Sales Commission and Compensation Plans – Part 1 | Do This Sell More Show 50
Written by Dave Lorenzo on October 7, 2019 / Do This Sell More Show
This show is the first in a five part series all about the different sales commission plans and compensation methods that go into sales team motivation.
It’s extremely important to motivate your salespeople in the right way. But what’s the best way to do it?
I’ll go over a few different examples of sales compensation methods so that you can decide for yourself which one you think would work the best for you.
One method is the straight commission model. This means that when you go out and sell something you get a certain percentage of revenue or profit. In this scenario your income is uncapped but you don’t make any money unless you sell something.
Another one of the more common sales commission plans is the variable commission model. This means that you get paid different levels of commission based on how much you sell. For example, the first ten units you could get paid 10 percent and the next ten you could get paid 15 percent. Some companies provide variable commission based on what kind of product is sold. This is a way of directing sales team motivation toward certain strategic items.
Another method is residual commission. This means that when you sell a product you get paid both today and for the length of the customer’s relationship. Even if you stop working, as long as the customer continues doing business with the company, then you still get paid that residual income.
There are several other sales compensation methods that I cover in the video but these three sales commission plans are common options among sales teams. I invite you to explore the rest of the series and think about which method of sales team motivation would work the best for you.
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