The way that sales people are rewarded for their contributions can fall under many different types of sales compensation plans.
In almost all types of sales compensation plans, sales people are expected to collaborate to find and pursue sales opportunities individually, in pairs, or small groups according to their strengths. However, the way that sales people are rewarded for their contributions can fall under many different types of sales compensation plans. Organizations considering a review of the sales compensation plan as well as sales people who are wondering which type of sales compensation plan is best for them may want to become more familiar with the different types of sales compensation plans available.
Straight salary is one of the rarer types of sales compensation plans. In straight salary compensation there are no commissions and few, if any, incentives. The salary for sales people working under this compensation plan is correspondingly competitive. These types of sales compensation plans are most often used when:
The types of sales compensation plans that combine commission with a base salary are the most common types of sales compensation plans. Most frequently, sales people will encounter compensation plans that rely more on commission than on salary to arrive at total compensation. This type of compensation plan is good when:
Types of sales compensation plans that work by calculating territory volume are most often encountered in organizations that have a team-based corporate culture. At the end of the compensation period, the total sales for a given territory are calculated and the commission is split among all sales people who worked that territory, usually on an equal basis. These types of sales compensation plans work well when:
The types of sales compensation plans that reward sales people based largely or exclusively on how the company is performing are usually start ups and almost always entrepreneurial. Organizations may rely on types of sales compensation plans based on profit margin or revenue for several reasons, chief among them lack of liquidity in early start up stages and a desire to encourage company loyalty. Such compensation plans are the best fit for:
Within each of these types of sales compensation plans there are modifications; no two sales compensation plans are typically alike. The type of sales compensation plan that an organization uses, and the type that a sales person accepts, depends on the market and the goals of those involved.
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.