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1. Effective compensation plans build an allowance for company profit at the high end of the range of profitability appropriate to the market stage (start up/fast growth/penetration/saturation).

2. Effective compensation plans focus on motivating salespeople to meet both tactical and strategic company needs: profit, growth, market share, volume, etc.

3. Effective compensation plans are tied to measurable criteria that accurately match the critical sales success factors for the company.

4. Effective compensation plans include both fixed and variable elements that are easily managed by the company and quickly understood by the salesperson (but they need not be 'simple').

5. Effective compensation plans have a design that is sufficiently complex to fit the real needs of the company and salespeople.

6. Effective compensation plans establish fixed base lines that support the long-term security of both company and salespeople with enough flexibility to change as goals change.

7. Effective compensation plans do not hurt or take advantage of either the company or salesperson. They do, however, protect the salesperson first, within limits.

8. Effective compensation plans value efforts according to their contribution, not just their difficulty.

9. Effective compensation plans motivate all salespeople: 'stars' to continue; 'average' producers to improve; and, 'poor' performers to leave.

10. Effective compensation plans distinguish between performing tasks and achieving results.

11. Effective compensation plans avoid competition between salespeople.

12. Effective compensation plans allow salespeople to plan, whereby reducing stress.

13. Effective compensation plans do not change quicker than the ability of salespeople to adjust and protect their own interests as well as the interests of the customer.

14. Effective compensation plans permit everyone with above-adequate performance to seek their own level without penalty.

15. Effective compensation plans constantly address changing company goals and market conditions.

16. Effective compensation plans are logical and appropriate and make sense to the customer – the ultimate test of validity.



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