From the course: Sales Management Foundations
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Designing sales compensation programs
From the course: Sales Management Foundations
Designing sales compensation programs
- To design a sales compensation program, follow these four steps. First, determine how much you want each rep to earn. Second, determine the method you will use to compensate them. Third, set thresholds around the target compensation, and finally, test your program before you put it into place. So first let's discuss how to determine the total amount of money you want your sales reps to earn annually. Take a look at their past performance and decide if you want to make adjustments up or down to that total for the coming year. For example, you might add in a cost of living adjustment. Make sure the amount you pay is competitive with the rest of the industry. Next, determine the method you want to use to pay your reps. You could use a straight salary program, a variable commission program, or a combination of the two. Straight salary programs are simple, easy to administer and control and easy to tie to the sales task,…
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