Find out which commission plan is best for your sales team
We know that some companies implement commission plans based on performance measures, whether it’s a single approach or a multiple-measure approach. But which structure is best for you and how to make the decision about your commission plan approach? This depends primarily on your sales and marketing goals, and the accuracy and availability of your data.
Let’s start by explaining what each commission plan approach:
Single-measure commission plan approach
These plans are really forthright, easy to understand for the sales team, and easy to manage. It is best to apply this commission plan approach when you feel that just one measure defines and represents what salespeople should accomplish.
Multiple-measure commission plan approach
If one single measure can’t capture exactly what you want your sales force to accomplish, then the multiple-measure commission plan approach is your choice. If this is your case, the sales strategies and the measurability of sales performance data may vary depending on products and customer segments. The point here is to incorporate multiple measures into your incentive plan. We recommend these methodologies:
- Single measures with multiple qualifiers: yes, a single measure drives incentive payouts, but the incentives will depend on the achievement of subgoals: product goals, customer goals or activity goals. These goals are the qualifiers.
- Multiple independent measures: commissions are calculated in an independent way and based on multiple measures. This is ideal when there are many goals that your sales force should achieve but those goals should also be prioritized.
- Multiple integrated measures: this occurs when multiple measures are combined to calculate commission payout.
- Points methodology: sales reps collect and redeem points for rewards. Applying this methodology provides a mechanism for creating a common currency fort valuing diverse result measures. This also allows salespeople to have flexibility on how they earn points, and this can be a huge motivator.
So, which commission plan approach better adapts to your sales department? Whether you choose the single-measure way or the multiple-measure structure, consider a commission tracking software like Blitz to keep track of your sales data and goals your sales reps are meeting.