How do you currently pay your sales team or individual sales representatives? Customarily, a sales commission structure is used. This is when a team or a person is paid in line with the commission sales they have generated. The more a sales rep or team sells the more money they receive. In certain companies, a commission plus a monthly salary structure is used. So it is imperative to make the right decision about commission payments. Here are various commission types.

Commission-only structure : – Also called a straight commission, a commission-only structure refers to when a sales representative earns just a commission. In other words, their compensation is never based on an hourly rate or a base salary. Instead, it is computed based on the quantity of goods or services they successfully sell. So, if a rep generates no sales, he or she receives no pay. This method can be a good move for a startup that lacks enough running capital. Besides, if a business employs aggressive and reliable sales people, it can attain its sales forecast with ease. If you are in the real estate sector or car industry, a straight commission can be a clever payment structure.

A combined pack: salary and commission : – This structure can be more attractive to gifted marketers than the straight commission structure. They are assured of getting a salary even when they make few or no sales at all. If you are a retailer, this approach is by far the most appropriate. As you set your commission part, ensure that it is lower than what you would pay a commission-only employee. This payment structure assures workers a stable but a smaller salary regardless of the sales generated.

Cash Bonus structure : – In this, sales representatives are salaried workers who receive a cash bonus according to the business’ preset earning quotas. Do you own a contractual service business that sells memberships? If so, you can use a bonus commission sales structure. Usually, this type of commission suits a departmental team working towards a common goal. If the goal is reached, a cash bonus is paid.

Variable sales commission : – This one is suitable when two teams of sales persons are set to attain a similar goal, but in different circumstances. For instance, a totally new sales team trying to penetrate a new market may earn a higher commission than a team that is trying to sell goods or services to an established customer base. Products that bring the business a bigger profit can result to big commissions. Items that result to smaller profit margins can lead to lower commissions.

How to successfully use commissions pay structures : – First, you should pick the right product to sell. This should be a product that your customers can find appealing in terms of features and unique benefits it offers them. In addition, the selected product should be better than that of competitors and be the kind that can be demanded the whole year. In addition to selecting the right product, you should define your target audience properly. If you expect to pay on commission, then it’s advisable to determine your target customers and let your workers know about them.

This will help them design a marketing technique that could lure most customers. Commission-based structure leaves a lot of freedom to the sales representatives. So it’s important to create a weekly schedule that all of them could follow to avoid time wastage. Each sales activity should be represented in your weekly timetable. Finally, ensure that you maintain great business money management practices to leave enough funds for marketing efforts and to assist your staff meet its commission sales target.