Sales commission models are notoriously complicated, but creating a transparent commission structure can increase sales team motivation and make sales performance more effective and efficient. There are four critical commission management areas to consider when adopting a new commission model — each with its own set of questions to answer to set your sales team up for maximum success.
Sales commission models
Choosing the right commission model takes careful consideration. Each model comes with its own benefits and supports different company and sales team goals. Consider these examples:
- Tiered commission models incentivize sales reps to continue closing deals, upselling and cross-selling current accounts, and increasing the size of their average ticket to increase their commission tier. This model works well for companies seeking growth by closing larger deals.
- Residual commission models continue rewarding employees with commission payments for as long as their accounts continue to create revenue. This model is particularly effective for companies seeking high-revenue sales via long-term client relationships.
Another consideration is how difficult your sales commission structure will be to track. Many companies, in hopes of motivating employees while maximizing sales deliverables, create complicated commission structures, but manually tracking any commission structure can be difficult, and their complexity often ends up discouraging sales reps. To increase sales team motivation, provide transparent commission modeling and tracking.
As you reconsider commission structure and management, the most critical planning questions fall under four categories: design, management, deployment, and governance.
Design questions
- Are all sales compensation components aligned with your overall business objectives?
- Is your commission design optimized to help your sales team achieve its current goals?
- Has company leadership identified and approved the key changes necessary to your new plan?
- Does your design support sales team understanding of company objectives and success drivers?
- Will your commission be based on performance or activity?
Management questions
- How flexible is your preferred commission model?
- Can you easily adjust or change models, add motivators, or personalize incentives?
- Is there an appropriate balance of base pay and commission?
- Does your team understand how and when they will get paid?
Deployment questions
- Are you ready to communicate plan updates, adjustments, and approvals promptly and effectively?
- Does your new plan seamlessly integrate with your daily sales and operations tasks?
- Can all stakeholders easily access and monitor relevant plan details and reports?
- Do you have a commission management solution in place to track sales and commission data?
Governance questions
- Do you have controls to validate the accuracy of commission calculation formulas?
- Are your commission management and payment policies clear, accessible, and transparent?
- Is it easy for sales reps and other stakeholders to track sales transaction activity?
- Do you have data visibility to measure the efficacy and efficiency of your commission model over time?
Simplifying commission management
While proper planning is crucial for commission success, modern sales management teams also need modern implementation solutions. Cloud-based commission management software allows your team to effectively manage commissions, motivate sales reps, and support sales team success.
A comprehensive commission management solution provides a host of benefits for commission plan management, deployment, and governance. Benefits include:
- Automatic commission tracking and processing
- Increased flexibility with easy commission plan adjustments
- Enhanced visibility for monitoring commission and objective alignment over time
- Elimination of manual processes for improved accuracy and efficiency
- Simple calculation validation, custom reporting, and predictive modeling
- Increased data trust with transparency for all stakeholders
Achieve business goals with a comprehensive commission management solution that makes it easy to implement and adjust your new commission plan, motivate your sales reps, and boost sales team productivity.
Keep your sales team motivated and engaged with a comprehensive commission management solution designed to grow with your business. Schedule your demo today at SalesVista.com.
