Uncapped commission — or the potential for unlimited earnings — motivates salespeople every day. As long as a rep continues selling, they continue collecting commissions. It adds up to success for both salespeople and sales organizations.
While commissioning rules and variables differ with every company, uncapped commissions offer a powerful tool to employers. It does a lot of heavy lifting by not only attracting talent but increasing morale and reducing turnover.
Uncapped commission as part of an overall sales compensation program gives employees the motivation to keep reaching for those sales.
In our fifteen years working with commission plans, we’ve worked with a number of organizations that pay uncapped commissions. We know companies have a variety of reasons for implementing it — or not.
If you’re considering uncapped commissions for your salesforce but need more information, read on!
What Is Uncapped Commission?
Occasionally companies cap the amount of commission that salespeople can earn. They do this as a cautionary financial measure. Basically, organizations concerned about investing too much into commissions put a limit on what they’ll have to payout. Admittedly this method provides a bit more certainty in operational costs. However, capping commission also caps a salesperson’s capability. It may also result in a lull in sales once employees reach that commission cap.
Instead, businesses willing to take a little risk increase their potential to earn revenue. They understand that as long as salespeople earn a commission, the company as a whole is earning revenue. So why cap that?
Uncapped commission means sales reps earn as much commission as they can. If they surpass quotas and accelerators, they keep taking home additional commission on each new sale.
Why Offer Uncapped Commission?
Implementing uncapped commission persuades already successful salespeople to keep selling. It’s a carrot that never stops working so you’ll have a driven team moving toward success at all times. A workforce constantly focused on selling only means the organization earns more revenue. Additionally, it acts as a huge draw for new talent looking to earn more money.
Of course, if your salesforce continually blows past quotas and keeps selling, it may be worth reevaluating quotas. However, it’s rarely a bad thing to have more sales than you planned for.
How to Implement Uncapped Commission
When incorporating uncapped commission into a sales compensation plan or structure, project every possibility. With an unlimited variable, you’ll need to be fully aware of your salespeople’s full unleashed potential. Use that calculation to determine the absolute max earning for each employee. This goes beyond OTE to the top potential of your team.
With that information on hand, you can build out a plan, including rates, splits, and other elements, that works for your organization. It’s worth considering adding accelerators to your structure if you really want to spark sales. On the other hand, decelerators may keep lower performers above a certain threshold at least.