Sales Remuneration Schemes

Most people in their careers leave education start work on a low salary and then build this up continually throughout their career as they progress.  Salary equates directly to status level.

In sales there can be many more parts to a remuneration.  Different elements motivate and reward in different ways. This article is to give you some idea of the challenges in getting it right before you recruit.

A salesperson’s pay is made up of basic, commission and incentives. There are schemes mixing these in all possible combinations.    They are all appropriate in different circumstances, companies and cultures.  Few employers really understand the psychology of selling and how to design a remuneration scheme for their goals.

Unlike many other types of employees the results of salespeople are very clear and transparent.

Avoid Offering a Basic Salary.
Most companies make the mistake of competing for the best sales staff by offering higher basics.  Logical, as that is how they compete for better technical staff.  This does not work in sales.  In sales a basic is for serving time, it has no relationship to results. And time served is harder to measure remote. Sales people always perform better under pressure.  Good salespeople know that it is all about results and that high income for them comes from taking more pressure.  Good salespeople are also more motivated by the money they can earn by returning results, than the illusionary security level provided by a basic. The average will always want pressure off and focus on the basic alone. Especially remote based salespeople need more pressure.

So, we recommend have an entirely results based remuneration scheme.  This should be a lot more though than ‘commission only’. We typically construct schemes with 3 to 5 elements of remuneration of which commission is just one. Results does not just mean sales. So, you can reward appointments made, deals closed and other easily measurable results. You can add fast track bonuses to inspire urgency from the start. Front loaded commission can help cash flow of a new sales associate in the first quarter. Longer term residual payments are very popular and lock in your best people.

Never try to sell a self-employed sales opportunity to someone who really is a ‘Basic Seeker’. You are selling to the wrong type of person. The more entrepreneur, independent types that you want are more interested in the prospect of high income and residuals. They will always be more confident, self-disciplined, experienced, and motivated.

Salespeople have their emotions go up and down each and every day.  They need managing.  On the low’s confidence needs to be built, on the high’s momentum needs to be maintained. This is why managing salespeople is so challenging. When they are remote you will have less ability to see the ‘lulls in activity’ immediately and this makes it more demanding to get right.

Part of the solution is regular incentive breaks, all related to performance.  This can range from a prize for being top performer in the week.  To a weekend in Marbella for exceeding quarterly sales target. We prefer the latter as it gets them together and all sorts of positive benefits can happen.

This all needs to be managed alongside other staff who are not so incentivised.

You should by now realise that you can’t get sales going by offering a competitive basic and just waiting for it to happen.  Neither can you just recruit remote salespeople and leave them to deliver.

Hire Slow Fire Fast.

Whatever your remuneration scheme it has to return a profit quickly. This is because the money you previously might have spend on offices and basics should go into Marketing and Lead Generation.
Be very choosy who you recruit and have a rigorous selection process. This will actually set up your job as elite and attract better quality people.  It is so expensive to recruit, train, manage and then for new staff to produce no, or below breakeven results.  When performance is not happening do not hesitate on getting rid of someone.  They will demotivate others and cost you a lot of money.  Three months absolute maximum, usually one month.

Every Manager I have even met will absolutely hate having to let someone go. It is not a pleasant task.  The problem is most procrastinate the decision rather than facing it. This leaves ongoing losses and disrespect in management from other sales staff and a negative sales environment which clearly tolerates low behaviour.  You need an elite team in sales, good ones will want to be part of an elite and will leave if you tolerate below standard performance.

 Alex McMillan (44) 07525916574