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September 16, 2024When hiring sales reps, the right compensation plan can make or break a deal in landing a superstar. To compete in today’s market, it is best to create an attractive compensation plan that handsomely rewards performance and provides a secure base salary. Sales reps take a risk when changing companies as it is almost like starting a new business. A high base salary is the sweet carrot that may entice them to leave a company they know for a company they don’t know.
Incorporate these five tips when creating sales compensation plans for top performers.
Offer an attractive base salary. Gone are the days when you could hire a sales rep for $50-60K base salary with upside to $80K. The market is demanding $70-100k+ base salaries for experienced reps. In return, the upside commission plans can be adjusted to offset the higher base. Provide a base salary that correlates to the length of your sales cycle. The longer the sales cycle, the larger the base.
Tie incentives to the activities or results desired. Almost 70% of sales and finance managers think their compensation plans fail to drive desired behaviors, according to a study by Synygy. In addition to commissions for closed sales, consider activity incentives. For example, if 30 cold calls per day generates an average of five conversations that results in one sale, then provide a cash incentive when the reps meet their daily conversation goal.
There is no perfect plan. Be flexible based on the experience and track record of the candidate. If necessary, customize a sales plan for top producers. Your top sales rep may need higher upside potential to feed their hunger for success. Like a racehorse, let them run and run fast. Don’t let structured comp plans get in the way of star performance.
Provide income projections. Show them the money! Prepare a data sheet detailing projected OTE (On Target Earnings) based on various sales levels. The income history of your best sales reps can be used as a guide. Make it easy for your candidates to see the potential.
Customized sales compensation plans that meet the demands of the candidate market are critical in attracting, hiring, and retaining sales talent. Small and midsize companies have the advantage of being flexible in designing sales compensation plans that quickly adjust to the demands of the job market. Creating a sales compensation plan that is competitive will greatly improve your sales hiring success.
If you would like to learn more about how to leverage compensation in your next hiring initiative, give us a call at 317-578-1310. Or email us at info@safarisolutions.com
