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Sales Compensations


An effective sales team is always highly motivated. Most important way of motivating your sales team is through their compensation plan.
This is also one of the most important aspects of the sales strategy that can have a big impact on the morale of your sales team and also to the sales they clock-in.
We need to consider different aspects before deciding on the compensation plans.
·         Competitive landscape and the compensation offered by competitors
·         Position of your product on the product lifecycle on the BCG matrix
·         Profitability of your product
·         Sales cycle time for your product
·         Complexity of the sale involved
·         Is your product/service a commodity or is it customized solution
·         Is it a one-off decision for your customers to buy your product or are they looking for a long term relationship
·         How critical is your product/service for your customers
·         Does your team sells products or solves customer problems
A good compensation plan needs to consider most of these aspects. These can also help you decide how often (frequency of payment – monthly, quarterly or annual) should you incentivize your team.
Components of the compensation plan:
Ideally a compensation plan should include the following components:
  1. Fixed pay:
  2. Variable pay (paid monthly, quarterly or annually)
  3. Training budget
Training budget is an important aspect which a lot of organizations forget to include as part of the total compensation package. Understanding the training requirements for your sales team and helping them improve their skills via thoughtful training will go a long way in keeping the sales team motivated and committed to the organization.
Having an optimal compensation plan is key to have a successful, happy, motivated sales team.
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