Top 2 Tips Before Building Sales Compensation Plans
by Shirah Smail
Nov 14, 2024
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Are you working on sales compensation plans for next year? Don’t know where to start? If so, this blog is for you.
When thinking about sales compensation plans, some people think “just pay the sales team a commission rate and call it a day”. While its best to keep sales compensation plans simple, there is an actual systematic process in designing sales compensation plans.
However, before even stepping into the design process, there are 2 key tips that will help you. If the items in these 2 key tips are not well defined then it will cause frustration in plan design and most likely plans will not achieve the desired results. These are the top 2 tips:
Before presenting an offer to a salesperson, think - is your company being fair in their decision making? If not, it may cost you. In August of 2025, the owners of a certain automobile dealership had to pay $275,000 (+ other relief) to settle a U.S. EEOC lawsuit related to their hiring process.
So, what happened?
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One of the most important questions that company leaders ask is “How much are these comp plans going to cost us?” That is where plan modeling or costing comes in.
This is the time of year when companies are creating sales compensation plans for next year. They usually invest time in determining the best mechanics (e.g. thresholds, accelerators, caps, etc.). They also spend an extensive am...
If you have ever been in a sales role, or played a part in a sales compensation program – then you most likely have heard the term “draw”. There are two main types of draws, recoverable and non-recoverable. There are two types because they accomplish different objectives and are processed differently. Depending on your objective, you can utilize draws to enhance your sales compensation pro...
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