To those of you who do not followand his blog, he has written a great piece lately about how companies can set up their very first sales comp plan. Now this is a critical plan for any sales-based businesses which is designed to motivate and incentivize staff, by giving them the chance to earn more for more sales. Whilst Josh’s piece was aimed at those who are setting up their very first sales plan, the words he writes can in fact be used to help you brush up your own sales plan.
There are so many sales-based companies out there which fail to regularly review their comp plans, and this carries with it a lot of dangers. The most worrying is that if your sales comp plan is not fit for purpose, you could end up demotivating staff or forcing them out the door, to competitors with better plans. Neither of these outcomes is desirable, so here is what you need to be reviewing.
Is It Competitive?
The first place to start here is to weigh up what you are offering versus what your competition is offering. This kind of information is very easy to find and you can simply look on local jobs pages to find out what is being offered. Failing this, speak to some trusted staff and see if they have colleagues or friends working in those other companies.
Are You Paying Out?
If you are not paying your employees their commission at the end of the month that they post the sale, your structure is wrong. This is the very key to the perfect implementation of the plan, and a failure to pay your staff in a timely manner is a huge problem. How can your staff get excited if they are getting paid late?
Are You Accelerating?
A plan should always be about different tiers and in particular you should be looking to reward those sales reps who are delivering high volume of sales. There will be a standard floor at which point everyone is making commission, and then above that you could have 2 or 3 higher floors which the very best will reach, which adds points on to their percentage of commission. This is the way to keep the very best talent in your business.
Are You Accommodating Trainees?
When someone comes to work for your business you have to make sure that you are taking their lack of training into consideration with regards to their salary. Whereas you will usually do a 500/50 or 40/60 deal with the rest of the staff in terms of basic salary and commissions, you have to do something different with the newbies. If you put them on the same pay scale from the jump, they will likely fail to earn commissions and be disenfranchised with the business. This of course will mean that you have failed to gain their loyalty and they could easily leave.
Take Josh’s advice, but use it for your own existing sales comp plan.