Sales managers are always looking for new and exciting ways to motivate their sales team and keep them hungry for success. The traditional notion that a low base salary with a high personal commission potential will keep sales professionals performing at their best is now challenged by the tendency to move towards team goals and shared commission structures.
If you’re looking to develop a winning approach for your sales team to help motivate them and to maximize their performance, read on.
The Benefits of Team Goals and Commissions
Although it may be a matter of personal preference, some inherent problems come with a small base and high personal commission structured sales team. To close as many deals as possible, sales reps will often do whatever it takes to close a deal and to meet quota. This can result in pressuring prospects to sign contracts and quickly passing off problematic leads to account managers who are left to deal with a host of issues and problems. Ultimately, the customer is quickly passed to a new person with whom they have no prior relationship or investment with, and the entire situation is not very desirable.
A shared team commission helps to combat this issue and makes sure internal teams and customers are all happy. Since multiple teams are involved in the customer life cycle, they can all share the rewards. This approach is much more harmonious, and the results can be amazing.
How to Determine the Formula
The easiest way to decide on the bonus amount for all should be based on your revenues. Instead of paying a personal sales commission on sales deals, start by creating a team-wide bonus equally between every member of the team. This includes business development reps, sales reps, account managers, support, and even developers. Anyone who is involved in the customer life cycle can be included in this.
Pick a benchmark based on your revenue goal for each month and decide on a percentage that is split equally amongst team members. For example, say your goal for the month is $100k, and you decide to pay a 20% commission on any revenue above that amount to the team. You would just divide that amount equally between the whole team.
The Benefits of Team Commissions
1) Get Everyone Growth-Focused
Shared bonus structures and team commissions help ensure that everyone on the team is rewarded for their hard work in helping to grow your revenue. This gives every team an incentive to keep adding revenue, and this is not just the sales reps who are in the trenches with customers. You will start seeing team members much more harmonious and efficient, which is a powerful thing.
2) Enhanced Team Morale
Shared team commissions help keep the entire team on the same page and working towards a common goal. This strong focus leaves little time for office politics and pretty much anything else that doesn’t add revenue to the business.
It also helps level out the playing field and makes sure that not one person is rewarded by a huge bonus, and everyone can share in the happiness of special milestones.
3) Better Customer Experience
When a salesperson is solely compensated on their personal achievements, there is little reason to ensure a smooth transition after the sale, which often leads to problems down the road.
With shared commission, each sales rep can fully commit to keeping their customers happy since this plays into their commission as well. The major benefit of this is more satisfied customers, which should be the goal of any company!
Of course, no system is perfect and even though a shared team commission comes with many benefits, it may not be the ideal solution for every team. If you decide to implement it within your team, make sure to always tweak it and make sure it’s working for everyone. There’s no problem with modifying it as your team grows or your priorities change.
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