As per recent reports, only 17.6% of salespersons rated their job satisfaction as outstanding. While this is alarming, this can be fixed with some age-old tactics and their modern adaptations.
Building a strong incentive strategy for sales teams is a consistent challenge for the management. The task lies in ensuring that the company’s goals translate into sales objectives and eventually reflect in the commission strategies designed for you.
For centuries, sales commission has served as the prime factor for sales reps to not just meet targets but to go all out and ‘smash sales targets’. Let’s track it back a bit to see how commissions came into the picture.
It all started with the Principal-Agent theory that emerged in the 1970s. Agents in this case are sales reps and the principal is the company. More often than not the interests of a principal and an agent are not aligned – the principal wants to earn more revenue while the agent is simply looking to make more money. This results in mismatched incentives and the solution here is to align their interests. The company needs to allow sales reps to earn a percentage of the profits on the products or services they sell – in other words, earn commissions for the sales they make.
Commissionable sales – what’s that all about?
Compensation plans in the form of commissionable sales and incentives factor into attracting and retaining employees across the board.
Sales commission is the additional income that you can earn for meeting and exceeding your sales quota (the minimum sales goal set for a defined period of time). Consider commissionable sales to be the variable component of your total compensation package.
While the salary component is fixed based on industry standards, the variable part offers great flexibility and the opportunity to earn more.
Well-planned commission structures are by far the best way to reward top performers and boost sales teams to maximize sales returns.
After all, higher commission rates = better performance, right?
Your game plan as a sales rep is not just to meet your targets for the month but you should always be striving to maximize your earnings with commissions and bonuses.
Sales commission structures: know what you’re signing up for
As a salesperson, it’s imperative that you are aware of the commission rates within the industry and understand the commission structure that your employer offers. The better you understand the commission structures in place, the easier it becomes to set your goals and work towards them.
What you should be clear about is that there is a ‘no one size fits all’ plan. Sales commission plans vary from industries to roles.
Luckily for you, you’ve got the concept of ‘fair commission rate for sales’ in place. As per the industry standards, the average sales commission rate can be anywhere between 20% to 30% of the gross margin. At the lower end, you can expect to get at least 5% to be added to your base salary as commissions and on the higher side, there are companies offering as much as 40% to 50% commission.
Before we dive into how to maximize your commissionable sales, here’s a quick rundown of the average pay of commissions per industry according to a detailed research by HubSpot:
- Wholesale and Manufacturing Sales Representatives: $63,000
- Insurance Sales Agents: $50,940
- Advertising Sales Agents: $53,310
- Real Estate Brokers and Sales Agents: $50,730
- Securities, Commodities, and Financial Services Sales Agents: $62,270
- Sales Representatives, Services, SAAS, Business Support, All Other: $56,130
- Door-to-Door Sales Workers, News and Street Vendors, and Related Workers: $27,420
- Retail Salespersons: $25,250
- Sales and Related Workers, All Other: $31,820
Top 8 ways to increase your commissionable sales
To put things in perspective, only as low as 24.3% of sales reps were able to exceed their sales quota in the last year!
Compared to the pool of talent and skill set that salespersons have, this metric came as quite a shocker
Now if you’re thinking – “Count me in, no matter how much I tried I just couldn’t hit my sales targets”, then we’ve got you covered!
We’re here to make sure that this year, you not only exceed your sales quota but also manage to increase your sales commissions just the way you want to!
We’ve compiled 8 actionable strategies that will help you step up your game. Let’s get right to it:
- Your commissions matter
Yes, the first rule of the game is to give importance to your commissions. Most sales reps ignore this component of their salary package for reasons such as confusion about the commission structure, lack of sales motivation and more.
This mental block needs to be removed. Now that we have shared a brief outline of the sales commission structure, we believe that you have a better understanding of what you will be working towards.
If you need more clarity, speak to your sales manager and understand the goals you need to meet to be able to earn more. You also need to be aware of how your commissions are calculated – take time to set goals for yourself based on this.
With commissions, you control your income! When you know that ‘you need to meet X targets to earn $Y’ – you’ll be motivated to hit that goal even more. Your success is in your hands and that will help you work just as hard as you need to, especially on days when you face a cash crunch.
- Choose the right product and the right time to sell
Your end goal here is to achieve your sales quota.
With commissionable sales, your compensation is directly connected to your effort and your ability to sell.
Your success in maximizing commissionable sales lies in finding the right product to sell. The product that you choose to sell should solve a specific problem for its intended audience. Not just that, you also need to ensure that your product has unique features and offerings that set it apart from the competitors in the market.
These wise words from Seth Godin will drill down this point further:
“Don’t find customers for your products, find products for your customers”.
This is what will help you enter the market with a solid sales strategy!
When you’re planning to increase your commissionable sales, you will need to identify the best time to sell the product.
Let’s say that the demand for your product is only seasonal, in this case, you will need to tactically plan ahead on how you can win over the market during this short span of time. Seasonal products would require you to put in more hours of work so that you can make up for the drop in demand during the off-seasons.
- Define your target market
Clearing understanding and defining your target market is crucial in increasing the likelihood of your commissionable sales.
Before you go out and start approaching your prospects – clearly outline the persona of your customer base.
Do thorough research to identify specific needs and characteristics of your target audience and position your products or services in a manner that would best suit them.
Carve out the entire buyer journey with your brand – know who your customers are, what problems they have and how you can customize your offerings to better suit their needs. It’s also important for you to understand what makes your current customer base to stick around and how you can get new customers to show up.
Make use of research data to understand how to locate these prospects and what would be the best way to approach them. Studies reveal that having a data-driven sales approach has always helped in winning the right customers over and increasing the overall profits earned by as much as 8%.
- All hail time management
While you’re out in the field, busy setting targets for yourself, you may get caught up in the grind and lose track of time. Time management skills are essential in achieving your sales quota.
Along with having a goal sheet for yourself, prepare a work schedule and ensure that you follow it religiously.
Some sales targets are time-bound and it is important that you’re on track – following a schedule can help you a great deal in hitting those targets in time.
- Set attainable goals
While your sales managers may set tantalizing commissionable sales plans, achieving them is an uphill task!
Ask yourself this question – ‘What is the attainment level of your sales quota?’
Most of the targets may seem frustratingly beyond your reach – you need to fix this.
There could be two reasons for this, either you are not sure about the expectations from your management or the goals laid out are in reality hard to meet.
Either way – you need direction and clarity. So go back to the drawing board and sit down for a discussion with your manager. Request for help with quota management and together build a profitable sales territory plan that will help you achieve your goals faster and in a realistic manner. It’s also important to re-align your goals from time to time given the changing priorities of your business and varying market conditions.
- Leverage a sales performance management platform
In order to succeed in earning more via commissionable sales, you need to ensure that you are on the right track. Manual checks and reporting can only get you so far – let’s not mention the time and efforts that go into that.
The benefits of regular reporting need no special mention. Using a sales software or an SPM platform will help you stay on top of your tasks, log in your prospects and manage your leads better. You can also monitor your own sales performance and easily forecast your sales targets.
The importance of sharing data and reports all through the sales pipeline will not only keep your managers and team informed but will also give you a better picture of where you are headed.
- Calculate your sales activities
In sales, the uncertainty factor is a given. At times no matter what you do you will be going through a bad slump. When you are faced with a long losing streak, you should know that it is time for a reality check.
With a sales software in place, you will be able to set up sales dashboards and track down issues to streamline your efforts better.
Besides this, you also need to keep tracking specific sales metrics. Let’s run by a few quickly:
- Cold calling tracker: Having this tracker in place will help you know your success rates with calls and come up with an ideal average over a period of time.
- Appointment rates: You also need to go back and track your ability to close appointments.
- Past sales: Past sales number is a great metric to track and benchmark against. Historic data such as this will not only help in profiling your prospects but will give you a fair idea as to how much you can aim at achieving in the current scenario.
8. The power of training and development
Businesses are evolving in a fast-moving landscape. With new competitors, price changes and shifting customer behaviour – sales training and development become all the more important.
You need to sharpen your skills in reaching out to prospects, improve your sales pitches and know your product inside-out. The only way to stay updated is with regular training sessions.
The learning should never stop – take time out for those training camps and gather all the insights you need before stepping out into the market.
Gear up to earn more commissionable sales
While there is no single best solution to maximizing your commissionable sales, following the above strategies will ensure that you are on the right track.
We can’t stress how important it is to automate sales commission structures. From detailed commission statements to having a full view of how your commissions are calculated – QuotaCal is here to help you manage sales commissions the right way! Sign up today and know how you can accelerate your commissionable sales.