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Commission based pay?

Is it better to pay sales commission based on group or individual performance?

  • My company distributes Software as a Service. Wondering about pros and cons in compensating commissions based on group or individual performance.

  • Answer:

    Without a question individual. There is no faster way to ruin a salespersons motivation to produce than by removing the incentive to produce sales. Sales professionals are motivated by earnings. Unlike customer service, administrative or other non executive salaried positions within a company sales professionals understand their role and that role is to generate revenue through sales. In return for performing their role they receive commission instead of or in addition to a base salary. The commission is what motivates them daily to perform. They may like the atmosphere within the company, believe in the product or service, and like their work, but the thing that keeps them striving to produce higher sales is the compensation they earn from making the sale. If you have a group of sales professionals not meeting sales expectations then you need to look at the group individually. You may not have the right individuals selling your product or service. Within this group you may find there are stellar performers who should be compensated well and others who under perform. Making a change to compensate sales base on the group's performance would be counter productive and likely un-motivate the best performers and give the under performers another reason to remain an under performer. There are ways to incentivize groups for meeting or exceeding certain sales performance milestones which can be effective in increasing sales. A sales performance bonus is a good way to add additional motivation. Bonuses can be used in many different ways e.g. weekly, monthly, quarterly, and annual. You can incorporate a bonus compensation structure into almost any compensation structure without changing the base structure itself and keep your top performers from leaving.

Christopher Telles at Quora Visit the source

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Other answers

Pay the sales rep using incentive (commission) and even bonus when they over achieve realistic targets. A group bonus or commission is a smart idea when there are analysts, customer service, people that are dedicated to the customer to carry out the terms of the contract -- that is where I see the "team" surplus comes in. Always replace "group" with "team" whenever possible.  I see it as a group of individuals and a team who works together.

Jeannette Marshall

Individual incentives are important. On top of individual incentives, a team incentive can help in the following ways: 1) As Jeanette pointed out, you can then reward non-selling support staff. 2) You can give an extra "push" for a sales rep who achieves their goal early in the period. With that additional incentive and team/peer expectations, a seller will be less likely to slow down production in that period. 3) For those who are new to the team and/or struggling with sales production in a given period, the team bonus can also give them a reason to try harder. A rep who feels hopeless about making their own goal might push hard to contribute to the the team goal in the hope of getting at least that part of the bonus pay. 4) Team camaraderie and reduced internal competition is also an outcome of a team incentive. Of course, the other aspects of the sales culture must also support this objective.

Deb Calvert

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