Everyone can benefit from a highly self-driven salesperson. It might sound a little harsh, but the bitter truth is that salespersons work for the company, so they cannot be allowed to perform like self-serving businessmen. This is the main reason behind some companies or industries favouring bonuses over commissions, as it helps in decreasing a certain type of risk. Besides the growth of an industry versus the maturity of the industry, various other parameters should be taken into consideration for determining the strategies that are best suitable for an organization. Some of these parameters are as follows −
- Competition − What do Companies do? What is the compensation plan for their salespeople? Furthermore, Companies should always try to come up with as well as implement the best package for compensation within the industry.
- Consultative Sale Versus Transactional Sale − What is the amount of influence that each person has over the actual sale versus administrative duties including maintenance of accounts? Usually, the involvement of a sales person in the actual sales process is directly proportional to the variable pay as compared to the basic salary.
- Length of the Cycle of Sales − This varies greatly from industry to industry. For example, Does their business deal with the sale of air planes or do Companies sell consumer products on a wholesale basis? In the first case, it is tough to make commission oriented incentive plans on this type of a long-term sophisticated sale dealing with hundreds of millions in different currencies.
- Type of Salesperson − The compensation plan for different people should be different in ways relying on their involvement and direct contacts to the process of selling. For example, the compensation structure of a sales coordinator should not be the same as that of an account executive,
- Length of Service − The length of service is one of the various specific parameters that relate to a single member of the team. A salesperson can enjoy a better upper handed package of compensation as a result of their years spent within the company or years spent in experience in case of a newly recruited salesperson.
- Size of Territory − There may be different packages for different geographic regions or other distributions in the territory. If the territory is bigger and offers more challenges, compensation must be provided for it.
- Account Type − A number of companies have a variety of structural set-ups. They categorize them as important accounts, so that their package for compensation will be segregated as per their importance.
- Team Salesmanship − Inspite of a team possessing a great selling environment, typically members of the team have different varieties of roles to play. Also, the part of their payments that are variable is ought to vary depending on their correlation to the actual sale.
- The Significance of Other Departments − This may have been one of the most sophisticated fields of the compensation planning for sales. The best of the business enterprises integrate compensation plans throughout the company.
If a salesperson does the same task as another salesperson with similar experience, the company should pay him/her the same as the latter. Companies would give the message out that the better performer will always have more income.
Finally, be sure of the fact that the plan remains the same for everyone. A plan that hits the right taste buds of only a specific set of people might be advantageous for some, but not for others. This would only serve its purpose partially, as the sections who don’t benefit from the incentive plan will resort to unfavourable, unethical and at times illegal practices.