Structuring commissions and incentives for sales management
Structuring the system and policy of commissions and incentives for sales management and its work team. We will continue to discuss the following points, Inshallah:
– Some types of commission structure with some examples.
– How can commission be linked to KPIs according to ISO 9001 requirements?
– When can the target or target of sales be increased and upgraded?
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- Commission structure and link to profit margin boardroom:
How is that?
The delegate’s commission is calculated by calculating the gross profit margin earned for each sale rather than the total sale price or contract value.
In other words, this commission structure evaluates the product sale price and costs associated with closing a transaction and only the actual profit is calculated. Sales representatives then earn a commission based on this number.
Example: If your company’s service cost is 1000R, but it accumulated a cost of USD 500 to complete that transaction, the sales representative will earn a percentage of the remaining profit of USD 500, e.g. 20%, i.e. 100 R.
When they are used: When the focus is greater on the profit margin and when the discount is not favorable to the management of the company.
. Withdraw incentives against commission structure.
Think of withdrawals as advance payments. In this commission structure, salespeople ensure that a specific amount of money is made every month, regardless of the number of sales they generate for their company.
Example: A sales representative is eligible to withdraw $2,000 in his first month and ends up receiving a commission of $1000. The salesperson will then retain the full commission plus $1,000 of the set withdrawal allowance.
When to Use: The commission withdrawal structure is generally best for new appointments, market weaknesses, long periods of change and uncertainty, or during the training period.
Note: There are some differences in this structure, most notably, the “borrower” withdrawal that must be repaid according to the specific conditions that the company can formulate.
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