Sales Representative Compensation: Salary Or Commission? | Do This Sell More Show 28
Written by Dave Lorenzo on September 15, 2019 / Do This Sell More Show
Sales Representative Compensation: Should you pay a salary to your sales reps? Should they be on commission only? We answer those questions and more on this episode of The Do This Sell More Show.
Should you offer straight commission, a sales rep salary, or a combination of both? Does it make sense to dangle bonuses, incentives, or spiffs? What’s the best way to compensate your top sales performers?
The first thing that springs to mind when it comes to how salespeople make money is, of course, commission. When they’re paid on commission, salespeople have incentive to close high-ticket deals and sell at premium prices.
How much should salespeople make in straight commission? You have to decide which sales reps on your team get what percentage, when, and why. Reward salespeople who maintain long-term client relationships and bring in repeat business.
If your sales cycle is really long (mine was once typically 18 months), you may find that salespeople get discouraged midstream. In B2B sales, it’s good to offer a sales rep salary in addition to commission. A consistent base salary helps keep your salespeople afloat while they wait for commission checks.
You can structure compensation in many different ways. Try a combination of commission and salary if it works for your business. Set up a schedule that follows the success of your sales team; that is, increase commission as your sales reps build stronger client relationships and sell more.
What about incentives, bonuses, or spiffs? This kind of compensation works well in specific situations. Incentives are great when you’re entering a new market, selling a new product or service, or trying to hit certain sales targets within set time frames.
Focus on commission, because that’s the type of compensation that motivates your best salespeople the most. If necessary, add a sales rep salary. Offer bonuses in special cases. Whatever you do, compensate your sales team based on performance above all else.
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