All the basic terms you need to know to start a winning commission plan - sales commission glossary
Let’s go back to basics. The commission plan management world is extensive, and sometimes we get lost in the abundant amount of information that is out there. Don´t worry! Here’s a sales commission glossary of the basic term you should never forget:
- Accelerators: These are used to encourage growth over the year. When the sales rep achieves a certain sales level, an accelerator will kick in. The accelerator is almost always applied for performance that exceeds 100%.
- Decelerator: These are applied before certain performance levels. If a sales rep’s performance falls below a stated threshold, then a decelerator will be applied.
- Threshold: This refers to the minimum accumulated commission a sales rep earns to trigger payment from a commission plan.
- Sales target: It is a goal set for a salesperson or a sales department. It is measured in revenue or units sold for a specific period. It helps sales directors to easily measure and estimate their contribution to overall sales goal.
- Top performers: Those sales reps in your team that achieve high win rates, improve sales development processes, maintain motivation, understand and articulate value, fill the pipeline and focus on nurturing new accounts.
- Single measure commission plan: This type of commission plan is easy to understand for the sales team, and easy to manage too. It is commonly applied when just one measure defines and represents what salespeople should accomplish.
- Multiple measure commission plan: It is used when a single commission plan can’t capture exactly what you want for your salesforce. The sales strategies and the measurability of sales performance data may change depending on products and customer segments.
- Residual income: A sales commission glossary can’t leave off the insurance market. Residual income is also called passive or recurring income. It is tied to premium payments, critical for insurance companies. The insurance company receives a commission by the time of the sale, then the agent receives an additional payment every time the policy holder renews the policy.
- Upfront payment: This is the commission an agent receives at the time the policy holder signs a contract. Life insurance firms use this type of commissions very frequently.
- Commission tracking software: a tool that allows you to calculate, manage and track your sales team’s commissions accurately and reduce the errors related to manual and spreadsheet methods.
In this recapitalization of what we have presented on this blog, we can agree that technology can be our ally. Blitz is one of the best commission tracking software in the market. It can help you apply these terms in your sales commission glossary. Don’t think it twice and learn more about this amazing tool.