Just about every business requires sales. However, there are those wherein just about all of their entire operations are focused on sales. Businesses such as these usually have employees who earn basic pay, as well as commission depending on the number of sales that they are able to generate. You can also read sales business plans, Plan Templates
Sales Commission Plan Template
If you run such a business, you’ll need to know exactly how much you should be compensating these people for the service that they have provided. And that’s why this article is going to teach you all that you need to know in order to come up with a sales commission plan sample.
Sample Sales Commission Plan
Sales Commission Plan Guideline
Sales Commission Plan Design
How to Create Your Business’s Sales Commission Plan
Remember that the purpose of having this type of plan is so that you are able to fairly compensate all of your business’s salespeople. You want to make it clear that those who generate a good number of sales are ones that will also receive a good amount of commission. You may also see marketing business plan templates.
However, you need to ensure that your commission plan is one that these people will feel justified if they work hard. If you pay them too little, then most likely you will end up losing them to your competition. Pay them too much and they might not have a reason to keep working harder. You may also see sales & marketing plan templates.
So long as these people are paid fairly for the work that they have provided, and that you provide them with a good enough reason to work hard, then expect your business to reach new sales heights. You may also see IT sales plan templates.
With that in mind, here are the steps that will allow you to come up with a proper sales commission plan:
1. Come Up With the Perfect Base Salary for Your Salespeople
What you will want to do first is to ensure that the people who are working in your sales division are given a base salary that they can live off of. Once you have managed to establish that, then coming up with the compensation plan shouldn’t be too much of a problem.
The reason as to why you will want to do this is because there have been so many businesses wherein they make the mistake of having their salespeople being paid solely on commissions. If you pay commission only, you’ll attract someone who either can’t get another type of sales job or a person who has no need for regular income. These are the two types of people that you don’t need as one might not be able to provide your business with the sales it needs to generate while the other might not have the passion to do the job.
So what you want to do is to provide these people with a base salary that’s just enough for them to still warrant a commission. You need to come up with an amount that will allow them to deal with their daily expenses, while at the same time make them yearn to earn more than what they’re already gaining. You may also see startup marketing plans.
If you want to determine how much these people should be paid for their base salary, then you can always go online to do your research. Take note that the amount will be based on the experience and expertise needed for the position. So figure out what position your organization is going to need and figure out just how much that role should be paid. You may also see strategic marketing plans.
2. Reward Behaviors You Want to Keep Seeing
The next step is for you to decide on how you should reward salespeople who have shown great sales behavior in your organization. These can be anything that they do that continue to generate profit for your business. There’s no doubt that you’re going to have employees who show exceptional talent when it comes to sales, so you’ll want to make sure that they keep doing a good job. And by showing these people that they will be well rewarded for their efforts, then you’re basically telling them to keep up the good work. You may also see monthly sales plan templates.
Also, this can also motivate those who aren’t your top salespeople as they’ll see that there’s actual incentive into dedicated to their work. A commission structure here works in your company’s favor because you don’t pay people unless you make money. The better the rewards, then the more these people will want to work towards them. Be sure to explain exactly how these people are going to earn these rewards so that they’ll have a clear goal. You may also see strategic sales plans.
Sales Commission Policies and Guidelines
3. Come Up With the Right Commission Rate
This is the part of the plan where you will need to do a lot of thinking. Typically, commissions are a percentage of net profit or a percentage of total revenue. This can vary differently with every organization in the sales industry. can range from 1% to 10% of revenue or 20% to 40% of gross profit. This means that you are going to have to know the commission rate for your own organization and that you have to make sure that it’s one that your employees will find fair. You may also see marketing & sales business plans.
If you want to have an idea as to where you want to set the rate at, then you should always consider the internet as a viable source of information. You may also see hotel sales plans.
Take note that nearly every organization follows this particular rule of thumb: The total commission for top-performing salespeople should equal the salesperson’s base salary. You may also see strategic sales plans.
So let’s say that one of your organization’s best salespeople is paid $70,000 due to his/her base salary. That person should also be earning $70,000 on commissions. You may also see personal sales plan templates.
Tips for Ensuring that Your Sales Commission Plan is Effective
Although you already know the steps on how you should go about in making the commission plan, there are still a couple of things that you can do to ensure that it’s effective. You may also see marketing plans in word.
So here are a few tips that you can follow to make sure that it is:
- Make sure that compensations are paid on time – If a salesperson knows that he or she has done an exceptional job, then that person is expected to be rewarded. Now, what if that person was not able to receive his or her reward on time? That will end up frustrating and demoralizing the salesperson and that could result in lower performance. To prevent something like that from happening, you’re going to have to make sure that these people are compensated exactly when they’re supposed to. You may also see retail marketing plans.
- Make sure that your plan is flexible – There are times wherein it might be difficult for your salespeople to sell certain assets. There are a lot of factors that could affect this such as the latest trends or even seasonal changes. What you’ll want to do is to give your business’s salespeople more of an incentive to prevent performance and sales from dropping. For example, if you know that sales will be difficult due to a new product that’s being introduced, you can change the plan in increasing the amount of commission that a salesperson will receive for doing a good job.
- Be transparent with your plan – If you want your employees to know that there is a commission plan that they can take advantage of, then you’ll want them to know about it. So what you will want to do is to hold a meeting wherein you discuss the entire plan with them. It shouldn’t take too long for you to discuss all of the details and you can even use the meeting as a means of seeing as to whether or not these people will be satisfied with the plan. Be sure that they understand that the point of the plan is to reward those that show great sales behavior. If you discuss the pros and cons of each plan and listen to what your salespeople have to say, you’ll stand a much better chance of coming up or improving on a plan that everyone will be satisfied with. You can also read territory sales plans.
Although coming up with a sales commission plan won’t exactly be the easiest thing to do, you’re still going to have to do it if you want your salespeople to feel satisfied with the effort they put into their work. So just follow the steps and tips above and you should be able to come up with a sales commission plan that you know everyone can be happy with. You may also see marketing and sales plans.
In the event that you would like to learn about the other types of plans that you can create, then all you have to do is to go through our site until you find the articles that can help you. They should be able to provide you with all of the information that you’re going to need. Just be sure that you are able to read them as thoroughly as possible so that you can make the most out of whatever it is that you’ve managed to acquire. You can also read daily sales plans.