Simplified Compensation Plans That Work

by Brian Jeffrey

Here’s an excerpt from  the eBook . . .

As you are probably aware, salespeople are not a philanthropic bunch. In fact, they can be downright mercenary when it comes to making money. This can be a problem. Some salespeople are so driven by money that they will say anything, promise anything, and do anything to make a sale no matter how bad the sale is for the customer and/or the company. These people are not sales professionals. In fact, some of them border on being con artists.

Sales professionals usually have personal goals they want to achieve for themselves and their families and they need money to do it. It’s up to you to develop remuneration plans that will fairly compensate these people so that both they and you can reach your goals.

Salespeople should be made aware of where and how the organization makes its profit so they can help maximize your return on investment. Too many companies feel margins are none of the salesperson’s business. Then they complain when their salespeople bring in unprofitable sales or seem to spend too much time on unprofitable opportunities. Good salespeople want to know how they can help their employer make the most money, if for no other reason than it affects their income. And this brings us to the subject of sales compensation plans.

Compensation plans should be set up on a win-win basis. I’ve seen plans where the more a salesperson sells, the less per sale he or she makes. That’s not much incentive to sell. Consider making the plan tied to profitability if possible. The more profit the company makes, the more money the salesperson takes home.

A good compensation plan takes a long time to develop. Deciding the pros and cons between salary only, base salary plus commission, commission only and all the combinations in-between can be a real chore. There’s no one plan that’s right for everyone. What’s good for one company is rarely good for another, at least not without some modifications or fine-tuning to meet the specific situation. While there’s no need to reinvent the wheel, be cautious about adopting another company’s remuneration plan in total. Use it as a guide only for developing your own.

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