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How to Effectively Communicate the Sales Commission Plan

By November 11, 2020 No Comments

A number of variables, conditions, rules, and calculations get packed into a single sales commission plan. While it’s always best to keep it as simple as possible, the structure of the plan, number of variables involved, key performance indicators requested by management as well as several other factors can increase the complexity of the plan. But the most important part of this plan is ensuring that your team fully understands how and when they earn commissions.

Manager speaks to group of seated people about sales commission plan.

Avoid high turnover on your sales team by clearly communicating the sales commission plan.

No matter how complex or simple your plan may be, it’s important to lay out every single detail for new employees, existing sales team members, and even the veterans who need a refresher.

Why?

When it comes to getting paid, employees want security. Without that, they experience frustration, morale drops, and your commission manager may have to deal with more disputes. Your organization may also undergo turnover, forcing your team to invest more resources and money into increased recruitment efforts. The easiest way to avoid this is to provide a clear course to getting paid.

For those working on commissions, this means laying out how an individual earns commissions, the calculations involved, and the milestones one’s expected to meet. Basically, your employees need to fully understand what you want them to do to earn at their highest potential. If they don’t get it, they won’t do it, and revenue will not increase.

So what’s the best way to do this? We’ve laid out a few steps to take below.

How to Communicate?

  • Employment Contract: To ensure that an employee not only understands the sales commission plan but agrees to the conditions, detail out the requirements and potential earnings. Presenting all qualifications needed to take home their full commission on hiring will set your new team member up for success and provide them a clear path toward getting paid.
  • Information Sheet: Especially if the commission plan incorporates a number of complex rules, it’s beneficial to provide materials to your sales team. But even a simple plan can benefit from an informational sheet that salespeople can reference whenever they like.
  • Payout Table: Mapping out what a sales rep can earn if they hit target while also specifying how commissions payout both below and above target will be a useful tool. Incorporate this into the information sheet or any other reference materials provided to the sales team.
  • Present at Sales Meetings: Sneak in mentions of what the sales team needs to achieve, in a general sense, in order to earn commissions while at group meetings. At individual meetings, managers can get more specific about what a sales rep needs to do to hit targets. The occasional reminder will keep momentum going among your team.
  • Access to Sales Web Portal: When you subscribe to the Enterprise or Managed Services plans with Core Commissions, your sales team gets access to a web portal where they can dynamically access dashboards, reports, and analytics to review their progress, quotas, and any other sales commission plan details that apply to them. It will not only enlighten them to what is expected of them but it will allow them to stay on top of their earnings.
Woman in business meeting raises hand to ask question about the sales commission plan.

Important Elements to Understand

  • How to earn commission: The first question any sales rep needs answered is “how do I earn my commission?” Be prepared to answer that question thoroughly but also with understandable steps.
  • When commissions are distributed: Be clear about when a sales rep earns their commission. If commission is not earned immediately upon a sale, map out the timeline for earnings. Perhaps a commission is earned on each monthly payment for a set period of time or the commission is earned upon completion of the sale. Make the schedule known and available to your team at all times.
  • If and how the commission rate changes: Commission rates often adjust depending on how much of a quota a sales rep meets or the time of year that the sales rep closes a deal. If the rate decreases or increases at any point or for any reason, define that clearly and deliver the information to your salespeople regularly.

We can help you manage your sales commission plan and free up the resources you need to prepare and distribute the information your team needs to be successful. Drop us a line or set up a free demo and we’ll walk you through what we can do for you and your sales team.

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