Compensating Sales Mentors

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Many sales organizations deploy peer mentors to help new sellers onboard more productively.  Mentoring is a great program to supplement the learnings from traditional new hire training and the skill-building from manager coaching.  Clearly, newly hired sellers benefit from this program.  Even managers benefit as they can share the responsibility for helping a new hire ramp-up.  So, what’s in it for the mentor? Should mentors be compensated? The kneejerk reaction is often yes – this doesn’t mean it’s always the right answer.  Here are some considerations as you decide what’s right for your organization: Level of effort and opportunity cost – Before you think about compensation, you must understand the level of effort being requested. Equally, consider if being a mentor presents an opportunity cost.  As an example, some mentors have their mentees shadow their sales calls.  If a mentee is merely being a shadow, the mentor has no opportunity cost.  Instead, if mentors are asked to help mentees strategize engagements and execute multiples call per week, the opportunity costs are much higher. Pay mix – Similar to the opportunity cost, think about the pay mix.  More leverage in the pay mix (i.e., a greater weight of variable pay to total compensation) drives up a need for mentor compensation. If sellers have mostly base salary, the financial impact of shifting a mentor’s focus to help the mentee may not be significant. Culture – Collaborative work environments may suppress the need for extra mentor compensation.  Instead, mentoring may be seen as a corporate responsibility.  This is especially true of sellers that were beneficial mentees. Mentor development and interest – Mentors that are looking to get promoted may see being a mentor as a good stepping stone for their career aspirations. Savvy sales leaders may select mentors and position this as a growth opportunity.  Equally, some people just have the heart of a teacher and enjoy the intrinsic rewards and goodwill of helping others. How to compensate sales mentors? If you decide that compensation is needed, you must figure out how to compensate the mentors.  Here are three approaches that may be used: Commission override – this is a mechanism that allows the mentor to earn commissions based on the performance of the mentee. This approach can get expensive so be sure to set the rates of pay appropriately and consider putting a cap on the mentor’s earnings potential.  When mentor compensation exists, this approach is very common. Shared quota and credit – this approach requires you to give both the mentor and mentee quota and credit for all activity in a predetermined period. Conceptually, this rewards the mentor and mentee to work together.  However, while it offers the mentor upside potential, it also holds them accountable – i.e., the mentor may have underperformance risk.  Finally, this approach can be administratively challenging in terms of quota and territory adjustments. Onboarding milestone bonuses – this program links mentor compensation to key achievements of the mentee during their onboarding. As an example, as the mentee successfully shadows 10 sales calls or builds their pipeline coverage ratio to 1x, the mentor receives a spot award of $500 (as an illustration).  This program works well when the mentor is being asked to help with holistic onboarding and not just helping to close deals. Ultimately, the option you choose – as well as the amount of pay – must be financially sustainable and administratively feasible.  In terms of the amount, let’s go back to the first consideration:  level of effort and opportunity cost.  The mentor payout should be large enough to keep them whole as well as share in the success of a new hire that is onboarding effectively. Sale mentoring programs are an excellent mechanism to help new sales employees ramp up more quickly and build an internal network.  Just remember to consider the needs of – and impacts to – the mentor.  They are taking on more work.  This sometimes means some extra pay.

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