Your sales team is vital to your company’s bottom line. The way your salespeople are recognised and compensated can have a huge impact of the revenue your organization can achieve.
No sales comp plan is perfect but finding the correct balance between controlling the downsides while still reaping the positive effects will distinguish your from your competitors.
In this SRG article, we’ll discuss one of the most-used sales comp plan options, the behaviour they can incentivize from your sales team, the impact on revenues and how to move forward with a winning strategy!
The Volume-Based Sales Comp Model
In this model, your sales pros get compensated based on the total volume sold and they have the power to make pricing decisions with little oversight. This type of compensation plan encourages sales team members to reduce price to increase volume. To most, cutting prices seems like the quickest way to gain additional volume and, therefore, commission.
Using this model, your sales team is getting acknowledgement for revenue and volume, but your bottom line perhaps doesn’t sees the greatest benefits. You’ll likely experience a struggling margin, as many sales may be made at low margins or even a loss. Additionally, these unprofitable sales are clogging up your processes so customers that do produce margins are not being served well.