5 years ago
September 24, 2019

10 Ways to Create a Great Sales Commission Plan

Having the right sales commission plan in place can have a huge impact on your sales team. It can boost engagement, help you achieve more desired actions, boost sales, and…

Rhys Metler

Having the right sales commission plan in place can have a huge impact on your sales team. It can boost engagement, help you achieve more desired actions, boost sales, and help make it easier for you to achieve your sales objectives.

Great sales commission plans should be unique to your organization. They are dynamic and ever-changing based on market conditions, industry changes, and many other factors.

Whether you are planning to develop a sales commission plan for the first time or are planning on reviewing your current plan to make it better, these tips from Toronto sales recruiters will help you create a great sales commission plan:

1. Collect as Much Information as Possible

There are many different approaches you can take when creating a sales commission plan. Collecting as much data and insights as you can is the key to making the right commission plan selection. Take a look at:

  • Industry standards and competitor commission structures
  • Past company performance – what worked, what didn’t?
  • Current business needs
  • Industry compensation benchmarks
  • The desired actions you want your sales team to execute

The key here is to collect as much information as possible to help you make an informed decision about the best approach for your company.

2. Choose the Right Planning Team

You want to have a good representation of your organization involved with planning and decision making. Get input from all managers involved with the sales and marketing team. Get input from human resources, sales reps, and sales leaders to get a holistic perspective on what your commission plan should look like and how it will work. Getting input from all levels of the organization will help you get greater buy-in.

3. Keep It Simple

It’s important to keep your commission plan as simple as possible. It shouldn’t be difficult for your sales reps or managers to understand. It doesn’t have to be a gigantic document or have complicated formulas. Sales commission should be easy to measure, it should be straightforward, and easy for management to administer. Keep it simple to save time and prevent unnecessary complications.

4. Choose the Right Type of Commission Plan

There are many different types of commission plans to consider – salary plus commission, commission only, profit margin, capped commission and more. Choose the type of plan that makes the most sense for your company structure and sales strategy. Check out 9 Types of Sales Compensation Plans to Consider to learn about commission plan options.

5. Align Commission with Sales Roles and Desired Behaviours

When choosing a commission structure, always consider the sales roles and desired actions you want your sales reps to take. Your commission plan should encourage good sales behaviours and actions that are in alignment with company objectives.

For example, if you want 80% of your sales to be Product 1 and 20% to be Product 2, set commission rates to incent reps to sell more of Product 1.

6. Offer a Competitive Commission Plan

Your commission plan not only needs to work for your company and motivate your reps, it also needs to be competitive with what is offered in your industry. A strong commission plan can help you attract and keep your top sales talent. Adjust your plan based on experience and find ways to use it as part of your recruiting process.

7. Set Targets, Caps, and Estimate Budget

It’s very important not to overlook the impact of commission on your operations budget, cash flow, payroll and other areas of your business. Set your sales targets, forecast sales projects, and estimate your budgetary requirements for your commission plan. Some companies add a cap to sliding commission scales to ensure commission and business objectives remain in alignment.

8. Create a Payout Schedule

Have a clear schedule and process for paying out commission to your sales reps. Be transparent with your sales reps about how and when they will be paid, especially if commission makes up a large portion of their overall compensation.

Toronto sales recruiters advise being transparent about payouts

9. Communicate With Your Sales Team

Once you have created and finalized your commission plan, take some time to speak with your sales leaders, managers, and sales reps about it. Make sure that everyone fully understands how the commission plan works. Answer any questions people have about the plan and make sure all parties understand how the commission plan affects their role directly.

10. Review Regularly

Your commission plan won’t be perfect. No plan is. There is always room for improvement. Review your commission plan regularly and adjust them as your business evolves and as your sales targets and strategy changes over time.

Read More From Toronto Sales Headhunters About Sales Commission Plans

Commission plans play a key role in keeping your sales team engaged. Learn more about commission and compensation plans in the sales industry by checking out these blogs that are packed with great insights from Toronto sales recruiters:

4 Types of Sales Commission Plans

Top 5 Common Ways Sales Professionals Are Paid

Top 4 Ways to Structure Your Sales Compensation Plan

5 Common Misconceptions about Sales Compensation

Pros and Cons of Different Types of Sales Compensation Plans

5 Tips to Create a Sales Incentive Program That Works


SalesForce Search is a Toronto sales recruiting company which specializes in the recruitment and placement of sales professionals. We recruit salespeople in every sector of the economy including, software, manufacturing, financial services and medical devices. Find the right salesperson for your organization, start your search here.

Rhys Metler

Rhys is a tenacious, top performing Senior Sales Recruiter with 15+ years of focused experience in the Digital Media, Mobile, Software, Technology and B2B verticals. He has a successful track record of headhunting top performing sales candidates for some of the most exciting brands in North America. He is a Certified Recruitment Specialist (CRS) and has expert experience in prospecting new business, client retention/renewals and managing top performing sales and recruitment teams. Rhys enjoys spending quality time with his wife, son, and daughters, BBQing on a hot summer day and tropical vacations.