Structuring a Quality Sales Compensation Package

Your sales team is one of your most valuable resources. After all, it’s how you bring in business and keep your company’s revenue pipeline flowing. To ensure you’re providing adequate motivation and accurate compensation to your sales team members, you must structure your sales compensation package to meet their performance level and give them a sense of upward mobility.

There is no magic formula for creating a sales compensation package, but following some guidelines will keep both you and your sales team members satisfied and excited for future successes.

Be Sure Your Plan is Scalable

By scalable, we mean the more a salesperson performs, the more they will earn. There should be a correlation between how much they sell and how much they make, as an incentive to consistently improve methods and techniques for making a sale. This also should be individualized rather than team-based, so that low performers who don’t make their quota don’t bring down high achievers.

Incorporate Your Company’s Goals into Sales Compensation

Begin with your company’s annual revenue goal and determine how much in sales will need to come in monthly to meet that goal. Next, determine how many sales deals you need to close to get to that point. Then figure out how many leads you would need. Keep this clear and simple, so that your sales team knows your goals and aligns with them.

Never Cap Commission

The sky should be the limit for sales. No sales rep should ever feel that they wouldn’t be fairly compensated for going above and beyond. If a sales team member hits 200 percent of his or her quota, they should be rewarded, not punished. This will motivate your sales team to meet or exceed their monthly goals and perform to the best of their ability.

There is no one size fits all for structuring a quality sales compensation package. When you develop sales compensation packages for your team, remember this: You want to offer them a package that will encourage, motivate and ultimately retain them to build a long-term, client-focused sales team. Weigh the perks and benefits to determine which plans will improve your overall sales performance and help your company achieve its goals.

Ready to build a world-class sales team of your own? Contact SelectOne today.