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Sales Management 3: Compensation Systems & Options for Sales Professionals

There are literally dozens of options for how to compensate sales professionals, and just as many if not more opinions on the “right” way versus any other way. The truth of the matter is all these options are fine and have a place — if they meet the acid tests of what monetary compensation and rewards are supposed to do in a company. All too often compensation plans are done for simplicity alone and are not well coordinated, or how rewards relate to behavior patterns and culture within a company are not well thought out. Inside this best practice we will explore the fundamentals — the acid tests of good reward systems and how to make certain that your rewards and pay complement your business objectives.

Pay Plan for Comfort Advisor - GP Pay Plan Commissions

This shared success pay plan outlines the acid tests and aligns pay of sales professionals with the true interests of all employees, not just the sales professional. We want gross profit dollars per man- or crew-day. We want those gross profit dollars per crew day to be maximized. To do so we must align the goals and pay plans of our teams -- both the sales teams and the install teams -- to be certain that they are focused on two things: 1-Creating sales in a shoulder season that produce gross profit dollars for our company to pay our overhead, and 2-The proper gross profit dollar amounts and not a gross margin % figure that can be good or bad depending on days of install required. Use this as a basis to create your version of aligned pay plans.

Comfort Advisor Pay Plan - Gross Profit Dollar Pay Template

Utilize this template (enter data in yellow areas of spread sheets), to determine how you want to pay a sales professional such as a Comfort Advisor based on gross profit dollars produced and not on top line sales. We want alignment in pay plans and our company and department goals. We all know it is entirely possible to sell a job at a price and a margin we think is attractive, but it turns out to be a multiple day job and we can lose money while paying the Comfort Advisor a handsome commission rate. Why? The pay plan is rewarding top line not true performance. Because we pay for labor and cost of goods sold, performance on a job is what is reflected in gross profit dollars -- not merely what is sold. To be in alignment, pay your sales professionals based on gross profit dollars production daily and monthly, and set up a bonus to create an incentive for them to bring you the gross profit dollars bacon on a slow quarter basis in order to align with your pay plans.

Fee for Service - Comfort Advisor Pay Sample

Attached is a sample fee for service schedule a Comfort Advisor can utilize to determine the actual fees to charge the company based on a sale.