How to Design Sales Compensation Packages that Work

When you are designing compensation packages for salespeople, you need to find a balance between base salary and incentive bonuses so you encourage high performance and reward results. It helps to check in with solution selling training professionals who have their fingers on the pulse of sales teams and know what keeps team members motivated to do their best. Years ago, one client gave the top sales person a “coveted” parking spot in the front of the building.  Alas, the sales offices where in the back, and good intentions became a running joke.

The experts recommend being absolutely clear upfront about how salespeople’s pay will be calculated and what rewards matter most. Compensation drives behavior.  So know what behavior you want from your team and make sure they know how to get the desired rewards and how to avoid failure.

Base salary should compensate each salesperson for doing their job on a daily basis. They earn their base pay by following the sales process from lead generation to closing deals steadily. Beyond that, compensate them for the revenue they bring in…for deals signed, sealed and delivered.

If you keep the calculations simple, each team member can figure out where they stand at any point in the year. The base keeps them on top of their daily activities which are crucial to successful sales. The aligned, fair, transparent and accurate rewards keep them trying harder to do the right thing. They better they perform, the more they stand to take home.