Recently, we talked about the various reasons why every company needs a solid compensation plan. We also looked at how much you should pay your sales reps. Today, we continue our journey in discovering the best ways to handle a sales force by highlighting the different options of compensation plans available for businesses. Find out whether your company may need to change its existing compensation structure.
One of the toughest decisions any business owner has to make is how to compensate their sales force well and still remain profitable. On one hand, you don’t want to pay less and discourage your staff which can actually affect their performance negatively. On the other hand, you don’t want to pay too much to stifle the growth of your venture. So, how do you determine how much to pay your salesperson?
Wondering whether to do away with commissions and pay all your sales employees equally? What’s your excuse? That the economy is rough and selling goods isn’t as easy, or salespeople know that sales won’t come easy and may not want to sign contracts where their salary isn’t guaranteed? If this sounds like your argument, hang on as I tell you why commissions still work even in the most uncertain business environments.
For a long time, businesses have used sales commission-based compensation structures to motivate their teams to work towards the company’s set objectives. This method of compensation makes it possible to recognize and reward hard workers for their exceptional performance in the organization. Besides, paying commissions provides a company with flexible payment terms that don’t rely on a set monthly salary but the generated revenue.
Do you consider your sales compensation plan a key component of your business strategy? Surprisingly, not many businesses do, even though compensation plans have direct effects on hiring, retaining, and motivating workers. Additionally, how you compensate your sales team will have implications on your company’s bottom line. This makes an effective payment plan a critical element in the success of a business. Here is a look at why your company needs a good sales compensation plan: