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What to Look For in Your Sales Compensation Plan
Jan 3, 2018 | Canadian Professional Sales Association lock

“For love or money” might accurately describe why sales people do what they do. Most sales people love the job – the highs of closing a deal, the interaction they get to have with other people, and the respect they get in the organization for having a direct impact on the bottom line. However, there’s no doubt that salespeople also love the money.

One of the benefits of working in sales is that it can be an extremely lucrative career – if you are compensated appropriately. Whether selling your product is transactional or complex, you should always ensure that your compensation structure is logical and fair. We’ve compiled a list of the aspects you should look for to ensure your compensation plan works for you.

Compensation must be tied to your KPIs

It’s a no-brainer that bonuses and commission should be linked with the key performance indicators (KPIs) that your organization measures. However, as new duties are added to the sales job description, or as company priorities shift, sales commissions can become separate from measurement. When you are evaluating a new job offer, ask what the KPIs for the role are and how they match up against the compensation structure. If you hear, for instance, that you are bonused on recurring revenue, but measured on closed deals, you should think about whether you are going to be set up for success in this role.

The commission structure should accurately reflect the impact you have on the sale

Credit should be given where credit is due, and your sales compensation structure should reflect this. If you are selling the type of product that requires little time and effort, you should expect to have lower commission and bonuses and higher base salary. Likewise, if there are several people involved in the sales process, say, a business development rep, an advisor, a solutions engineer, or others, you should expect to split the commission. When you are the primary person responsible for closing a complex sale, you should expect a high percentage of commission.

Commission and bonuses that don’t leave you high and dry

Enterprise sales are known to be feast or famine, but that doesn’t mean you should be left to starve in between deals. Even if the commission looks lucrative, bear in mind the length of the sales cycle for the product you are selling. If closing the deal takes a year or years, consider whether you will want a salary that gives you more financial security while you work toward your next deal.

You developed good negotiation skills from your experience closing sales, so use them. Ensure that your compensation plan is reasonable, and negotiate to make sure you get the best deal possible.

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