May 18
The AU Entrepreneur’s Guide to Developing The Right Commission Plan For Your Remote Sales Team

The AU Entrepreneur’s Guide to Developing the Right Commission Plan For Your Remote Sales Team

Your sales department is the core of your business. Let’s face it. What company can function properly without clients and, more importantly, without sales?

Obviously, there’s a lot riding on your sales team’s ability to land clients and hit quotas. Both your operations and your opportunities to expand do rely on a healthy cash flow, after all. So, if you want to attract and retain people who can help you do that, drafting the right commissions package is key. Premium salaries are proven to boost work performance. Done right, they can even help you save money in the long run.

Yet at the same time, you also have to consider your organisation’s finances.

To help you out, here are some of the most common sales commission plans. Have a look and try to see what would work best for your company’s needs:

100% Straight Commission Plan

100_-Straight-Commission-Plan

The sky’s the limit for sales reps are under this commission package. A compensation plan that’s based solely on sales might mean there’s no fixed pay, but this also means there’s no limit to how much a sales representative can earn. Thus, these employees have more control of their time and can work more or less hours depending on how much money they want to earn.

Although it offers less income stability, this package appeals to highly competitive individuals. Aside from its inherent flexibility, it can also be the fastest way for them to achieve their financial goals.

If you run a start-up, this would be a good compensation plan to start with. Your sales reps can function as independent contractors who get paid only when they bring in revenue. Thus, you can give higher commission rates because you don’t have to pay them a base salary.

Base Salary Plus Commission

Base-Salary-Plus-Commission

Since closing a sale is always tricky and can often depend on luck, many agents still prefer some form of fixed monthly compensation.The best sales reps are more inclined to stay with companies that provide them with a measure of security as well as further opportunities for them to grow. Providing a base salary, along with a commission for every sale closed, can address this preference.

This way, your sales agents are motivated to close as many customers as possible, while still having a safety net for unforeseen circumstances.

If you’re worried about them getting complacent, conduct periodic evaluations to ensure that they’re still meeting their quotas at least.

Tiered Commissions

Tiered-Commissions

This is another easy way to reward and recognize your top sales agents. Tiered commissions encourage your reps to hit certain numbers to get higher commissions.

For example, you can set a 5% commission for sales worth $20,000. You can then increase the commission percentage for say, the next $10,000 in sales as you go higher up the tiers. Thus, the more deals your sales reps close, the more they can earn.

Revenue Commission

Revenue-Commission

You can also base your reps’ commissions on your company’s revenue. The revenue commission model is especially popular in companies that sell products with set price points.

For example, if your company sells a certain product line, you can give a 10% commission to sales reps who sell $1,000 worth of such. As with tiered commissions, this compensation plan is easy to understand but it effectively incentivises your team to perform better to raise their income.

Gross Margin Compensation Model

Black computer keyboard close-up. Bank, finance concept

There’s more to your business’ numbers than its gross revenue. There are still the outstanding liabilities, operating costs, and other miscellaneous expenses. This is where this compensation model comes in.

Instead of paying your sales reps based on gross revenue figures, you can use the gross margin commission model. For example, if you have a revenue of $1000 and $500 worth of expenses, you can pay your agents a percentage from the remaining $500 profit.

This is perfect if you’re concerned about sales agents who rely heavily on discounts to close a sale. Since frequent and big discounts will affect their earnings, they will have to think of better strategies to close a deal.

Clearly, there are a lot of commission-based compensation plans to choose from. However, it’s still up to you to determine which one would suit your sales team best.

If you’re still lost, it helps to avail of assistance and counsel from trusted industry partners.

Fortunately, Remote Staff has been assisting your fellow AU entrepreneurs with not just recruiting the best remote sales representatives in the Philippines, but also with developing the right compensation plans for retaining them for the past 13 years. With our considerable knowledge and experience, we can definitely help you come up with the best plan for you and your remote sales team.

Give us a call or schedule a call back to know more.

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About The Author

Serena has been working remotely and writing content for the better part of the last decade. To date, she's written for Pepper.ph and Mabuhay Magazine, among others, and has churned out more than a thousand articles on everything from The Basics of Stock Market Investing to How to Make Milk Tea-Flavored Taho at home. Hermits, aspiring hermits, and non-hermits with interesting project propositions may email her at serena.estrella10@gmail.com.

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