7 months ago
March 10, 2017

Top 4 Ways to Structure Your Sales Compensation Plan

There are many ways to pay your sales reps. You just need to find the right one for your company. Read the Top 4 Ways to Structure Your Sales Compensation Plan

Claire McConnachie

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.

Ways to Structure Your Sales Compensation Plan

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:

1. Salaried:

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.

2. Base salary plus commission:

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.

3. Commission only:

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.

4. Profit margin plan:

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:

  • Quota based plans
  • Sales goal bonuses
  • Team based commission/bonus

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 McConnachie

Claire is a Western University graduate with a background in recruiting, sales and customer service. As a Recruitment Consultant, her goals are to place the best people in the right roles resulting in satisfaction for both the candidate and client.