In our Tales from the Sales Team series, we’ll cover actual concerns and questions from real salespeople about their paycheck and sales commission.
“When will I get paid for this sale?”
– Amy, the SaaS salesperson
This month’s hero is Amy, a salesperson getting familiar with her organization’s sales commission plan. She isn’t clear on the sales commission payout schedule though. Last cycle, she sold a subscription to a new customer but didn’t see the commission for the sale reported in her recent paycheck.
All sales organizations need to be prepared to carefully select and communicate the commission pay schedule.
After speaking with her commission manager, Amy learns that commissions are distributed upon payment. Amy’s customer will make monthly payments and she’ll get a cut every time they pay her company. Depending on the industry, this pay schedule may also be known as residual, usage, or trailing commissions.
Had Amy’s commission manager been using sales commission management software like Core Commissions, it may have been easier for Amy to determine when she would be paid. That’s because Core offers a sales portal that allows salespeople like Amy to view their pay schedules and other details. But all sales organizations need to be prepared to carefully select and communicate the commission pay schedule that works best for them.
Commission pay schedules vary by organization and industry. When any sales organization designs their sales commission plan, it needs to take into account the best rhythm for paying out commissions. There are a few popular options available.
Sales Commission Schedules
- Commission Upon Sale: Often used by companies that sell smaller items at lower prices, sales commission upon sale requires that a salesperson earns incentives for every sale they make.
- Commission Upon Each Payment: Popular among subscription-based business models, sales commission upon each payment over the course of a subscription period allows salespeople to earn a portion of their incentive with each payment made by the customer.
- Commission Upon Full Payment: This type of schedule may be incorporated for higher priced products. A payment must be completed by the customer before the salesperson can earn their full sales commission.
- A Combination of the Three: Some businesses that operate by selling a variety of product types may incorporate a combination of the three commission schedules outlined above.
When hiring new salespeople, it’s important to detail out when and how an employee can trigger a commission payout. If a salesperson does not get clear direction on when and how they will get paid, they may get frustrated and look for another opportunity. A sales team that feels secure knowing how and when they will be paid will be more likely to drive more sales and represent your business well.
If you’d like help from Core Commissions in determining how to best schedule sales commission payments, drop us a line. We can walk you through how our sales commission automation works, providing a reliable but flexible tool that simplifies the sales commission process overall.