Every company uses different sales compensation structures to incentivize their sales team, and it is no secret that traditional compensation methods have been getting some scrutiny. They often neglect to take into account more holistic factors such as overall employee success and company culture. The situation is exacerbated further by a continually changing and more integrated economy. Research shows that salespeople are most motivated by their ability to affect change and influence others. These sales compensation structures create an environment in which only the top few performers tend to get rewarded adequately.
The following nontraditional sales compensation methods take into account more than just numbers and will ultimately benefit your sales reps with a better quality of life and productivity.
1. Compensation Plans That Are Not Specific to the Product
The most common type of sales compensation plans is specific to the product being sold. It is fairly easy to have a high level of performance if the product in question is a slow seller and is not on the critical path of your business. Offering incentives for selling different products can encourage innovative thinking and increase overall sales volume. It is also important to recognize that the sales cycle for different products can vary significantly.
2. Seller Paid Incentives
There are instances in which a seller may have more control over the sales process than others. In such cases, offering seller paid incentives that are in their best interest can eliminate conflict and encourage collaboration and input from sellers. The incentivization does not only have to be monetary, but can also take on the form of better working conditions, stock options and free time for sellers to get creative with their approach towards customers.
3. Commission Equivalent Profit Sharing
It makes sense to reward sellers for the profit they drive. This can be done by offering commission software for finance equivalent to profit sharing structures in which the seller earns a certain amount of commission on their own and generates more income for the company. This structure can be used for more seasoned sellers who have better understanding of the sales process and have a greater ability to affect change in order to improve sales volume.
4. Quarterly Sales Volume Bonus Structure
It can be difficult to estimate the sales cycle for different products, so a quarterly sales volume bonus structure is more effective in this case. It rewards sellers based on their performance as well as the end results of their efforts, which is more motivating than individualized variable compensation plans. The bonus must be tied to a budget that includes more than just the number of dollars generated from the sale. It must also include long term financial indicators such as revenue and profits.
5. Team Sales Incentives
The sales team at a company can be treated as a single unit and rewarded accordingly. A team structure can help improve the overall atmosphere and morale of the workforce. It also improves employee productivity, which ultimately affects product quality, innovation and sales growth rates. Motivated employees often encourage their friends and colleagues to join the company, which leads to higher visibility and greater brand value.
6. Sales Leader Bonus Structure
Sales leaders should be compensated based on the number of players they have recruiting for the team. The players are then compensated based on their performance and the number of commission clawback in a given month or quarter. This structure is more complicated than other sales compensation structures and requires some flexibility from everyone involved. It also requires a good understanding of how to increase productivity from your sellers, how to make sure that you are compensating them equitably and how to motivate your sellers to do better as a team.
ElevateHQ is an online sales performance management platform that aims to help businesses increase productivity and efficiency. Our software is ideal for sales and marketing teams. We help organizations meet their revenue goals by ensuring that their sales representatives are properly incentivized and able to track the progress of their personal goals.