The lure of commission has long been held as the performance driver for sales teams. However, for many businesses devising a commission scheme becomes an exercise in setting targets to guarantee earnings. Not so much a tool to generate sales but more a means of paying sales staff what they want to earn. Rather than ponder over the reasons for such an approach let us look at what a sales commission plan should be targeted on.
It may be stating the obvious but the old saying of ‘profit is sanity and turnover is vanity’ has never gone out of fashion. Commission should be skewed towards higher margin sales or new products that, when established, will generate a higher margin. The commission scheme should be driving the business forward and supporting your plans for growth and sustainability.
There should also be a differentiation between new sales and those gained from existing customers. Always make a clear definition of what constitutes new business and how you will define new sales from the existing customer base for commission calculation purposes. That way you can point your sales staff in the direction you want them to go.
Finally, make sure the commission payment mechanics are transparent and understood by your sales team. The commission incentive needs to deliver what it says on the tin and keep your team focussed on achieving your shared goals.
Are your commission plans driving profitability or rewarding mediocrity?
To find out more about how you can maximise the impact of your commission based incentive plans call me on 01604 763494 or fill in the contact form.
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