Setting effective sales incentives and pay structures that motivate your sales reps can make the difference between hitting or missing your targets. This article is what I would have wanted to know when I first started building Enplug’s sales team. After a few years of experience, these are our hard-earned tips and incentives for bringing out the best performance from your sales force.
- Goal and Stretch Goal
Set a goal and a stretch goal. Even after your team hits the goal, the stretch goal will keep the momentum going. Our stretch goal is 20% above our goal. Celebrate with the entire team after you reach your stretch goal!
- Commission Tiers
We use accelerated commission tiers: the higher the sales, the higher the commission percentage. This encourages sales reps to always strive to bring in one more customer towards the end of the quota period and not save the deal for the next quota period.
- Team Rewards
Set aside a percent of new revenue each quarter towards a reward that the entire team gets to vote on. From new company swag, restaurant outing, or new furniture, incentivize your whole organization to root for and support your sales team.
- Publicly Display the Numbers
Out of sight, out of mind. So to keep sales numbers at the top of mind, place sales dashboards on TV monitors around the office. Companies like Autodesk and Zillow connect Enplug’s digital signage media player to their TVs to easily show sales dashboards. Featuring each sales rep’ progress invites your non-sales teammates to congratulate sales reps that are doing well or share words of encouragement to those who are falling behind.
One of our dashboards in Enplug’s office. Turn your TV into a sales dashboard with our mini device.
Build in bonuses attached to specific results. For example, we prefer customers to pay for a year upfront. We give our sales people a cash bonus for every annual upfront deal they bring in. We also give quarterly bonuses to reward sales reps who have exceptional performance for consecutive months.
- Pay What the Customer Pays
To discourage use of discounts, our sales reps’ commission is based on what the customer actually pays. If our sales rep gives a customer a free month of service, the sales rep won’t receive commission for the free month. If a customer cancels after three months, the sales rep only receives three months of commission for that sale. As a result, our sales reps never oversell because their commission is also tied to how long the customer continues paying.
- Pay After the Customer Pays
One of the most important lessons we learned in sales incentives is to pay a sales rep’s commission after the customer has paid. This ensures that sales reps aren’t pressuring customers to sign a contract that the customer never intends to pay. If a customer pays monthly for their software subscription, the sales rep is paid monthly commission on that sale. A major benefit of this practice is that it keeps your company’s cash flow healthier.
- Commission Timeline
Our sales reps receive commission on the customer’s first year payments. The only way to continue receiving commission for that customer beyond the first year is if the customer upgrades to a higher paying tier. If the customer upgrades, the sales rep will receive commission on the additional revenue from the customer for 12 months. We like to align our sales reps with our customers as closely as possible. When the customer is happy and continues upgrading their subscription, the sales rep is rewarded.
- Pay Transparency
Finally, make sure your commission and bonus structure is understandable and transparent. Our sales reps can view exactly how their monthly commissions are calculated and they’re able to view others’ commissions as well. Plus, reps find it incentivizing to see how the highest performing sales rep reached their large commission checks. Seeing all the deals and how it’s calculated makes it real and demonstrates that it’s achievable. This transparent system promotes trust and fairness in your organization and lets your sales team know that you believe in merit-based rewards.
Have questions about any of these sales incentives? Let me know in the comments below. Share your sales incentives and we’ll include it in this article and credit you!
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