Paying Commissions, But Still Not Seeing Results? Here’s Why.
Discover how to design pay plans and incentives that actually drive performance and revenue growth.
Is Your Commission Structure Holding You Back?
Many companies believe that paying out commissions automatically motivates their teams. However, if your pay plan and incentives aren't aligned with the right targets or behaviors, you could be wasting money and losing potential revenue.
Some of the most common problems a poor pay plan creates include:
High turnover rates
Underperforming sales teams
Disconnect between pay and performance
Why Most Companies Get Pay Plans and Incentives Wrong.
Companies make some simple, key mistakes companies when designing commission structures, which include:
Setting generic goals that don’t align with business objectives - For example a setting a gross profit target when the company objective is revenue growth. Whilst it may seem the 2 align, often they don’t.
Incentivising the wrong behaviours - Examples of this include volume over quality and/or Ideal customer profile. 2 high quality deals with the correct ICP is better than 4 volume based deals that cost the business money over contract lifetime.
Failing to tailor incentives to different roles or targets - A one size pay plan vary rarely, if ever, fits all. Building the right plan for each role is critical to business growth and sales success.
Lack of transparency and clarity in how commissions are calculated - The biggest failing of most companies. A motivated sales person should know exactly at all times how much they have earned in commission, and also what they need to achieve to earn more. Commission used correctly WILL motivate sales teams to sell more.
The Hidden Cost of Misaligned Incentives
Wasted commission payments
Unmotivated or disengaged teams
Missed revenue growth opportunities
