How to compensate sales people for extraordinary performance

Our resident sales and marketing expert Sean McPheat suggests there are ways to be more creative with sales job incentive schemes.

Sales contests and incentive programs are a natural and integral part of any sales force compensation plan. However, poorly designed sales incentive programs can cost your firm a ton of money as well as lost sales, missed opportunities and high sales employee turnover. After all, once recruited into sales roles, you want your team to stay and build long-term client relationships and maximise productivity.

While a momentary reward for a sales team member that is too small can result in lowered enthusiasm, poor self-esteem and feelings of animosity; sales jobs with rewards that are too high can cost you more than the production value as well as create an air of entitlement, resulting in counterproductive effort.

Here is a formula that will help you design a plan that will reward high sales achievers without breaking the bank.

Pay the Invisible Sales Person

This idea is extremely generic and universal; however, I think you will get the idea of the concept.

The concept is to reward the sales producer in part, for what you would have to pay an additional sales person to get that same performance. Here is an example:

Let us assume that your average sales person closes three sales a month. For this, he or she is paid a commission of an average £1,000 per sale or £3,000, in addition to salary, that for this example is £3,000.

Also, your higher level sales people average five sales per month and you pay them the same way, or £5,000 on top of the £3,000 base.

In this case, a great sales incentive and reward would be to give a sales person £1,500 (to £3,000) as a bonus to close eight sales.

The Logic

The sales person who closes 8 sales would receive his or her normal £8,000 commission, plus base. However, you received the production of what is essentially an extra sales person, without the expense. Share those savings with the sales person.

You received the sales volume of an additional sales person and saved the £3,000 salary plus fringe. Give the sales person some portion of this. Also, when a sales person reaches such a point, you have a clearly quantifiable result.

In creating the reward, consider the sales volume needed to fill the shoes of an additional sales team member, and motivate the team to produce this number without hiring a new team member.

Incentives make sales jobs attractive

There are dozens of ways you can interpret and use this formula to ensure sales people stay in their sales jobs. You could even have the sales team sell the amount that would require an additional sales team member and then reward the team that non-existent team member’s commissions.

Author Credit:

Managing Director of MTD Sales Training, Sean McPheat is regarded as a thought leader on modern day selling, management skills and business improvement. Sean has been featured on CNN, ITV, BBC, SKY, Forbes, Arena Magazine and has over 250 other media credits to his name. Sean’s Sales Blog is visited by 5,000 people every week and his 6 Sales Training Audios are free to download. Click here to follow Sean online.

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