Commission-based sales models have been standard business practice for many decades, but do they still make sense in a post-pandemic world? Are they still functional and practical when the company has adapted to changing sales patterns, problems with supply chains, and more and more employees working part or even full time from home?
Historically, there are many advantages to commission-based sales models. They can be a motivator for salespeople since they are based on the value of sales achieved and can form all or part of a pay package.
When used judiciously, this tool can benefit not only high-achieving salespeople but the company as well. Payroll cost is related to the value of business achieved rather than just the amount of product made. It helps a business to control costs during peaks and troughs since payroll will be reduced or increased according to patterns in market trends. An attractive commission package also helps companies retain top sales talent.
1) Automate Your Commissions
When a business uses an automated commissions module, commissions are easy to calculate quickly and accurately. Quotas and compensation percentages can be programmed into an algorithm that runs automatically and can be adjusted for different salespeople, different territories, different products, etc.
If the same system that pays commissions is being used to process deal pricing, it can be used as a great motivator for salespeople. When sales reps price deals, this sort of integrated system lets them know actively what they can expect to get paid. This is why we consider SalesChain’s commissions module to be the “glue” that holds our whole business automation solution together – it motivates reps to know the system, price deals accurately, and maximize their own commission as a result.
2) Create a Focus on Revenue
Commissions programs can help managers focus sales teams to be revenue-driven rather than activity-driven. While it is certainly important for salespeople to track their activities to create a record they can reference, the company doesn’t prosper based upon the number of client interactions.
The underlying goal of the company will always be to make money – and the same is true for salespeople. Being revenue-driven means being focused on the tools that will ultimately result in a number of deals closed, not a number of activity points logged. Viable commissions packages that are deemed fair, accessible, and functional by employees are an important tool.
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3) Address Supply Chain Issues
It’s no secret: the office technology industry is among those hit hard by the present supply chain issues. Dealers who have primarily relied on hardware-based commissions are simply going to need to rethink their strategy if they want to keep their top reps.
One way to approach this crisis is to focus on renewing business, like servicing existing machinery rather than selling additional hardware.
We saw similar challenges during the pandemic where the work from home movement caused a shift to sales of A3 or otherwise smaller format printers and copiers. Always keep in mind during a crisis that businesses are meant to adapt and grow with the times. Don’t get stuck in a rut and lose your profits in the mix.
4) Be Forward-Thinking
Forward-thinking companies will realize that even though commissions-based sales models have inherent value in motivating employees and generating revenue for their businesses, they must re-evaluate the structure to keep them viable in current market conditions.
Since the current drawbacks are outside of your salespeople’s control, it is important to create a sales compensation plan that prevents a feeling of unfairness, fosters a sense of accomplishment, and maintains motivation through ease of use.
5) Enlist SalesChain’s Help!
SalesChain’s business automation system is the only provider with a built-in commissions module. This integration into one complete system has many benefits. Harvard Business Review (https://hbr.org/2015/04/how-to-really-motivate-salespeople) recommends designing a sales compensation plan by carefully collecting and collating sales metrics.
With SalesChain, commissions are integrated into the software, making it easy to view trends and know which products are selling and create incentive programs to reward salespeople for selling specific products. The integrated accounting approach gives increased visibility to the sales force in the form of an accessible electronic dashboard.
This accessibility allows them to see where the company is making money so that they can capitalize on best-selling products and suggest new, compatible ones to clients. SalesChain software allows you to use commissions to Guide your strategy, Leverage and Understand your data, and Extract meaningful results, in other words, it is the GLUE holding the entire unified business automation solution together!