8 Tips for Designing a Compensation Package for Your Sales Team

A good sales staff is indispensable, and a great compensation package will keep them around.

Question: What's one best practice you use when designing compensation packages for sales staff?

Give Yourself the Same Package

"Once one of your employees takes on an aggressive performance-based compensation model, you should too. There is no better (and cheaper) way of determining if the model works and is fair than experiencing it yourself."


Summarize the Package on a 3x5 Card

"If you can't, your package is too complicated. If you can, your sales team members will be able to quickly recall how it works. Quick recall is essential for ongoing motivation. "


Align Their Support Staff With Incentives

"With rare exception, a sales team cannot succeed by themselves. Their support staff -- designers, administrative folks and operations experts -- all need to come together to deliver a client's experience and make the sale a good one. Make sure to have your sales team share the upside with their broader team, which will help everyone sell more products."


Reverse the Curve

"Oftentimes, companies almost penalize a salesperson for more and more sales. Increase the percentage with success. I want my salespeople to be the highest paid people in our company. It's a mentality that's sometimes tough for entrepreneurs to think of -- someone other than themselves making more than they do. By reversing the curve, you also help to cover their base out of the first dollars."


Display a Leaderboard

"Displaying a leaderboard with the highest performers on the sales team -- including commissions -- creates transparency, which trumps all."


Ditch the Commission

"Although commission-based systems are common, they can actually undermine performance by making salespeople too focused on their individual numbers at the expense of the company's health and teamwork. So track the numbers, but pay your salespeople a salary based on their holistic performance in building the company."


Develop Tiered Packages That Reward Sales Often

"We make sure to establish tiered compensation packages that reward the sales staff often. This approach increases motivation and gives a continuous sense of achievement to the team members. "


Don't Pay Them

"Your sales staff is there to generate sales. They should be paying for their own job. A sales staff compensation package should consist primarily of commissions and bonuses for signups. To motivate anyone, salespeople included, you need to set goals. Make it very attractive to succeed. Make it very unattractive to not close. This process will eliminate the inefficient and reward the dedicated."


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8 Tips for Designing a Compensation Package for Your Sales Team

A good sales staff is indispensable, and a great compensation package will keep them around.

Question: What's one best practice you use when designing compensation packages for sales staff?

Give Yourself the Same Package

"Once one of your employees takes on an aggressive performance-based compensation model, you should too. There is no better (and cheaper) way of determining if the model works and is fair than experiencing it yourself."


Summarize the Package on a 3x5 Card

"If you can't, your package is too complicated. If you can, your sales team members will be able to quickly recall how it works. Quick recall is essential for ongoing motivation. "


Align Their Support Staff With Incentives

"With rare exception, a sales team cannot succeed by themselves. Their support staff -- designers, administrative folks and operations experts -- all need to come together to deliver a client's experience and make the sale a good one. Make sure to have your sales team share the upside with their broader team, which will help everyone sell more products."


Reverse the Curve

"Oftentimes, companies almost penalize a salesperson for more and more sales. Increase the percentage with success. I want my salespeople to be the highest paid people in our company. It's a mentality that's sometimes tough for entrepreneurs to think of -- someone other than themselves making more than they do. By reversing the curve, you also help to cover their base out of the first dollars."


Display a Leaderboard

"Displaying a leaderboard with the highest performers on the sales team -- including commissions -- creates transparency, which trumps all."


Ditch the Commission

"Although commission-based systems are common, they can actually undermine performance by making salespeople too focused on their individual numbers at the expense of the company's health and teamwork. So track the numbers, but pay your salespeople a salary based on their holistic performance in building the company."


Develop Tiered Packages That Reward Sales Often

"We make sure to establish tiered compensation packages that reward the sales staff often. This approach increases motivation and gives a continuous sense of achievement to the team members. "


Don't Pay Them

"Your sales staff is there to generate sales. They should be paying for their own job. A sales staff compensation package should consist primarily of commissions and bonuses for signups. To motivate anyone, salespeople included, you need to set goals. Make it very attractive to succeed. Make it very unattractive to not close. This process will eliminate the inefficient and reward the dedicated."


See Also: Simple Ways to Master the Art of Networking

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