Should I pay my sales staff commission? How do I get the plan right so that it works for my business and the sales staff?
Two very important questions that all B2B business owners will face at some point and making the right decisions will have a significant impact on how your business evolves. Having been both a non-commission and commission earning salesperson, as well as being on the other side of the line and building a comp plan for a sales team, I can offer my rounded insights on the various pros and cons as well as helping you to avoid the common mistakes plenty make.
People work in B2B sales for various reasons, but the best performers do at least share one reason – the earning potential. However, please don’t make the mistake of interpreting that as them being motivated per se by money as it’s rarely as black and white as that; it’s more about how their earnings can help them do the things that inspire and motivate them (side note – understanding this about your staff means you can create bespoke incentives to drive results).
So, if you are considering hiring salespeople specifically to grow sales for your business (by maximising existing client relationships whilst consistently onboarding new clients), you should know that the general expectation of salespeople is that they benefit from playing their part in the company achieving success.
Is that achieved by a commission plan? Not necessarily! As pointed out previously, you may achieve better results in driving your sales team to success by offering a bespoke incentive scheme instead of offering commission.
Whichever method you do use in your business, the rewards must be linked to achieving a clear outcome i.e., target/quota. Your sales staff need to specifically know exactly what they need to achieve and this needs to be a SMART target/quota. When building the best plan to incentivise your team, these are the important points to consider:
- Keep it simple – the plan MUST be simple to explain and simple to understand. You want the scheme to incentivise your team to keep pushing for results – you don’t want them wasting time trying to interpret it as well as trying to work out how best to ‘game’ it in their favour.
- Take your time – take your time to get it as right as it can be before detailing it to the team. Nothing demotivates a sales team quicker than moving the goalposts of a commission plan EVEN if the changes are only improvements – strange I know but true as salespeople won’t trust it and will waste time trying to work out where the catch is!
- Identify your ideal sales-based outcomes – identify the sales-based outcomes you desire for your business and use these to shape your commission plan – incentives drive behaviour! For example, if your scheme is capped at a certain level meaning, once they’ve reached that outcome, the salesperson cannot benefit any further, don’t be surprised when they stop pushing for results!
- Be consistent with paid commission – decide at what point in the sales process is the commission paid. If you choose to pay when an invoice is issued or a contract signed, what happens if the invoice is not paid, or the contract is cancelled at a later point? Most commission schemes include a clawback to cover this eventuality.
- Be competitive – research what your competitors typically offer so that you can, at the very least, ensure your incentive packages are on a par if not more attractive
- Pay for growth – remember, all successful incentive schemes result in GROWTH so make sure your scheme only pays out for achieving growth and not for just standing still. Overheads and direct costs need to be covered 1st!
- Give the salesperson ownership – as much as possible, make sure the salesperson has control over the outcomes and isn’t dependent on too many others doing a good job for them to earn the incentive.
In summary, I am a firm believer in providing your sales staff with the opportunity to gain additional benefits from achieving (and exceeding) their targets/quotas – you just need to make sure it’s the right scheme for them and your business. If you need help building the right scheme, I can help you by giving you insights from both perspectives; how the salesperson will see it and how it works best for your business.