Josh Melick is a genus when it comes to business and sales and he has written a fantastic blog piece recently regarding the way in which sales comps are set up. Josh alludes to the fact that whilst sales commissions are a fantastic way to incentivize people, so many businesses get it wrong regarding the way in which they manage and pay for these sales reps. Josh has written a fantastic blog post regarding the management of this, and here are the tips which he has in terms of making sure that sales comp plans are set up in the right way.
Setting the Trigger
When it comes to paying sales it is important that you set up the minimum which the person has to earn before the sales comp kicks in. It makes no sense to pay percentages from the very beginning because of the fact that so many will make some sales, the idea is to push them to make many sales. This will be the first step in setting up the plan
Even within this you have to ensure that there are high level accelerators for the very high performing staff. This could be a 10% sales commission which very quickly becomes a 20% commission when they sell a certain amount. This is a great incentive to turn the average earners into your star sellers and they will love the chance to get another 10% on their sales because of their high level performance.
Pay The Commission
One of the most frustrating things for anyone who works in sales is that they will work their butt off to try and make as many sales as possible, and then not be paid for the commissions in a timely manner. This is awful conduct for a company and it is critical that these commissions are paid on time, and accurately.
Because of the comparatively lower rate of the pre-commission sales, it is imperative that new staff are not given the same pay scale. New employees, at least whilst they are still training, should be given a rate which is much more based around a solid basic pay. Anyone who is looking to get sales commission should be well trained and given enough chance to get their sales acumen up before you switch them to a commission-based pay scheme. Josh speaks a great deal about the importance of showing these employees the importance of selling once they have been moved to the rate that everyone else is on. The key is to financially support them through their training and then show them just how much they could be earning once they have been moved over to the earning scale which everyone else is on.
These are the keys which Josh lays out in his blog post regarding how to set up a sales comp plan which fits in with the company’s needs and which supports the staff.