An effective and a reliable sales commission plan of a particular company or an organization is a crucial factor in determining employee retention, specifically that of the sales team. The sales commission plans of a company should be updated periodically; it doesn’t matter if it has been successful in the past. Revising the sales commission plans is intimidating and most organizations aren’t sure whether the new plan will work or not. Nevertheless, it is essential to take the leap of faith and come up with a plan that benefits both you and your sales team and that will enhance productivity. Otherwise, you might be saying farewell to your sales professionals as they join your competitor. Here are four ways in which you can improve your sales commission plans.
1. Find Out Each Sales Job Role and the Associated Skill sets
As the head of the company or the compensation manager, it is your duty to determine the various job roles in your company. You can ask questions such as, ‘Which sales positions will be implemented in the new plan?’ and ‘What will be the responsibilities of the specific role within the sales department?’ You can also take into consideration if any new skills are needed. For example, the sales team might be needed to learn a new sales software that has been deployed to boost the efficiency of the department in order to drive more sales and promote the growth of the business.
2. Select a Compensation Plan that Satisfies Your Goals
The sales team usually works individually or in groups within an organization and it is up to you whether you want them to work independently or cohesively. For example, if you want them to work as a team then you will need to develop sales commission plans that will reward them as a team. If you want them to concentrate their efforts into selling a particular product or service, then you will have to formulate a plan that provides incentives accordingly. However refrain from making more than three commission rewards in a year, as this will overwhelm your employees.
3. Calculate the Cost of Generating Profits
It sounds strange doesn’t it? But it is true. This is the next step you need to take to improve your sales commission plans. You need to ask yourself the question, ‘Will my organization be able to afford the increase in the compensation if every employee in the sales department achieved their intended goal?’ You have to take into account expenses like training costs, the travelling costs, the technology costs, and the costs related to coaching your sales professionals so that they can reach their goals quickly. This is a productive way to determine whether your new plan will work or needs amendments.
4. Be Sure to Communicate
You have to communicate with your sales employees and supply them with adequate information regarding the new plan. Inform them of their earning potential and when the new plan starts and what will it take for them to succeed. After that, you should motivate your employees and implement the new plan with an amazing incentive bonus.
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