Skip to content
All posts

6 Winning Sales Compensation Plans That Attract Sales Rock Stars

The right incentive program will improve employee performance by up to 44%. That's why it's important to consider all possible sales compensation plans. If your employees feel they are being compensated fairly for their work, they will work harder. 

Sales compensation plans outline how your sales reps will be paid. As a manager, you want to motivate your team to work efficiently. The right compensation plan will make a huge difference.  

Learn how to build a better sales team using the most desirable sales compensation plans below. 


1. Base Salary Plus Commission

A base salary plus commission program is a type of sales incentive compensation plan that is commonly used by businesses. It's attractive to your reps because it guarantees them an income regardless of the amount they sell. Plus, the fact that they can earn more with better sales means they are inclined to work that little bit harder. 

With this kind of plan, you'll receive applications from competitive salespeople who want to do their best work, so they make more money. It allows you to build a motivated team who have your business's interests in mind. 

Providing a base salary also means you can employ your sales reps to do more than just sell, like fulfilling customer service obligations. You can create a stronger team with wider and more varied skills, which will inevitably contribute to the success of your business. 


2. Salary Plan

By providing your reps with a good salary, they'll be motivated to work hard and achieve your sales goals. A salary compensation plan ensures that your reps will be paid even if they don't meet certain sales goals.

While this may seem like a counterintuitive option, it also means you don't have to pay out any huge commission. Your reps will be aware of what is expected of them in their roles and strive to meet them.

If your sales team doesn't spend every working hour selling, a salary-only compensation plan is a great choice. It means you can rely on your team to pursue other tasks you assign them, like training new employees or administrative duties. 


3. Gross Profit Margin Plans

A gross margin profit plan pays your sales reps based on company profits rather than what they sell individually. For example, an individual rep would be better off selling one $3000 product than two $1000 products. You'll see an increase in the company's profits, plus your reps earn a higher wage.

These plans work well when your company is trying to push a particular product. Your reps will naturally want to sell more of the products that make the most money. It's a great way to build your profits and keep your team highly motivated.

With this type of plan, you'll attract salespeople with marketing expertise. They'll be confident in pushing more expensive items to the customer and detailing why these particular products are the best option. 


4. Commission Based Salary

Straight commission plans are an excellent way to motivate your team to get selling. Because their salary will only come from their ability to sell, you can guarantee your reps will be incredibly hard-working. 

You'll usually pay out quite a high commission percentage on these kinds of plans. After all, your employees must be earning enough from you to make a living. However, you can rest assured that it will be worth it because your sales team will be highly motivated and skilled.

Commission-only compensation plans attract confident sellers with a lot of sales experience. Your team will know when to contact customers and what to say to ensure they buy. They'll also be well adept at building your company a loyal customer base. 


5. Base Salary and Bonus Compensation

A base salary and bonus compensation plan is somewhat similar to a salary and commission plan. The difference is that you aren't offering a commission for each sale. Instead, your reps receive a bonus on top of their salary at the end of a pre-designated period which you decide. 

A bonus compensation plan works well for businesses that can generally make strong predictions about how well their sales year will go. As a manager, this plan allows you to set aside a budget to account for what your rep's bonuses will likely be. 

Your reps will like this plan because they'll know they're getting an annual pay bump as long as they meet their targets. It's a plan that incentivizes your employees and results in a high level of motivation. 


6. Territory-Based Commission Plan

A territory-based commission plan motivates your sales reps to sell to customers in pre-defined areas. Your employees will be paid based on how much they sell within a certain territory instead of individual sales. The commission is split between all employees selling in a particular territory.

This compensation plan motivates reps to sell in large quantities so that they see the results they want when their commission is split. It's a plan that requires a lot of teamwork and can help create this kind of attitude in your sales reps. 

A territory-based compensation plan is attractive if the territory is already well established. If you're branching into a new territory, you'll want to ensure your company is well-known and offers high-quality services and products. This will help attract a strong sales force with the right motivation. 


Get More From Your Sales Compensation Plans

Sales compensation plans are powerful tools when it comes to recruiting the right people. If you can clearly show that your reps receive fair and regular payment, you'll build a team with the motivation to sell well. You'll also attract the type of employees who want your company to do well.

The compensation plan you choose to offer will depend on the kind of company you run. If sales are guaranteed, a commission-only plan is very attractive to potential reps. However, some will prioritize a definite salary over a commission. 

For further advice on building a successful sales compensation plan, contact our expert team here