9 years ago
January 6, 2015

Sales Compensation For Sales Leaders: What They Expect

Analyze your sales compensation for sales leaders to ensure that it provides the compensation that your best sales people expect.

Rhys Metler

sales compensation for sales leadersNo two sales compensation plans are alike, which can pose a quandary for organizations looking to benchmark their sales compensation for sales leaders. In a business environment that seems custom made for sales hunters, sales leaders’ expectations are changing rapidly as businesses update compensation plans designed to attract the best of the best. For your business, this means now is the time to analyze your sales compensation for sales leaders to ensure that it provides the compensation that your best sales people expect and that sales leaders new to your organization will accept.

How Important Are Options? 

When a sales leader is considering your organization’s compensation, the potential for cash earnings is almost always the first consideration. Most sales leaders view other forms of compensation like benefits and equity interest as perks; these are nice things to have, but will rarely move the needle if the cash compensation isn’t there. Keep this in mind when planning your sales compensation for sales leaders, but do not neglect the importance of bonuses and indirect compensation for stretch goals. 

When Is a Sliding Commission Appropriate?

Sliding commission, where the percentage calculation of your sales compensation for sales leaders increases based upon the volume of sales made, is a highly desirable compensation scale for sales leaders. Offering a higher percentage commission for sales above a pre-set benchmark encourages sales leaders to reach, and also helps sales leaders feel that the greater sales volumes they achieve are recognized by the organization. A sliding commission as part of your sales compensation for sales leaders may be expected if: 

  • Your compensation is commission only
  • Your top competitors are using sliding commission
  • Your average margin supports higher percentages on higher sales volumes

What Activities Should Be Compensated?

A compensation plan that only rewards sales leaders for new business is increasingly outdated in today’s marketplace. Recognizing that sales from existing customers can have a higher margin than sales from brand-new customers after marketing budgets are taken into account, and knowing that each sales activity a sales person performs is an investment of time, most organizations are now moving towards sales compensation for sales leaders that accommodates all selling activities resulting in revenue, and sales leaders are coming to expect this as a result. 

Make sure that your sales compensation addresses sales to existing customers both active and lapsed as well as sales to new customers. Note, however, that compensation for the two activities does not have to be equal; your compensation can be adjusted in line with your organization’s goals to encourage sales leaders to make sales where you need them most.

How Long Is the Lag Time on Payout?

Calculating compensation for sales people is a time consuming task, especially if your payroll department is not taking advantage of automated compensation software. However, your sales leaders expect to be paid what they have earned regularly; if your sales compensation for sales leaders consistently arrives late due to delays in the payroll process, you are running the risk of losing your leaders. Don’t let your organization fall into this trap. Ensure that your payout on salary and commission is timely and running on a schedule in line with your industry.

Sales leaders will be loyal to your business if your sales compensation for sales leaders is up to the mark. Although there are many great resources available to scale your sales compensation, your top sales people know best the measure of sales compensation for sales leaders that will keep them working hard for you. Take the opportunity to ask your sales leaders how your organization’s compensation measures up and offer them an opening to provide suggestions. With this information in hand, you can make stronger improvements to your sales compensation for sales leaders that will keep your current top performers motivated.

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.