A well-designed commission plan is essential for motivating your sales team, but how do you create such a plan? In this video, we discuss the key elements of a successful commission plan and what to look for during the design process.
- Alignment with company strategy and culture: Make sure your commission plan aligns with your organization’s goals and supports your company values. Ask yourself: does the plan encourage my team to perform according to the company strategy?
- Simple and intuitive design: An effective commission plan has a maximum of three components. Consider things like new business, number of customers or revenue growth. Make the plan simple to understand and the commission calculation easy.
- Clear relationship between performance and pay: Sales people should be able to see directly how their performance affects their pay. This provides motivation and clarity. Top performers may earn significantly more than low performers if performance-based pay is your strategy.
- Reward sales results, not activities: The commission plan should focus on results achieved, not just activities. Furthermore, you might consider variable pay for departments such as marketing and customer success as well, if they contribute to sales growth or margins.
A good commission plan requires thoughtful consideration. Want to learn more about this topic? Watch our full webinar on setting up effective commission plans via the link in the video. Good luck!
