According to Allied Market Research, the global solar energy market was valued at $52.5 billion in 2018. Their research projects that the market value for this industry will continue to grow by as much as 325% over the next 3 years, which is a significant increase for the sales of solar-powered systems, equipment and services.
To help drive the sale of solar-powered systems, it is standard for companies in the solar energy industry to structure employee pay around commissions. Similar to many other sales-oriented industries, sales teams are composed of different supporting roles that work collaboratively to close deals. The commission for each team member is based on what role they play in the overall sales process.
Who is paid commission?
There are three main employee types that are paid commissions in the solar sales industry. These include:
Canvassers: While not directly involved in coordinating sales or transactions, canvassers help with all of the backend work such as lead generation, customer prospecting, and scheduling appointments for sales reps.
Sales reps: Sales reps have the most customer interaction and work directly with customers to provide information, answer questions, follow-up, and eventually process sales.
Territory managers: Territory managers oversee both canvassers and sales reps within a specific customer territory. They are responsible for managing their sales teams, tracking sales performance, evaluating sales data, and motivating their team to meet goals and quotas.
As is the case with any industry, the sales compensation structure for canvassers, solar sales reps, and territory managers varies based on the market, the system, current industry standards, and many other variables. Below are some of the common ways that commissions are calculated for the employee types outlined above.
Commission Structure for Canvassers
Canvassers typically earn an hourly wage or a base salary and commissions as an additional source of income. For canvassers, commissions make up a much smaller percentage of their pay than sales reps or territory managers. They earn a flat commission for each confirmed appointment scheduled and each appointment that results in a sale. These commissions typically fall between $25-50 dollars.
Commission Structure for Solar Sales Reps
The majority of solar salespeople are paid on a straight commission pay structure without a base salary. Their commission structure can be a lot more complicated than canvassers and territory managers because their overall sales compensation is based on several different commission calculation methods. These methods include:
Overall revenue: One of the easiest ways to calculate and pay commissions to solar sales reps is a percentage of the overall price of the system contract.
Gross margin percentage: As an effort to encourage salespeople to prioritize the sale of more profitable systems, sales reps may be paid on gross margin instead of overall sales price. This also helps cushion the amount the business would pay in commissions for less gainful sales.
Base commission plus multipliers: With this method, the sales rep is paid a base commission but has the opportunity to earn additional commissions by achieving certain quotas. These additional commissions are known as multipliers and are calculated based on the percentage of the sales quota attained.
Base commission plus margin splits: These commissions are determined by sales that generate more revenue than expected. If a system sells for more than the regular listing price, a sales rep would receive their base commission plus an additional commission from the increased profit margin. This increased margin is split between the company and the sales rep.
Tiered Commission: This is a static, tiered commission rate that is determined based on the size of the system. Larger system sizes will net a larger commission amount.
Commission Structure for Territory Managers
Because territory managers are not directly involved in sales transactions, they receive a base salary and earn commissions as an additional source of income based on the performance of the employees that they support. Their commission structure includes:
Override commissions: Commissions earned based on the sales of their direct employees is referred to as an override. Managers often earn overrides as a reward for team performance.
Hierarchical rollups: When each sale is processed, the total commissions paid out is split between the manager and the sales rep. The manager’s commission is typically a smaller percentage compared to the sales rep who closed the deal.
Simplify Commission Structures for Solar Sales
In order to effectively and accurately calculate commission payments for canvassers, solar sales reps, and territory managers, you need a comprehensive software capable of managing multiple commission structures. Core Commissions’ powerful and robust software is the ideal solution for automating the management of multiple commission structures.
Additionally, Core’s application allows you to organize your employees by creating an employee hierarchical structure by role. Choose exactly what data you want to display for each role to give your employees visibility to the components that are factored into their commission pay. Plus, managers can be given access to the sales data for their direct employees, making it simple to manage the sales performance of their territory.