Sales department is one of the fundamental departments in any business especially if your company wishes to choose profit-centric approach. To increase the productivity of employees, it is essential to design a sales compensation plan in order to encourage them to stay focused. Easier said than done, a sales compensation plan is not a piece of cake to design because of a number of factors affecting it – gross salary, compensation expenditure, type of product or service, target audience, company’s policies, etc.
While designing a sales compensation and bonus plan for your team, it is fundamental to realize that those who are performing exceptionally high should be rewarded because they are bringing profits, customers, stake value and productivity to the company, but those who are unable to perform well should either be penalized or if needed, be given sales training. The idea is to separate high-performers from low-performers and grasp an idea of extra expense a company may incur by hiring an unskilled sales employee.
Pitching in your product to your customer is hard because most of the times, a common mistake is made when a salesperson oversells himself before his customer. Overselling can be a huge trouble because it tends to push your customer’s expectations about your offering higher which your product might not be able to deliver. So naturally, you would like to consider people who are honest about what the products but communicate the features and benefits in the most commendable way.
Lastly, you can choose an unfair way of designing a sales compensation plan if you do not consider the type of your product. You need to first understand if your product belongs to Type A – high-value/less turnover, Type B – moderate value / moderate turnover or Type C – low value/high turnover. Ideally, if you sell Type A products then your sales team deserves a higher commission rate where as if you sell Type C products then you might want to adjust your commission rate accordingly.