How do your sales compensation plans compare?
Compensation plans among sales staff can vary greatly but generally, they all include some mixture of base pay and commission.
The right mixture can be tricky as managers seek to offer a base salary high enough for sales personnel to meet basic necessities, but low enough that sales commissions become a vital part of a paycheck.
“We have a very good pay plan, but it tends to be a lower salary with higher commissions,” says Dennis Boswinkle, sales manager for Nacarato Volvo Trucks’ dealership in Nashville, Tenn.
Marrying the right person to the right compensation plan is also a key factor in keeping your staff motivated, he adds.
“If you’ve got somebody making $40,000 to $50,000 a year and they’re comfortable with that level of pay, they’ll never be the salesperson that you need,” Boswinkle says.
Chris Marsh, sales manager for Tri-State Trucks, says compensation plans vary for the level of experience each sales person brings and that commission structures are tiered based on gross margin of the sale.
Open communication, Boswinkle says, also is a key factor in making sure sales staff understand the importance of hitting their sales goals, and how their sales performance impacts their co-workers.
“All my guys know what it takes to pay the bills here,” he says. “They know what we need to have a healthy bottom line. We talk about that very openly.”
Nacarato tries to balance dips in demand for new trucks by honing attentions on its used truck lineup.
“When new is off, used is on,” he says of trends in the new and used truck markets. “When new is on, used is off.”
Jason Cluck, store branch manager for Arrow Truck Sales Atlanta, says his company’s pay plans are 100 percent commission based, but do offer a base pay for the sales person’s first six months.
If sales commissions exceed the base allotment, the employee is paid the higher of the two amounts. After the first six months, all employees are transitioned to full commission.