Sales compensation can be incredibly complex, and the terminology used is critical when it comes to sharing information, expectations, and creating cohesion among your sales team.
A sales commission glossary allows all sales representatives to speak the same language and ensures that everyone is always on the same page. It should be tailored for you and your team.
Terms to help you to get your sales commission glossary started
Commission:
To start, what even is a commission? Successes and failures of a sales team can stem from how a commission plan is defined. A commission, broadly speaking, is any additional compensation beyond usual salary based upon performance. There are many types of commission plans!
Single Measure Commission Plan:
These types of commission plans are determined by a singular measure that defines the achievement of a sales target.
Multiple Measure Commission Plan:
A multiple measure plan is employed when more considerations are needed beyond a single measure plan. These may change depending on the type of product, customer, or other considerations.
Sales Target:
A sales target is an individual’s or departmental goal and is measured in terms of revenue or units/services sold within a certain time frame.
Achievement:
Achievement is the measure of performance against a defined sales target. This is expressed as a percentage. For example, if a sales member sells $75,000 of her $90,000 quota, her achievement is 83%.
SMART:
A team members’ sales target and commission plan must be SMART or specific, measurable, attainable, realistic, and timely. Make sure that expectations are clear and well-defined.
ABC:
“Always be closing” is a term used to promote the idea that any action of a sales team member should be leading toward the closure of a deal. Always lead with the end in mind, and the end is the successful closure of a sale.
Accelerator:
Accelerators are used to reward behaviors above and beyond a quota or sales target. These typically kick in once a sales member has met his or her quota. For example, if a sales team member meets her $100,000 quota to earn her $10,000 commission, her baseline 10% commission rate might increase to 12% as further incentive.
Decelerator:
A decelerator is the opposite of an accelerator. These include reduced commission rates before a quota is met. For example, if a sales team member falls short of her $100,000 quota, her usual 10% commission rate may be lowered to 8% to penalize below average performance. This is used as a motivator for team members, but must be used with caution.
Commission Tracking Software:
These software tools allow sales teams to calculate and track commission plans for every team member. This automated process reduces common errors related to spreadsheet tracking and allows your team to track commissions in real-time.
Blitz is one of the best sales commission plan tracking software on the market. We’ll help you create your own sales commission glossary and apply these terms to your team! Contact us now or visit our website to chat with one of our representatives for more information. https://www.blitzrocks.com/
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