Facing rejections throughout the day, yet putting on a big smile for the next sales pitch, takes work. And while, as leaders and HR executives, we can’t turn every no to yes, there is something we can do to keep our sales team’s morale high and energetic–proper sales compensation.
In this article, we are revealing five expert payroll tips for building a high-performing sales team. But first, let’s see how payroll affects your sales team’s performance:
Payroll For High-Performing Sales Team
Payroll is a significant factor when it comes to influencing sales behavior and building a high-performing sales team. The right plan inspires your team to adopt the desired behaviors for hitting specific business goals. It helps:
- Incentivise individual reps
- Budget better
- Aligns individual efforts with overall company goals
- Ensure fair wages
- Increases sales productivity
- Improve job satisfaction
Above all, an impressive payroll attracts and retains top talent. This is especially important when the average turnover rate of sales reps is 35% (23% higher than any other job role). That’s why getting your sales team’s payroll (sales compensation) is crucial for building a team you can rely on.
5 Tips For A High-Performing Sales Team: The Payroll Factor
Now, as promised, here are the tried and tested tips for building an exceptionally successful sales team using payroll strategies:
Choose a Compensation Plan that Encourages Better Performance
A sales compensation is a structured program outlining how much your sales reps earn based on performance. It includes two components: Base salary and incentives (commission, bonuses, and benefits).
Here are the most common sales compensation plans. Each option has a different structure and can be tailored to your specific business needs, goals, and resources:
It’s when you decide a salary for every sales rep. Each employee is still provided with a baseline quota to meet, but the structure doesn’t encourage the team to go over quotas. However, the plan works if you want an accurate idea of your sales expenses and total sales per rep.
Here, you pay the team completely based on their performance. It’s a highly effective motivator for reps to make more and more sales. Plus, it eliminates the risks because you’ll only have to pay the employees making money for your business.
But with a commission-only plan, you can never accurately forecast the business expense. Especially for industries with seasonal highs and lows, the plan can leave employees struggling to make ends meet.
Base Salary + Commission
This is the most commonly used compensation plan industry-wide, where the reps receive a fixed salary plus commission for the sales made. Teams also prefer this because it gives them a stable income and incentivizes exceeding quotas.
60:40 is a standard salary-to-commission ratio. But, for technical products where onboarding new clients is tougher, 70:30 and 75:25 ratios are more common.
Base Salary + Bonus
It’s an ideal plan when your sales team constantly hits their quotas. This gives you a predictable yearly budget while motivating the employees to close deals. Let’s say you pay a fixed salary of $50,00 and offer a $15,000 bonus for selling some set amount per year. If you know that 9 of 10 sales reps will hit this number, then you can set $135,000 aside for bonuses.
Gross Margin Commission Plan
A gross margin plan works excellent when you have to pay reps based solely on their profits. However, it encourages reps to sell products with higher profit margins, leaving your other (low-margin) products behind.
Critical Reminder: Before finalizing your sales compensation plan, make sure it aligns with payroll compliance regulations. This includes compliance with federal, state, and local tax laws. It’ll protect your business from any future legal penalties.
Create a Reward Package
Another crucial pillar in the compensation plan is reward packages. It motivates your team to outperform themselves every quarter. Numbers prove this: businesses with successful reward programs show a 79% success rate.
A successful reward package will cater to your sales reps’ individual strengths and promote performance. These rewards can be monetary or non-monetary, with the same underlying goal–encouraging higher performance.
These are the five most popular sales reward schemes you can choose for your team:
- Role-specific incentives: Incentives set for your individual reps’ or team’s strengths
- Split rewards: Splitting the rewards amongst reps who work together to close the client
- Presale rewards: When interested customers take more time to decide, you need to keep the reps motivated to close the account. Here, rewarding the reps at different stages can help them focus throughout the buyer’s journey.
Since 50% of reps prefer the reward experience, you can include non-monetary incentives in the reward package. It can include:
- Give away products
- Travel tickets
- Offer sales training course (upskilling incentives)
- Offering star performers lead on a project (career advancement)
So, create a custom reward package for your sales team based on their strengths, weaknesses, and goals. Keep the package simple for maximum engagement and motivation.
Decide When To Provide Compensation
Quicker payouts keep your sales team motivated. That’s why you want to pay them as quickly as possible for the best performance. This will encourage them to close more sales.
But, the timing of compensation depends on various factors, including your industry, company size, product complexity, and team structure. For example, if your product has a buyers’ journey with a long sales cycle, quicker payouts cannot be possible.
In general, the frequency of payout ranges from as short as monthly to as long as biannually. However, when you are balancing the hows and whens of the payouts, leverage attendance tracking software to create the perfect payroll strategy that rewards hard work in your team and business.
Start Financial Wellness Program
Go beyond compensation to take care of your sales staff’s overall financial wellness. By providing them with tools, resources, and knowledge, you help them make better financial decisions, boosting their overall performance and job satisfaction.
These programs can range from education to financial planning. Here are a few ways you can help:
Financial education workshops: Since the sales team often deals with variable income structure, organize regular webinars and seminars on topics like savings, budgeting, retirement planning,
Assistance in opening savings accounts: Guide your new employees with setting up savings accounts. If possible, partner with banks to provide the best savings account opening services on favorable terms.
Personal finance tools: Empower employees with financial management tools to accurately track their earnings, budget, and plan savings.
Such assistance will lead to more financially secure and less stressed sales staff – directly impacting their sales performance.
Educate and Empower your Sales Team
A continuous growth mindset and hunger for improvement are two of the key traits of high-performing employee behavior. Therefore, don’t let profits and revenue monopolize your business when building a high-performing sales team.
Focus on setting goals that motivate your sales reps to sell better. Know their strengths, weaknesses, and areas they want to improve.
Set aside funds for coaching and training your sales team. Make sure your team has a good understanding of the sales plan, compensation, products, average sales cycles, and overall sales strategies.
This tells your sales team that you encourage them to grow professionally, bring new ideas and techniques to the table, and provide their opinions on board–all of which, in turn, makes them a high-performing sales team.
Your sales team is the life and blood of your business. The company’s future depends on its performance–make sure you do everything to keep it high. The above-shared expert tips are a great place to start caring for fostering a high-performance sales team. But don’t just stop there.
Consistently consult with your team and provide them with all the resources to increase accuracy, reduce costs, and drive sales performance up the roof.