Here’s an example of a sales compensation plan that illustrates the “carrot and stick” approach I outlined in How health plans can achieve successful sales compensation alignment. It compares the roll-out period (year 1) with post roll out (year 2) and beyond.
Cross-Selling Sales Compensation Example
Sales compensation example for cross-selling health plans
Scenario: A sales rep has a $75,000 base with $37,500 variable comp target.
- Average Ancillary Premium: $40 PEPM
- Average Group Size: 80 employees
- Monthly Premium: $3,200
- 5% Monthly Override: $160 (5% x $3,200)
- 75% Sales Person’s Share: $120 before taxes ($160 X 75%)
- Annualize Sales Person’s Share:$1,440 before taxes
Roll Out Period
Variable Comp: No Downside Cross-Selling Risk
- 3 Sold Cases or 240 employees: $4,320 cross-sell compensation or $41,820* total variable comp
- 0 Sold Cases: $0 cross-sell compensation or $37,500* total variable comp
Post Roll Out
Variable Comp: 10% Downside Cross-Selling Risk
- 3 Sold Cases or 240 employees: $4,320 cross-sell compensation or $41,820* total variable comp
- 0 Sold Cases: $0 cross-sell compensation or $33,750* total variable comp
The salesperson who meets all their goals earns $116,820
The salesperson who doesn’t meet all their goals earns $108,750
*Assumes 100% achievement of other goals
Contact
If you could use some guidance on developing a compensation plan for cross-selling, contact me to get the conversation started.
