Apple Affiliate Program Offers Commission for Store Sales (Slides)
Why Do You Need a Sales Commission Scheme?
description
Transcript of Why Do You Need a Sales Commission Scheme?
![Page 1: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/1.jpg)
The underlying assumption is that rewarding salespeople financially for performance will encourage them to work
harder and sell more in pursuit of those rewards. This view is not borne out by academic research but in practice sales
commission schemes are almost universally used. A carefully-designed commission scheme when
implemented on top of good management practices and a solid sales process is a useful management tool - but it is
not a substitute for these things.
![Page 2: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/2.jpg)
How to design a sales commission scheme
![Page 3: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/3.jpg)
Commission schemes are usually implemented at individual level
![Page 4: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/4.jpg)
Ensure that the rewards incentivise the behaviour you want. You may want different behaviours from an account
manager and a sales representative
![Page 5: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/5.jpg)
Think carefully about the balance between basic salary and commission. The two combined form the OTE (on-
target earnings) and the balance will have a strong impact on the motivation and behaviour of the salesperson:
![Page 6: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/6.jpg)
The lower the proportion of basic salary the higher the OTE, since you are transferring risk to the salesperson
![Page 7: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/7.jpg)
A high basic may mean that salespeople do not need any sales to achieve their minimum acceptable income
![Page 8: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/8.jpg)
A low basic may result in aggressive sales behaviours or high staff turnoverDecide whether the scheme should be
based on sales revenue or gross margin:
![Page 9: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/9.jpg)
Revenue is relatively easy to measure but may result in unwanted price discounting
![Page 10: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/10.jpg)
Gross margin supports prices but is more difficult to measure and can be open to manipulationImplement
appropriate controls on the sales process:
![Page 11: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/11.jpg)
A pricing model or pricelist
![Page 12: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/12.jpg)
Sign-offs
![Page 13: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/13.jpg)
Commission payments only after contracts are signedUnderstand that every commission scheme will
have unwanted side-effects:
![Page 14: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/14.jpg)
If a salesperson feels they are not going to achieve targets they will hold back new opportunities to the next year
![Page 15: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/15.jpg)
Individual targets will prevent salespeople working as a team or spending time on anything that does not
contribute to the current target
![Page 16: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/16.jpg)
Salespeople will go after the easiest opportunities, which might not be the ones that matter most strategicallyCheck that you can afford all possible outcomes and that better performance against the commission scheme results in
improved net margins for the business under all circumstancesMake sure that commission targets in total exceed the sales income budget - assume a conservative proportion of target sales will actually be achievedThe overall commission scheme rules should be published
annually and each salesperson should have a written copy of their own targets and rewards, signed by them and
their managerReview performance with each salesperson monthly
![Page 17: Why Do You Need a Sales Commission Scheme?](https://reader036.fdocuments.us/reader036/viewer/2022082702/55625c6dd8b42aed7d8b46d9/html5/thumbnails/17.jpg)
http://wealth4allteam.com/?spon=3373/