Town Hall Overview:
In the world of sales, one important aspect of compensation is commissions. When it comes to sales professional commissions, finding the right balance between activity and results is crucial for success. In this blog post, we will dive into the topic of sales professional commissions and explore different models, how to structure them, and the impact of recent employment issues on these models.
Sales Professional Commissions: Finding the Right Balance
Paying commissions to sales teams can be a great way to motivate and reward them for their efforts. However, it is essential to structure commissions around a balance of activity and results. Randy Van Straten, a board member president, believes that a balance of both is crucial for achieving optimal outcomes.
Structuring Commissions: Models and Percentages
One common approach to structuring sales professional commissions is to split them between activity-based and result-based percentages. For example, Randy suggests a balance of 50% activity and 50% results or a split of 25% activity and 75% results. This ensures that sales professionals are not solely focused on activity without producing desired results.
Adapting to Recent Employment Issues
In recent times, finding quality sales professionals has become a challenge for many businesses. To address this, some companies consider raising the base salary to attract talented individuals. However, it is important to strike a balance and offer additional incentives in the form of commissions. Randy suggests an additional 10-30% commission based on the salary to make the compensation package more appealing.
Differentiating between Growth and Account Management
Randy explains that sales teams can be divided into two categories: those focused on growth (hunting) and those focused on account management (farming). Each category may require a different commission structure. For growth-oriented roles, activity-based commissions can be tied to setting up key meetings and driving new business. Whereas, account managers can be incentivized based on their success in retaining and growing existing accounts.
Measuring and Tracking Results
To ensure the effectiveness of sales professional commissions, it is crucial to accurately measure and track results. Randy suggests identifying specific metrics such as new business, client billing systems, and client services to associate them with individual activities. This way, the sales team can directly see the impact of their efforts on achieving results and align their activities accordingly.
Adjusting Commissions for External Factors
External factors, such as changes in the market or the loss of a major client, can impact sales performance. It is important for businesses to remain flexible and make adjustments when necessary. Randy advises working closely with sales team members to set goals, account for external changes, and provide the necessary support and tools to meet those goals.
The Role of Account Executives
Once a sale is closed, the responsibility of managing the account often passes to account executives. Commissions for account executives can be tied to the total billings of the accounts they manage. This incentivizes them to keep the business, provide excellent service, and actively seek opportunities to grow their portfolio. The satisfaction of customers should also be considered to strike a balance between productivity and customer service.
Co-Designing Solutions and Partnering with Brokers
Another crucial aspect of successful sales processes is co-designing solutions with clients. This involves listening to their needs and ensuring that the proposed solutions align with their goals. Partnering with brokers can also be beneficial as they can serve as lead salespersons, facilitating and strengthening relationships with clients.
Sales professional commissions play a vital role in motivating sales teams and driving business growth. Finding the right balance between activity and results is critical when structuring commissions. By considering the unique needs of their business and industry, companies can design effective commission structures that incentivize sales professionals to achieve optimal outcomes. With a combination of accurate tracking, flexible adjustments, and co-designing solutions, businesses can create a winning sales compensation strategy that benefits both the sales team and the company as a whole.
Slides:
Sales Professional Commissions
Additional Resources:
Sales Professional Prototype Schedule
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