Attracting the right sales team can mean the difference between a business that grows steadily and a business that skyrockets to success. Sales teams have a profound, direct impact on a company’s bottom line, and the best salespeople know they’re worth their weight in gold. That’s why the cream of the crop work for companies that have a sales commission structure that appropriately compensates them for their skill and talent.
But how does a company design a sales commission structure that will attract and retain the best sales team? Above all, the commission structure must attract people with extraordinary sales abilities, particularly ones who develop the ability to “relationship sell” and not sell out while selling, as I mentioned in my article last week.
In my forty-plus years as a business leader and entrepreneur, I’ve learned through experience how to attract and retain this type of salesperson. Because I’m a salesman at heart who thrives in a commissioned sales environment, I have a strong intuition about what the best salespeople are drawn to and what they expect from a prospective employer. Here are my top four tips for developing a winning sales commissions structure:
- Set a 90/10 commission structure.
Many companies don’t expect their sales teams to draw more than half of their compensation from commission. Their argument is that the sales industry is inherently volatile, and it’s therefore necessary to financially insulate sales reps and protect them during sales downturns. This philosophy is wrong.
I strongly advocate a 90/10 ratio, meaning 90 percent of compensation should come from commission. What I’ve found is that many salespeople simply aren’t cut out for such a dramatic earnings ratio. But the ones who are attracted to this commission structure are consistently the best. That’s because the best salespeople are the ones who are not only good at what they do, but they also know they are good at what they do.