One of the first things that top sales talent will look at in job ads is how the sales compensation plan is structured. There is no one size fits all strategy that works for all businesses, and there are many factors that go into how a company determines their pay structure.
“No matter which approach you use, success depends on awareness. Your sales management team must understand your company’s overall goals and structure compensation to align with them. In short, sales compensation should be not just a tactical focus for your organization, but a strategic one as well,” says Ken Thoreson on Salesforce.com.
Choosing the right sales compensation plan for your company plays an important role in motivating your sales team and helping you achieve your sales goals. Here are a number of common ways you can structure your compensation plan:
While these plans are not that common, they do work for some companies. They are simple and straightforward, and give your sales team a dependable paycheck each week. The negative is that there is little incentive for people to go above and beyond to make sales.
This is the most common sales compensation plan used today. It gives sales staff the stability of knowing they will receive a base pay, but it also motivates them to work for sales to increase their salary.
You only receive a salary for the sales you make. If you don’t make a sale, you don’t get paid. While these plans are purely performance based, it could lead to unhealthy competition among your reps and cause issues internally as reps fight for sales.
In these plans, commission rates will change in accordance with profit margins. The greater the profit, the more reps are paid. However, the lower the profit, the lower the commission rates will be.
Other sales compensation options include:
The key is to find a compensation that makes sense for your company – what you are selling, your sales process, and the type of reps you have working for you.
Want to learn more? Check out these blog posts from our sales recruiters:
5 Ways to Get the Best Out of Your Sales Rep
4 Tips to Retain a Top Sales Team
10 Tips to Motivate Your Sales Team
SalesForce Search is a sales recruiting company which specializes in the recruitment and placement of sales professionals. We recruit sales people in every sector of the economy including, software, manufacturing, financial services and medical devices. Find the right sales person for your organization, start your search here.
Claire has 4+ years of experience in sales and recruitment. As a Director of Client Services, her main objective is to connect great people to great companies by building strong relationships with both top clients and candidates in the sales industry. She specializes in sales roles of all seniority levels for both enterprise and start-up clients North American wide. When Claire isn't networking with top talent, she enjoys being outdoors, traveling and spending time with friends & family.