October 2024

Commissions and Their Effect on Sales Behavior

Sales commissions have long been a primary incentive for driving individual performance in competitive industries. As a direct reward for sales achievements, commissions motivate employees to maximize their efforts in achieving—and often exceeding—targets. However, the commission structure has also drawn concerns, with critics arguing that it can lead to aggressive, short-term-focused behaviors, undermining customer satisfaction and organizational ethics. Despite these challenges, well-designed commission plans can promote responsible and customer-centric selling

Consumption-Based Sales Compensation Plans

The Consumption-Based Sales Compensation Plan is a dynamic and performance-driven incentive program designed to align the interests of sales teams with the organization’s objectives in a consumption-driven business model. This innovative compensation measure is well-suited for businesses that primarily generate revenue through the ongoing usage or consumption of products and services, such as subscription-based software, utility services, or consumable goods. Key Features: Variable Compensation Structure: The plan incorporates a variable