Nine entrepreneurs answer the question: What's the one best practice you use when designing compensation packages for sales staff? Here's what they had to say.
No. 1: Maintain Them Regularly
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It's really tough to maintain the perfect incentive and compensation packages for sales staff -- especially in a startup. If the company is growing quickly, goals that were difficult for reps to hit one month can become easy in the next when scaling. I make a point to sit with the sales team on a monthly basis to go over numbers and adjust compensation plans accordingly.
-Matt Ehrlichman of Porch
No. 2: Give Yourself the Same Package
Once one of your employees takes on an aggressive performance-based compensation model, you should too. There is no better (and cheaper) way of determining if the model works and is fair than experiencing it yourself.
- Brennan White of Watchtower
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No. 3: Summarize the Package on a 3x5 Card
If you can't, your package is too complicated. If you can, your sales team members will be able to quickly recall how it works. Quick recall is essential for ongoing motivation.
- Kevon Saber of Fig
No. 4: Align Their Support Staff With Incentives
With rare exception, a sales team cannot succeed by themselves. Their support staff (designers, administrative folks and operations experts) all need to come together to deliver a client's experience and make the sale a good one. Make sure to have your sales team share the upside with their broader team, which will help everyone sell more products.
-Aaron Schwartz of Modify Watches
No. 5: Reverse the Curve
Oftentimes, companies almost penalize a salesperson for increased sales. Compensation should increase with success. I want my salespeople to be the highest paid people in our company. It's a mentality that's sometimes tough for entrepreneurs to think of -- someone other than themselves making more than they do. By reversing the curve, you also help to cover their base out of the first dollars.
- Andrew Howlett of Rain
No. 6: Display a Leaderboard
Displaying a leaderboard with the highest performers on the sales team -- including commissions -- creates transparency, which trumps all.
- Phil Dumontet of DASHED
No. 7: Ditch the Commission
Although commission-based systems are common, they can actually undermine performance by making salespeople too focused on their individual numbers at the expense of the company's health and teamwork. So track the numbers, but pay your salespeople a salary based on their holistic performance in building the company.
- Mary Ellen Slayter of Reputation Capital
No. 8: Develop Tiered Packages That Reward Sales Often
We make sure to establish tiered compensation packages that reward the sales staff often. This approach increases motivation and gives a continuous sense of achievement to the team members.
- Evrim Oralkan of Travertine Mart
No. 9: Don't Pay Them
Your sales staff is there to generate sales. They should be paying for their own job. A sales staff compensation package should consist primarily of commissions and bonuses for signups. To motivate anyone, salespeople included, you need to set goals. Make it very attractive to succeed. Make it very unattractive to not close. This process will eliminate the inefficient and reward the dedicated.
-Gideon Kimbrell of InList Inc
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses. Email your questions about best practices for starting up and/or managing a small business to email@example.com.