Being cheap with your sales team is a big mistake. Controlling every element of the commission plan in order to manage how much the sales team makes is the wrong way to get results. If you’re thinking is around the idea the sales person “could” make too much money, you’re doing it wrong. Don’t focus on how much you are “giving” away, but rather how much you are going to make.
The best commission plans are motivating. They motivate the sales team to push themselves and to try that much harder. If a commission plan isn’t motivating, it’s the wrong commission plan. Commission plans need to be simple and easy to understand. And they need to be lucrative in relation to a sales persons efforts. I’ve seen organizations where the sales people were paid 150K while generating 15 million in revenue. It was a problem. Management didn’t think the sales people should make more than that. The sales team felt they were being taken advantage of and weren’t valued. I side with the sales team on this one. Fifteen million dollars is a lot of revenue for one person to manage. Paying 1% is embarrassing. (it wasn’t a low margin product/solution) I see this too often. Leadership is too focused on how much sales is making, rather than the impact sales is making on revenue.
Pay your sales people in relationship to their impact on the company. Don’t focus on the dollar amount. Create accelerators that pay even more when they exceed their numbers. Remember, it’s gravy after that. Being cheap with sales people only hurts you in the end. It’s demotivating. It creates bitterness. It increases turnover. It undermines moral. In the end, being cheap will cost you more anyway. It’s just harder to see.
If sales isn’t making the number, they shouldn’t get squat. If they are making the number pay them and pay them well. Don’t focus on whether or not they are making too much. There is no such thing in sales as too much. If you’re making money, so should the sales team. Don’t be cheap.
- Hiring first sales staff: Dont try to grow on the cheap (theglobeandmail.com)
- Looking to Motivate Your Sales Force? Get the Rewards Right (brighthub.com)