Josh Melick – Key Components to a Tight Sales Comp Plan

Josh Melick has written a brilliant piece for his blog recently about how businesses can create their very first sales comp plan. Not only does the piece contain all of the key aspects of a great first plan, it also reiterates the need for existing businesses to reevaluate their own plans and ensure that their employees are being well enough looked after.

These plans have to be very fluid and reviewed in order to stay competitive and to ensure that they are in fact working for the business. Let’s take a look at the key components which Josh has outlined, which work for new businesses and which should inspire existing businesses to reassess what they are doing with their sales comp plans.

Implementation of the Plan

A structure which looks great on paper is one thing, but if it is not being implemented properly by the business then it will fall at the first hurdle. More specifically what Josh is referring to when he talks about the implementation of the plan, is that employees are actually getting paid on time. If you have committed to paying your employees at the end of the month for sales made that month — which you always should — you should be actually doing so.

Competitive Structure

The percentages which you are giving to your employees have got to be competitive. Failing to do this could easily see you losing some of the workforce to a competitor, which is not exactly going to be good news for the workforce or the money which you have invested into training them. Make sure that it is competitive and continuously review to ensure it stays that way.

Trainee Considerations

Josh makes an important point regarding trainees, that they must have their own salary structure during their first 3 to 6 months. The smartest way to go about this is to give them a larger percentage on their base salary, than the 50/50 split which you are perhaps using for your well established employees. This will keep them motivated to learn and to work harder once that commission really kicks in.

Accelerating The Best

Implementing a floor into the structure below which no commission is paid is a great idea, and one which Josh rightly puts forward. He also talks about adding a level of acceleration for the very best performing staff in the business. Once the employees reach a certain volume of sales, they will be able to earn extra points on top of the lowest level of commission. This will not only ensure that they continue to push sales, but also that you are working to keep the top talent in your workforce and not leaving to go to another’s.

The key to this working is regular reviews and assessments. In doing so you will be able to successfully motivate your staff and incentivize them to work as hard as possible to earn as much money as they can, for both you and them.