Commission is the financial incentive you give to sales people to help them meet or surpass the sales targets you set for the business. Many sales people receive a base salary and can earn commission on top of that base by achieving their monthly or sales quota. You want your sales people to hit their sales targets, right? If you do, there are a number of things you need to ensure to keep your sales people – and your company – happy.

Is your commission plan easy to work out? If it’s easy for your sales people to understand the commission they will earn by closing a certain deal, this will make them pre-disposed to do well. If your commission plan is an intricate, esoteric set of formulas requiring an advanced degree in pure maths to fathom, then you’re going to engender confusion and distrust.

Does your commission plan give your sales people a fair chance of achieving target? If the targets are reasonable and your sales people should hit them with a reasonable amount of effort and ability, that’s great. If you know they’re not achievable, then something’s wrong with either your people or – more likely – your business model or the need for your product or service. You need to take a long hard look at the root causes of the failure.

Is your commission plan correctly aligned to the long term goals of the business? You need to make sure your salespeople are chasing the right business for your business. Sales people, quite naturally, will look for the easy wins and the path of least resistance to achieving target. Some products and services are easier to sell than others, and if your people are concentrating on those easier-to-sell items that are not in the strategic interest of your business, you’re building a rod for your back. You need to make sure that your commission plan is structured in a way that is fair to your sales people while also enabling your company to grow in a stable and sustained manner.

Commit to a fair and wise commission plan and your people and the company will commit to you.

 

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