Ashley is your business’ top salesperson. She’s only been with the company for a year, but she’s already exceeding her targets and nearing her commission cap. Suddenly, Ashley stops selling. Before you know it, her resignation letter is on your desk. What went wrong? The answer might lie in your sales compensation plan.
Great salespeople are ambitious and laser-focused on their targets. And, when their commission structure doesn’t align with their expectations and doesn’t encourage them to sell, a great salesperson will look for one that does.
So how do you create a sales compensation plan that’s transparent and lucrative for both your company and the sales team? Here are three things ways to keep your current salespeople happy and attract professionals hungry to produce profit for your business.
1. A clear sales compensation plan is critical
Does your sales compensation plan require an accountant to pore over spreadsheets to calculate your salesperson’s earnings? Do you measure performance based on unquantifiable metrics?
An open, transparent commission structure helps current employees and potential recruits understand their earning potential. Your plan should clearly indicate profitability. What is the minimum price for the widget you sell? How much does the salesperson earn if they sell your product for more?
Strive for a plan that empowers salespeople to be able to calculate their earnings on their own.
These days, it takes an average of 42 days to recruit a great salesperson, three months to onboard them so they’re sales-ready, and perhaps losing them in 18-24 months. That’s right. Even if you invest three months in onboarding someone, they might leave after 18 months. Why does this happen? It might be that you need to show them the money with a clear compensation plan.
Instead of investing in hiring, onboarding and training someone who may leave over compensation, lay out your pay structure with potential hires. Communicate with the prospect in detail before shaking hands over an employment contract.
2. Your sales compensation plan should align with your expectations
For months, your sales leadership team has prioritized client retention. Now, it’s time to hunt for new accounts. Did your sales compensation plan evolve with your new targets and expectations?
Compensation is not a marble statue. It should be fluid and reviewed frequently. If you’re growing fast, you may want to revisit your pay structure quarterly to keep your sales team engaged and focused on the current needs of the business.
Ask yourself what metric drives your organization. Is your company driven by the product or the marketing team? Is it sales-driven? When you understand what’s most important to your business, you can set performance measurements that propel your sales team forwards.
3. Accelerate your sales team
Does your sales compensation plan cap commissions? What happens when a salesperson hits or exceeds that cap? Are there generous accelerators to go beyond the quota? Chances are, the salesperson stops selling, or worse yet leaves and looks for another opportunity without a hard stop on their earning potential.
Instead of capping commissions, accelerate your sales team. Encourage your salespeople to go beyond the quota with bonuses and incentives that bring more business to you and your team. A commission cap puts a ceiling above your salespeople. An accelerant urges them to reach for the stars.
Is it time to update your sales compensation plan? At HireMeASalesPerson.com, our packages all include commission calculator samples and sales compensation plan templates that help you engage and retain great salespeople. Contact us to learn more.