How to bring a change in your sales commission plans

How to bring a change in your sales commission plans?

Successful organizations do not stop themselves from changing their sales commission strategy. They understand the individual aspirations of different sales representatives and the challenges of diverse sales territories. A single sales commission plan may not work well across the organizations. In addition to that, it’s always recommended to try out different compensation plans and take calculated risks to understand which model is giving the best results.

If you are stuck with one sales commission process which is giving you zero results, this blog is for you. We will discuss the impact of bringing change to your sales commission plan, prerequisites of introducing new methods, useful strategies to manage different types of compensation, and how to adapt to the new ways without any hassle with compensation management tools. 

When do you need to change the sales commission?

  • The obvious answer is when your sales revenue is not hitting the target. But, that’s just the tip of the iceberg. The fundamental reason why organizations depend on sales commission is to keep their sales reps motivated. And the motivation comes from comprehensive compensation management which helps sales reps to be assured of their rewards and organizations about the commitment of their sales professionals. Win-win for both.
  • So, in order to understand the effectiveness of the sales commission, organizations should understand the motivation of their sales employees and take note of their requests. If they are not satisfied with the current sales commission pattern or feel a better plan will help them to put in more effort, organizations should consider bringing minor to major changes in sales commission planning.
  • Understanding the need of the territory is another important factor to modify sales commissions. If one sales commission has worked well in one territory, it does not mean that it will work in every market. Smart sales managers and sales leaders understand the differences and skillfully implement the right sales commission at the right place.
  • And there could be more reasons than these three. In our conversation with the sales leaders, we have encountered multiple scenarios where they seek a change in their compensation processes. From more sales, achieving the business objectives to retaining the best employees, reasons are manifold. Here is a quick checklist to help you identify your best reasons-
  1. The current plan is not lucrative enough to attract the best sales talent
  2. An ongoing sales compensation plan is not lucrative enough to retain your top salespeople
  3. The existing sales incentive plan is too complex for the sales reps to follow
  4. The plan is complex to manage, follow and modify for the organization
  5. The salespeople are being overpaid/underpaid based on the role
  6. The plan has loopholes and salespeople are making the most out of it with shadow accounting
  7. There is a dearth of real-time visibility in the current commission payments
  8. Organizations business strategy or business goals have changed

The last point is highly important as most businesses are quickly changing their strategy and becoming more aggressive to keep in pace with the evolving market. Though most organizations prefer to bring changes to their sales commission in a year, the present market can push businesses to rethink their sales commission strategy.

Prerequisites of changing a compensation structure

1) Focus on communication: If you have studied your sales commission carefully and are now determined to change your plan, make sure your salespeople are aware of the new strategy. Before making any change, inform your sales manager, reps and region leaders about the new initiative and ask for their suggestions.

When you communicate to them about the changes, focus on passing two key information-

a) why the plan is changing

b) what the key behaviors are that you want to reward moving forward

Sales commission is a key factor of sales and an organization’s growth. It’s advised to embark on this journey together. Plus, the collective and practical wisdom from the sales team can help you to create a rewarding sales compensation plan and scale commissions. 

2) Ensure synergy across your organization: Not just your salespeople, but make sure your finance team and other stakeholders are also onboard with the new commission initiatives. This is important as they are an integral part of the sales commission program and their approval and suggestion can accelerate your initiatives. Understand their challenges in implementing the new commission plan. The finance team’s role is crucial here as they release the payouts. Their confidence in your new sales commission program is mandatory to improve commission processing time. 

3) Identify potential risks and setbacks: While planning for your next sales commission program, try to visualize the forthcoming challenges. Ask your experienced sales reps about their assumption, reservation, and thoughts about the new activities. Float the idea and template in the sales team and observe the reaction. Collect the feedback to iterate and improve your sales commission plan.

4) Evaluate rigorously before rolling out the new plan: Though you have planned everything well, make sure you have a mock test of multiple scenarios that may occur while achieving the commission. If you are using sales compensation software to manage your commission program, test that too. This exercise will help you to run the sales compensation program without any glitches and avoiding all unnecessary disputes.

5) Closely track the sales process after launching your sales commission program: After launching the program make sure you monitor your sales process. If you find any disruption in the sales efforts due to the new commission program, address it immediately. You have made adjustments or changed your sales commission to uplift your company sales and not to downgrade it.

Commission tracking software removes the chances of manual error from your sales commission management. The agility and robustness of the software bring better synergy among the sales team and HR department releasing quick and accurate payouts.

What are the changes you can make in your sales commission process

Universally, there are seven to eight commission plans that organizations follow. Though they add their own tweaks and modifications to make it more interesting and applicable for salespersons. If you are changing your commission plan, be mindful of the certain pros and cons of each commission type. We always advise sales leaders and managers to talk to their sales reps to identify the exact issue. And our findings have been-

  • There are two types of sales reps. The rainmaker, the quintessential lead hunters and deal closers. They are the sales Rockstar’s and here to give you tons of business. Your task is to retain them for more growth.
  • And then there are under-performers. But you know they can shine and maybe just one sales deal away to prove themselves.

Now, for these two different categories, organizations have to be smart while creating their commission plans.

And remember, your every commission plan is carried out to boost your sales process. In your new compensation practices, try to achieve the below checklists-

  • Make sure your commission plan is aligned to the company’s growth.
  • Keep your commission plan simple and effective. It should be extraordinarily clear which outcomes you are rewarding.
  • Plan your commission in a way that it helps you to release the payouts to the sales people without any delay.
  • The sales compensation plan should reflect the type of business you’re in and the stage of business you’re at.

Your hardworking sales teams are trying their best to give you the best of revenue. The best compensation package, right combination of commission automation and commission management tools can help you to introduce flexible commissions solutions and improve employee Experience. 

Make every change hassle-free with sales commission software

Introducing a new commission plan or making sudden changes in your sales incentive compensation management can be a big headache if you are doing it on spreadsheets or traditional legacy commission management software. Automated and modern sales commission software can help you to bring new life to your commission management.

  • They are fast and robust and help you try out new sales compensation programs and innovative compensation strategies in a few minutes.
  • Managing complex compensation plans is a big challenge on spreadsheets. The sales compensation management software makes it hassle-free. 
  • It acts as a sales performance management software helping you to track and closely monitor every sales reps’ performance.
  • Sales commission software provides dedicated dashboards to both the sales reps and manager bringing transparency to the team.
  • Real-time data and insights of the compensation management solution help organizations to take better data-driven decisions and introduce flexible sales commissions. 
  • Create territories and verticals for flexible sales compensation programs along with hierarchy management.
  • Commission tracking software removes the chances of manual error from your sales commission management. The agility and robustness of the compensation software bring better synergy among the sales team and HR department releasing quick and accurate payouts.
  • Cloud-based compensation management solution helps to adapt to the business change, new processes around commissions and achieve sales goals. 

Commission management solution is helping organizations significantly improve their sales commission program. If you want to explore how it can bring a transformation to your sales efforts, reach out for a demo today.



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