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How to choose the appropiate sales commission structure

How you pay your sales team can either overshadow or help improve their morale. However, deciding on a sales commission structure can be difficult.

There are several factors to consider before deciding on a sales commission structure, and for sales managers and directors, it is recommended to understand the differences between each type.

What is a sales commission structure?

A sales commission structure refers to how much money a salesperson earns based on their performance. Similarly, each type of sales commission structure offers different types of advantages and disadvantages depending on the type of business you run and the results you want from your sales team.

The importance of choosing the right type of sales commission structure

Choosing an appropriate sales commission structure is essential because it affects employee motivation levels as well as company performance metrics such as turnover rates and customer satisfaction scores. 

In fact, if you have more than one employee who works within the same department or with similar responsibilities then choosing a suitable model will allow everyone involved to feel compensated for their efforts without feeling left out or undervalued due to inequitable pay practices among staff members working under different conditions at different times.

A sales commission structure is how a company pays its sales representatives. The most common way is by the commission, but there are a few other types.

  • A higher base salary allows for better retention as well as lower turnover costs for the business. If you have high turnover rates, you may need to hire more employees or find new ones frequently which can cost your business more money than paying them less upfront with a higher base salary instead.
  • Higher bonuses mean more motivation for employees when they achieve goals set out by management such as monthly quotas or annual goals that have been set out in advance before any work has begun; this will also keep them motivated throughout their tenure with your company so long as those goals haven't been met yet!


Motivate your sales team with the optimal sales commission structure

As mentioned above, an effective and attractive sales commission structure is a perfect way to motivate sales teams to reach their sales goals. It also can empower your sales teams, encourage motivation, and boost sales performance. 

Considering in so many cases, the most effective structure is the one that motivates the right number of sales reps to reach their goals, you also need to know how to set up effective sales quotas.


Utilize the appropriate technology to measure the effectiveness of your commission plans

Technology can assist you in achieving your sales objectives by automating processes, measuring performance, and rewarding employees. It also enables you to maximize the effectiveness of your sales comp plans by managing them from start to finish.

Using technology can also help sales professionals improve their performance. Effective data analysis and sales enablement can provide sales professionals with better insights into deals and methods for closing them. 

With a combination of complete automation, seamless integrations with legacy systems and CRM platforms, and real-time reporting, Blitz is the automated commission management platform sales managers and directors need to eliminate the hassle of manual commission calculation. 

Want to learn more about how to build high-performing sales teams, and refine your sales strategies and commission plans? Visit our blog to get the latest insights.

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