How to Devise a Sales Commission Scheme
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- เผยแพร่เมื่อ 30 ธ.ค. 2024
- Here Rob Scott of Aaron Wallis Sales Recruitment talks through the most popular types of sales commission schemes in the UK together with their 'pros and cons'. Different bonus schemes discussed and evaluated together with some 'golden rules' when devising sales incentive schemes
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Great video! Amazingly simple explained!
Nice one, I'm a fan of payment as a fixed percentage of revenue; keeps things simple, provided it can predictably stack up commercially.
Great insights. Never thought about that before! THX a lot!
Thanks for your comment Jafar
Hi Jafar, there is not a straight answer to this one I'm afraid as it depends on so many potential anomolies such as the industry sector, company culture, the 'cost of sale' and the support required to achieve the GP but will impact the Nett profit and so forth. In the UK it typically is anything from 2% to 25% but guess this doesn't really help!
are their any good incentive structures to stop from build up of older inventory?
Hi Scott, There are companies that pay a higher % commission for inventory that is nearing it's 'shelf life'. One of my clients who trade in aircraft components have a points system, and part of their commission accelerator criteria is to 'score points' for selling older inventory. What this means is the sales team are heavily incentivised for selling products that are within six months of being worthless
Good info, thank you very much
Thanks Juan
How much percentage is the good practice for the comission after acheiving the target gp
I love your tutorial. From vietnam
The statements between your first type of sales commission and and your last preferred type seem somewhat inconsistent without a further example...in the first statement if it is difficult for a salesperson to calculate a % of GP, how is it easier in your last example to also calculate % of gp above a certain threshold level? It is unclear without specific examples..in your preferred part 4, i can see it is not difficult to calculate and communicate the threshold and you provided that example, however, what is the metric used to calculate the commission earned after the threshold has been met? Please clarify with specific examples of the differences between 1 and 4.. If in your last example, your saying after the threshold is met, it is a % of GP, then you have the same issue as in your first example where the sales rep walks out of the order and does not know what his commission is.. The only thing he might know is if he has met his threshold...
Hi Mach, I get your point and agree with what you’ve said it is a tad inconsistent. However, I’m trying to emphasise the fact that commission schemes based upon sales income/turnover are fraught with potential danger. Unfortunately, I have met many loss-making firms that handsomely pay their sales teams on unprofitable business (sometimes for many years).
I hope that viewers recognise the main point that a commission scheme needs to have a mechanism within it to not pay commission to sales staff on deals that are loss-making, or to salespeople who aren’t covering their cost.
The video is probably best viewed in conjunction with our website advice articles:
www.aaronwallis.co.uk/employer/advice/how-to-devise-a-sales-commission-scheme.aspx
www.aaronwallis.co.uk/employer/advice/most-common-sales-commission-schemes.aspx
Thanks for your comment and I will shortly be revisiting all of this advice as it’s many years old now.
All the best, Rob
excellent..yes, I understand that many companies are now looking to down to ebit before paying commissions..
Hello, can you do a sales Commission agent for me?
With some examples might be easy to understand
Hi Joy, click the link to our website, and there are many examples. Go to www.aaronwallis.co.uk and search 'commission schemes'
Nice video