What is a sales compensation plan? A sales compensation plan is a plan created for each individual sales representative within a company or organization. It lays out the details of the sales compensation of the representative, which includes the base salary of the individual, the commission they get from the sales that they had closed and the incentives that motivates the sales employees.
In this article are sales compensation pan templates that can be downloaded and used for personal purposes. We will also be further discussing about what it is, its uses as well as the uses of its templates, the different types of compensation plans and many more. Check them out below!
Sample Manufacturing Inside Sales Rep Compensation Plan Template
Sales Compensation Plan Format and Content Guidelines
Sales Incentive Compensation Plan
Effective Sales Incentives or Compensation Plan Discussion Format
Incentive Compensation Plan Template
Uses of a Sales Compensation Plan and Template?
Every sales compensation plan is unique to each sales representative and it is because of specific concepts and components where the plan is based on, which includes their role in the sales team they belong to. The sales compensation plan of each sales representative is based on their role in a particular sales cycle, tenure or seniority, sales engagements, sales deals closed and many more. All of these components affect how a sales representative is being compensated and how much they are paid.
Now, sales compensation plans have been made available through various types of sales compensation plan templates. To further understand about sales compensation plans and its templates, here are some if its uses that you should know about.
- Sales compensation plans help influence the work attitude of sales employees in the organization from the bottom level up to the senior level executives.
- It also tailor fitting of compensation among different sales roles in a company or organization which ensures that every sales representative is compensated based on the account they are working on, their performance and their seniority.
- Many top performing companies use a sales compensation plan as their means of managing sales performance so that they can accomplish the strategic goals that they had set.
- A sales compensation plan greatly helps in improving the behavior and performance of sales employees within the company or organization. The right type of compensation plan can drive employees to better perform in their jobs and tasks.
- Sales compensation plan templates are very useful when it comes to planning for an individuals compensation because the template includes details and other information that are important to the compensation plan.
- The template is used to save time and resources as it eliminates the need to recreate the same compensation plan whenever it is needed.
- Sales compensation plan templates contain the same details and items, but they can be edited and customized for the different compensation needs of each sales representative.
- The templates can also be used a study material for students as well as reference for those professionals who need one to create their own. There are also many samples available for this purpose.
- Sales compensation plan templates are also being used because of the convenience it offers its users. In addition, it is also a tool that can easily be used by anyone.
A lot can be done with compensation plan templates that is why they are considered very useful tools. Compensation plan templates and other related templates are available for download in articles, like Commission Plan Templates and Sales Plan Samples & Templates.
What Are the Different Types of Sales Compensation Plans?
Choosing the right compensation plan will help your business reach its targeted business goals and objectives. Not only does it motivate your sales employees to perform better, but it will also help your business earn more. That is why it is important to choose the right compensation plan fit for your business and your employees. Here are the different types of compensation plans that you may want to consider.
In this type of sales compensation plan, your sales representatives are paid just like how other employees are paid within the company and that is with a fixed salary. Sales representatives are not paid with any commission regardless if they were able to sell something or not. A straight salary compensation plan is often used in industries where direct selling is prohibited, in companies that have small sales teams, and in companies where sales representatives spend more time on other activities than selling.
The compensation plan allows uniformity in the calculation of the compensation of each employee. The downside is that it does not motivate sales people to perform better as there are no incentives for them if they work harder.
Salary Plus Commission
Money is always one of top motivators for people to work harder and perform better with their jobs. This is the most common compensation plan used today. With a salary plus commission plan, sales employees will be motivated to perform better because they will get know that they will some kind of incentive on top of their salary. Proper metrics and sales tracking ensures that the hardworking employees get their fair share of the incentive.
An obvious advantage of this type of compensation plan is the increase in productivity and goals are easily accomplished. The disadvantage is that the base salary tends to be lower.
If you want to get the best out of your money then you need a commission only plan. In this type of plan, sales representatives are only paid for the sales that they were able to bring, but no salary is involved. This means more value for your money. The plan is easier compared to the salary plus commission plan. Although this type pf compensation plan only a tracts a few individuals, you can still guarantee that you can hire the best and most hardworking ones.
A territory volume sales compensation plan works best when used in a team-based corporate environment. The sales team will be working within the specified or outlined territory assigned to them and the total of all their sales are then divided equally among all of the team members at the end of a compensation period. This type of plan requires that all members of the team work together to achieve common goals and that the territory is rich enough.
In a profit margin sales compensation plan, sales people are paid based on how well the company is performing financially. As its name implies, the compensation given to the sales people of the company are based on the profit it earns and not based on the company’s revenue. This type of compensation plan works best of your sales employees are able to support themselves in times when the company is not earning well and when there are other incentives that the company offers.
Having knowledge about the five different sales compensation plans will allow you to choose and decide which compensation plan to use that is applicable to your company and business style. You may also want to check out compensation pan templates and other related templates on our website. You can find them in articles, like Compensation Agreement Template and Sample Workers Compensation Forms.
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The Ultimate Guide to Sales Compensation Plan
Sales Rep Compensation Plan Discussion Flow and Content Layout
Creating Winning Sales Compensation Plans
Tips for Building a Competitive Sales Compensation Plan
The following are tips that you need to be aware of to help you build a competitive sales compensation plan.
- Reward sales behaviors that you want your employees to repeat. Now if you see your sales people doing something that enables to the company to generate more income and closing more sale, then provide a reward for such act. Rewarding a positive behavior increases or motivates sales employees to do the same positive behavior again.
- Pay commissions quickly. One a sale has been made or closed, work on giving the just commission that your sales people deserve. Do not let them wait for it for too long as this will demotivate them from working until they get hold of that commission.
- Choose the right commission rate. There are many factors that affect how commission is calculated and provided. You need to think hard and decide how much commission to offer for different types of sales transactions and ensure that they are all appropriate.
- Change compensation plans as the experience of your sales people changes. Sales people who have more experience are capable of doing more and better things compared to those who just started and compared to when they just started. Because of that, it is just appropriate to make changes to the current compensation plan they have.
- Be flexible with your plans. Changes in products being sold and the territories your sales people cover also means changes in their compensation plan. This because new products or new territories may need higher commissions compared to the ones they were working on before.
- Be transparent. Tell your employees about your plans of providing a better sales compensation plan for them. You need to ensure that they are aware of this and that they understand the plans that you have.
Those are just some of the tips that you can use to help you create a competitive compensation plan. If you like to learn more about other plans in general and download different varieties of plan templates, then you may want to check out our website. Some of the articles you can find there are Business Plan Templates, 100 Day Plan Templates, and Personal Development Plan Templates.
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