How to Build the Perfect Sales Commission Plan

Are you struggling to come up with a great sales commission plan? If so, this guide can help you figure out a solution. When it comes to driving sales and revenue, you have to get creative.

With that said, take a look at the tips below to learn how to create the best sales commission plans:

Set the Right Rates

When it comes to creating a sales commission plan, set an adequate commission price. Most sales positions offer a base salary, which is important. If there isn’t one, the sales position will only attract individuals who can’t get a different type of job or don’t need regular income.

Those types of candidates aren’t good for business. So set a base salary that’s sufficient enough to cover general living expenses, but not high enough that there’s no need to pursue commission.

Reward Good Sales Habits

It’s a smart idea to reward sales behaviors that you would like for your reps to repeat. The best sales commission plans include strategies that enhance overall revenue.

For example, if you want to new bring in business, then offer higher commissions for reps who sign up new customers. This type of sales commission plan gives your company an advantage.

Choose the Appropriate Commission Rate

When putting together a new sales commission plan, you want to consider the commission percentage. Generally, commissions are a portion of net profit or total revenue.

The percentages differ depending on the industry, but the numbers are usually 1 to 10% of revenue or 20 to 40% of gross profit.

Pay Commissions Quickly

Quick commission is a great incentive for sales reps. It’s more of a reward when the turnaround time for payment is delivered fast. It provides instant gratification and boosts sales motivation.

If reps have to wait a long time to receive their commission, they may not be too enthused about driving sales.

Be Truthful

Come up with a sales commission plan agreement that your reps are fully aware of. Make sure that everyone is on the same page and understands how the commission works. They should understand that the goal is to make good money and that hard work gets rewarded.

Consider Changing the Commission Rates

For sales reps that are just getting started, consider giving them a higher base salary and lower commission. This helps them to get their feet wet, and it encourages them to get better at bringing in sales. Advise them that the base pay will decrease over time, but the commission rate will increase.

If you need more help putting together a commission plan, check out AgileComp.

Put Together the Perfect Sales Commission Plan

If you want to drive sales, coming up with a brilliant sales commission plan is the way to do it. With the right strategy in place, you can bring in big business and keep your reps happy.

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