Josh Melick – The Simplicity of a Sales Comp Plan

In a recent article published on his blog, business and sales expert Josh Melick detailed what companies need to do in order to set up a successful sales comp plan for its employees. What strikes you most when reading the blog post however is not so much the benefits of this kind of plan, which is obvious to most who are working in sales, but rather the simplicity of setting up an effective plan like this.

Despite the simplicity of it, there are still so many businesses out there who are getting this wrong and who are not effectively incentivizing their sales teams. These are the simple basics to getting this right.

Paying on Time

One of the most important aspects of this kind of plan is that the employees are paid exactly what they have earned by way of commissions, and that they are getting that money on time. Employees working within sales rely on their additional income which commissions bring them. This means that we have employees working hard to make more money for the company and to put more money in their pockets too. If the business is not able to pay them what they have earned, in a timely fashion, they will be discouraging their employees from trying harder, which is the point of the whole exercise.

Various ‘Floors’

Two posts which Josh alludes to in his advice is the need to have a floor which all employees must sell past before they start to earn commission. This is necessary so that all of the staff are driven too ell beyond the basics. Additionally however Josh talks about the need to create a number of these sales floors, and each time the staff pass one they are able to make more money per sale. This works perfectly for incentivizing all staff in the building and it encourages a health competition between the members of staff who are trying to sell.

Training New Staff

New staff simply cannot be expected to sell at the same rate as existing staff and whilst they are training it is important that they are given a much higher basic rate, and that they earn a much smaller commission on their sales. This will of course only be in the short term as they are learning the ropes. After an employees properly trained, they can then be moved onto the same rate as everyone else in the building.

Constant Review

And finally it is reasonable for the business to constantly review the percentages which they are offering their staff, and the basic wage which they are being paid. This is a simple aspect of business and in doing this a company can always ensure that it is competitive and that it is doing its best to retain the high quality talent which it counts on within its sales teams.

As Josh mentioned in his post, this is a simple plan which is easy to set up and to manage, it is important that businesses get this right.