Josh Melick is a radical thinker with a history in both math and engineering, he also has a brilliant business mind. Josh is able to use these skills together to offer excellent advice to businesses. This is exactly what Josh has done on his personal blog recently and he has published an outstanding post on how businesses can better build a sales comp plan.
The whole point of a plan like this is to drive your team towards more sales, making both you and them more money in the process. If the plan isn’t well set up however, it will not work and your employees will not be motivated at all. Here is a brief summary of the points which Josh has made regarding what your sales comp plan should look like.
Paying On Time, Every Time
One serious own goal which Josh mentions that so many companies are making is not paying their staff their commissions on time. Given the lower base salary which we give our teams, they are relying on those commissions coming in, for them to enjoy what they have earned. There is no reason that any business shouldn’t be able to pay staff what they have earned, as they earn it.
Josh talks about how it is a mistake for companies to pay their trainee employees on the same comp plan as well established workers. What should happen here is that there is an increase in the base rate and a reduction in the commission ‘floors’ which trainees have to hit to begin earning. This not only helps the trainee make a good wage, they are also going to be incentivized to work even harder once they do become fully established.
Setting a Floor
The importance of setting sensible floors which your sales reps have to hit before they kick start their commissions is another idea which Josh discusses on his blog post. This will ensure that good quality sales reps are still making the kind of money which they want, and it will help to weed out lazier reps who are happy with a lower amount of commissions. Those who don’t work hard will only be making their base rate, which wouldn’t be enough to keep them happy in the long term.
Accelerating The Pay
The best way to utilize the most talented sales reps which you have, is to create accelerators for them. Josh recommends that this is broken down into different levels to keep on motivating the sales team. As they move through different sales revenue figures, they will be able to add a couple of points onto the commission which they are earning. Naturally this will have to be well thought out in terms of how many points to add for each level, but this is certainly a great way to continuously encourage the very highest performing sales reps in the business.
Get our sales comp plan right and you can ensure that your reps are working to the maximum.