A company is represented in the market and over the entire world by their sales people. The product and services of a company are energetically promoted by the sales people of a company. Revenue growth and production are a company’s top most priority, sales people provide it by being the front runner and face of the company in front of the customers and people in general.
The employees who work as the sales people of a company have direct impact on the clients and the market itself as a whole. These impacts are about the products of the company in which they work and about the employee as well.
It is a fact that the company which provides really good incentives will have good sales people, because the way sales people work is the reflection of how they are treated in most cases, by their companies. The effectiveness of sales commission given to sales people tells how good a company is itself. When a company makes a well oriented and fair commission system, its sales people enthusiastically support those activities which are of great benefit to the company.
These incentive or commissions should appropriately meet the demands of today and the work which the sale person goes through; as sales people support the company in a very committed way when their contributions is rewarded suitably.
A sales person’s basic salary package includes bottom salary, commissions earned on each sale. This is the pattern which is used in most places; some companies may differ slightly from it.
The compensation package is present in all of the companies for their sales rep or sales people. Many places now offer grants on stock options too. This has become a widespread practice indeed. There are many ways through the commission of a sales person is calculated. Typically what most companies do is that they set the commission of the sales person based on the percentage of the sold revenues and products. Another way similar to it is that they are paid incentives based on the margins of profits.
Commissions are given in between the percentage of 30 to 50 percent of the cash received on a sale. Hence the base pay decides how much commission is going to be earned on total. The factors through which a sales person commission depends are many.
Few of them are the technical knowledge of the worker, the time cycle needed to complete a sales project, profit on a product and also a fact that sales which has been made if it was achievable due to the skill and handling capability of the sales person. Apart from that there are other factors on which the commission depends, for one thing if the sale cycle is short then the main salary will be coming from the commission and incentives received.
Others are when the profit made on a sale is very high and the skill of the sales person is good enough to make the sale dependent on the sales person’s abilities. In a long sale cycle the importance and cash received through it becomes of less emphasis, it also happens when the sales requires greater level of technical know how.
However it is not the case that the commission becomes higher when the salesperson has greater technical knowledge, but rather because the total package of pay is weighed between the base pay having more emphasis then the commission earned on sales.
A sales person is never reprimanded on the basis of a product which is made to have less commission potential, in such products or services the main focus of the pay is on the base salary rather than commission earned on its sale. Those products which are easily sold have more commission attached to them, as the company wants to have more of such items sold through their sales people. Thus for such items the base salary would be low and commission would be greater.
Each company has its own priorities and the commission that they pay to their sales rep depends upon their own policies. When a company is trying to make its share in the market they pay large amounts on commission for selling their products or providing their services, so that rapport can be built with new clients through the sales people. In the inductor phase of a product the commission received by the sales people is high; it becomes great when the product which is being sold is of great profitability.
The plan pay structure for commissions and basic salary has to be carefully planned as a poorly constructed plan will bring unknown and unwanted results.
Almost all the commission plans put no boundaries on the pay and salary for a sales person that he earns through each sale. In fact in many cases the percentage of the commission can also increase depending upon the number of sales made.