Sales force remuneration: progression and meritocracy
When it comes to remuneration, commercial managers still have many doubts when choosing the most appropriate remuneration for the sales force
Not everyone has reached a consensus when it comes to salesforce compensation. On the one hand, we have only commissioning advocates. On the other, we have only one fixed defender.
This issue is a debate for long hours, as all parties must be right. However, before taking sides on what to do, it is necessary to reflect:
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How to pay the sales force?
Something is wrong when the company’s managers do not accept to share the profits with the teams that generated results, through commissioning rules for salespeople.
The era of individualistic companies is over. The companies that win on the internet today are those that are giving space for their employees to grow along with them.
The new era of business is flat.
Today, the sales force and everyone involved in the results is rewarded in proportion to their efforts and their results.
Some companies believe that the seller is not entitled to share in the results, as he is already being paid to sell. Thus, the sales force ends up not receiving sales commissions. But that’s a mistake! It will demotivate your employees.
Other companies get in the way. They only pay for what is sold. In other words, it seems that all the effort that the sales force applies and that does not materialize in sales has little value and does not deserve to be rewarded.
That’s where meritocracy in companies, sales targets, and commission come into play.
There must be a balance between results and efforts to achieve them.
How to commission sales?
If people are to be compensated according to their worth, then the sales force’s compensation must be for their efforts, regardless of whether they have sold or not.
This is because, often, even dialoguing, presenting the product or service to the customer, negotiating, sending proposals, answering e-mails, making visits, and everything else, the sale does not happen.
Not selling is a natural step in the sales process!
The truth is, it’s not possible to be 100% successful in a sales force.
When a sale doesn’t happen, the effort of the sales force that fought to make the sale happen still needs to be rewarded and recognized. For this reason, the remuneration must have a fixed amount.
Returning to meritocracy, when the team achieves a positive result after the effort, isn’t it valid to reward and recognize that effort? Isn’t it fair to pay “something extra”?
Therefore, we believe that every position (regardless of being a sales force) needs to have a productivity commission. Yes! After all, don’t market people also help the company get results? What about accounting, finance, legal, production, etc.? Basically, everyone is part of a team!
So, get to know this and other sales commissioning models that, in some way, help to remunerate so many efforts, fifth results.
- Productivity commission
- Recurring commission
- Salesperson commissioning by team goal
- Staggered sales commission
But before that, understand the importance of setting other goals for your employees. Something beyond monetary. See how to set personal goals and objectives in this Site ware video:
1. Productivity commission
This means that in addition to the sales commission, the company will recognize the employee’s performance and will reward them with a commission if the work has the expected result.
Think of the following items about salesforce compensation, combining a fixed amount with the reward on sales made:
- After creating the sales target, establish the sales commission based on the results achieved without the target having been met;
- Increase the sales commission percentage if the seller hits your goal;
- Set an overall salesforce goal. If it gets beaten, give a prize to all sellers;
- Have a bronze, silver, and gold goal and increase commissions if the sales force hits the goals.
We certainly believe that this type of progressive and meritocratic remuneration will act as fuel for the sales force to pursue its goals since it knows that the company believes in its work.
In this sense, knowing how to remunerate salespeople is fundamental and this attitude will serve to demonstrate to the team that the company believes in the results and that the work between the company and the sales force is one of partnership and complicity.
Salesforce compensation must be based on meritocracy.
2. Recurring commission
For recurring revenue companies (such as schools, colleges, gyms and Saabs) this methodology works well.
So, just as the company receives a smaller but constant amount (until the customer leaves the company), the salesperson will also receive his commission in this way.
Ideal for him to understand that he needs to keep his customers loyal.
There is a variation for this commissioning, in which the seller only starts to receive his commission after the client has been with the company for at least 3 months.
3. Commissioning of salespeople by team goal
In this case, the commission is only paid if the team reaches the stipulated goal. The goal would be to motivate everyone to work collaboratively and hit the goal together.
But in practice, it doesn’t work that way, and it turns out to be demotivating for top-performing salespeople. After all, even if they beat their goals, they may not receive a commission if the team doesn’t do the same.
Can be used as an extra incentive, never the only one.
4. Staggered sales commission
A sales target and a commission percentage are set.
If the seller makes less than 60% of the goal, he does not receive a commission. If you make 60 to 80% of the goal, you receive 70% of the commission percentage; if you do from 81 to 99%, you receive 85% of the commission, if you sell between 100 and 120% of the target, you receive 100%. And if you sell more than 120%, you get 150% of the commission percentage.
It is good for sellers to strive to sell more, but there is a risk of becoming discouraged if they sell too little in an unlucky month.
Other Ways to Motivate Sellers beyond Sales Commission
Aligning salespeople’s personal goals with their job performance at the company is one of the most effective ways to motivate them.
Therefore, the Agent created a tool especially for this. It’s about the funnel of dreams.
Through it, the salesperson can find out how to reach sales goals and earn commissions can help him achieve his personal goals.
Want to understand this better? So, follow this video:
As you’ve seen, there are several forms of commissioning for sellers. What is the best? It all depends on your business goals.
The important thing is to know that regardless of the rules for commissioning sellers, they must be aligned with the strategic planning of the business.
It’s no use knowing how to remunerate salespeople if this remuneration doesn’t reflect in more productivity to reach the business goals.
So be creative when thinking about how to commission salespeople. Think of ways to commission sales that bring the results your company expects.