Enough said! We’ve written comp. plans for hundreds if not thousands. Each will have it’s own niche and each will be customized to the client. However, the fundamentals don’t change.
Let’s first address this crazy notion of a sales person starting with 100% commission. It’s just not realistic.
If you have a salesperson that has the skills to make $100K and they are making $100K then their bills are going to be $110K. That salesperson can’t afford to leave even if your job will pay that person $125K. It’s 60-90 days to ramp up and build a pipeline. Not very many sales people have the financial capability to support themselves and their family for even 60 days with little income.
OK, let’s say you offer a draw during ramp up. That’s not 100% commission! You can call it a draw but you can’t recover it if they quit or get fired! So call it what it is – a base for ramp up.
I’m a full believer in keeping salespeople hungry with the limits based on their ability to close business. The problem is 80% of salespeople are not money motivated. If they are not money motivated the heavy commission programs don’t keep them hungry. That no longer means these intrinsically motivated salespeople are bad, it just means you have to re-think how you compensate them.
Your comp. plan must be competitive in the market in which the salesperson lives. The average salesperson in the US make $83K a year. In NYC that is peanuts and one can barely pay rent. In Podunk PA you can live like a king on $83K. The motto is hire the most expensive people you can afford!
In order to attract the salespeople with the skills to sell your stuff you must have an attractive self-eliminating and self-elevating comp plan.
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