5 Key Questions about
Sales Compensation
5 Key Questions about

Over the past 20 years, our team has been asked many questions about sales compensation. Here are the answers to the most common.

Do Salespeople Only Seek Monetary Gains?

While it's evident that salespeople have a financial inclination due to the nature of their work, their aspirations stretch beyond just monetary rewards. They seek a well-articulated value proposition, validation of their company's efficacy in aiding clients, proactive support, achievable objectives, uncomplicated compensation schemes, and a comprehensive vision of their professional trajectory and the company's direction. Salespeople consider themselves adept problem solvers and need to have faith in their company's distinctive capacity to address pivotal issues. The knack for identifying potential sales and sealing deals is a prized and scarce skill, which is why salespeople are keen on being adequately rewarded for their contributions.

Striking the Right Balance between Base Salary and Commission:

A vast majority, 95% of the salespeople encountered, prefer a blend of fixed salary and variable commissions or bonuses. When devising a compensation plan, three primary elements come into play – fixed salary, performance-based incentives, and equity options. Each structuring model has its merits and drawbacks, yet the most effective compensation plans maintain a thoughtful equilibrium aligned with the responsibilities shouldered by the sales personnel. Hence, clarity in role expectations is crucial as it should resonate with the broader business goals. Additionally, the timeline and methodology of commission disbursement are critical. Ideal plans remunerate commissions in the pay cycle following successful payment collection from clients, keeping salespeople motivated and engaged.

Am I Offering Competitive Compensation?

The ability to attract and retain proficient individuals is a testament to competitive compensation. Notably, top-tier salespeople often command salaries above industry averages, merited by their exceptional performance. Thus, it's imprudent to anchor your pay scales to average benchmarks. It's vital to maintain open communication channels with your sales team, ready to discuss salary adjustments for standout performers. The sales sector has seen a significant uptick in salaries, as reported in The Definitive Sales Salary Guide, emphasising the dynamic nature of sales compensation landscapes.

Should There Be a Ceiling on Commissions?

In a commission-centric pay structure, imposing a cap can be counterproductive. Salespeople value the prospect of earning unlimited income, reflecting their skills and perseverance. The essence of an 'at-risk plan' is the willingness to accept a lower base salary for the potential of higher earnings through overachievement. While caps might be sensible for no-risk compensation structures, they are discouraged for sales-centric plans.

What Constitutes Effective SPIFFs?

SPIFFs, small immediate bonuses for specific achievements, serve as potent motivators to amplify business revenue. They act as catalysts or enhancers to long-term sales strategies. A well-designed SPIFF program should offer immediate rewards with minimal administrative hassles. Overly extended SPIFFs might lose their appeal. Hence, they should be concise, sporadic, and cost-effective, not exceeding 5% of your incentive budget. Alongside SPIFFs, consider implementing accelerators or overachievement commissions, wherein higher commission rates are unlocked post-sales target attainment, fueling the drive to exceed targets.

These insights aim to equip you with insights to incentivise and retain stellar sales talent within your organisation. Experts concur that a robust sales compensation scheme could catalyse sales augmentation. Attracting a high-calibre sales executives to your team not only enhances your company's asset pool but also positions you as a corporate luminary.

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