Finding The Compensation Plan For Your Team

By: Michael C. McMillanAnswer Center America, Inc.

Great Compensation Plan = Great Sales People “MAYBE!”

Draw Against CommissionAn amount of money advanced against amounts you are expected to earn in future commissions. This arrangement can be very beneficial as it helps smooth the cash flow of a person paid on commission. When commissions are earned, the amount you have drawn is deducted and you are paid the balance of the commission

•Salesperson accepts draw of $400 per week for 3 weeks before earning commission of $1500. The commission paid would be $1500 - (3 x 400) or $300, so the salesperson's benefit would equal the entire $1500

Base Plus CommissionA plan where an employee is paid a base salary plus a set commission plan for any sales that are made.

•Base Salary of $30,000.00 per year plus 5% of Monthly Revenue for 2 calendar years of contracted accounts sold after 90 days.

Great Compensation Plan = Great Sales People “Maybe”

Straight CommissionEmployee is only paid for the sales they complete and money is collected on.

•$150.00 per account closed and 7.5% of the total collected revenue on account for 3 years

Straight Commission Plus BonusThe same as Straight Commission but where a Bonus is paid for hitting predetermined goals set forth by a sales manager or board.

•$150.00 per account closed and 7.5% of the total collected revenue on account for 3 years, plus $5,000.00 for closing $30,000.00 of new revenue in one quarter.

Picking The Right Plan The First Time

What is The Big Secret for Picking The Best Commission Plan?

Look Inward On Your Teams Growth Plans

Do Your Homework For New Compensation Plans

Review All The Options With Your Sales Department

Check Your Annual Gross Profit For Percentage of Loss To Compensation

Pick the Plan That Matches Your Teams Growth Projections and Goals

Flat GrowthIf your goals or corporate plan is to only sustain your current profit margins and billable then a long term commission plan is for you.

Slow & Steady 1% - 2%1% - 2% Growth Though normally thought as flat growth is still an increase in your margin. Again to keep a great sales person on the Payroll you need to build a long term plan for your sales team.Quick Sales “Acquisition Sales”Quick Sales or Acquisition Sales are accounts that typically do not have a long life line. Because of this short term or one time commission is the best way to do this.

Breaking Records 25%+If you are looking to change the face of your company and break all the sales records you commission plan must be set-up to do the same thing. You need to have an extremely aggressive commission plan that pays large upfront and long term so you get a ton of accounts and keep them.

Pick the Plan That Matches Your Teams Growth Projections and Goals

Google, Google, Google!!!Every day there are at least 100,000 new entries on Google for business ideas and strategies from around the world. If you are looking for a new idea this is a great place to start.

Pick Up The Book!!!Yeah I know you are going to say everyone says buy the book. But, really there are tons o f great books out there on the subject that will teach you a ton on new compensation plans.

Look To The Past…History is the pathway to the future. This can not be more true than in sales. Always look to what worked in the past then make it your own.

Don’t Just Make The Decision, Discuss and Debate About It!

Initial Planning SessionHave your sales team come with their top 5 ideas

A Dose of RealityAt the Planning Session don’t let ideas that have no way of working even get past the first 5 minutes.

Budget Break DownHave your sales manager break down the top 5 of all the sales reps ideas and come up with actual numbers from the previous years sales figures.

If you do not have last years numbers call a competitor of equal size and ask for their numbers. FYI – everyone loves to brag about sales numbers. LOL!Live & Die with the Decision

Once the decision of a plan is made you must stick to it 100%.

We Are All In Business To Make Money, Right?

Quarterly Check UpAt the end of each quarter you should be checking your loss to profit to see if your plan is effective and/or costing your company to0 much money to support.

Semi - Annual ReportTwice a year you need to check your loss of profit and then compare it to your marketing costs and closing percentages. This gives you’re a true overview of your total costs.

The Annual HeadacheAnnually you need to take all of your quarterly, and semi-annual reports and then compose them into the end of year loss report for sales. This will tell you if a change in your compensation plan needs to happen or if you are set to go for another year.

Players Make Money and Bums Lose It!

YOU GET WHAT

YOU PAY FOR

AKA – Michael C. McMillanAKA – Michael C. McMillan

By: Michael C. McMillanAnswer Center America, Inc.