How to Make salaries for sales personnel

Text/Ray Silverstein

As your business is growing, you realize that you cannot do everything on your own. Because you want to focus on promoting enterprise growth, you are planning to hire your first salesperson. Once you find a suitable candidate, you will immediately face the question: how will you develop a salary structure?
The salary structure of sales personnel is a very tricky and important problem. There are many modes to choose from. You can pay 100% of your salary, 100% commission, or commission plus allowance, or other combinations. Each method has its own advantages and disadvantages.
An empirical rule: commissions can motivate sales staff to work harder, while fixed salaries can help increase employee loyalty.
Before finding a proper salary structure, you should weigh several factors, including the type of sales personnel you want to hire and the types of products your company sells, the length of your target customer and sales cycle. There are many different types of sales personnel who are competent for different sales environments. In short, it all depends on the products you want to sell and who you want to sell them.
When the vast majority of compensation is Commission, sales staff often feel the value of "yourself. As a result, they may easily leave your company and take away your customers. In contrast, the danger of a sales person who mainly uses salary is not that great. If you pay the sales staff a commission, you must make a tough non-competitive clause in the employment contract ).

Advance advances and their disadvantages
At the beginning, many small enterprises will advance their new sales staff in advance based on future Commissions. In theory, this operation is like a security protection network by the sea. Although the tide hits them, they slowly see their feet wet.
However, the disadvantage is that if your sales staff has never been prepared to speed up the initiative, he will spend a lot of advance fees without any effect. So how will he return to the company? If sales continue to decline, the sales staff may resign or be dismissed by you. In either case, your company will face a deficit. You will not only lose a lot of advance fees and employees, but also lose the training time in vain.

Consider your sales cycle
The boss often prefers a Commission-based salary structure because it determines the income of employees based entirely on the sales performance. But you also need to realize that if your sales cycle is longer, the Commission-based salary structure will be less attractive to employees. A long sales cycle may prevent sales staff from continuing to earn revenue, so that even the best sales staff will not stay in the company.
Using the sales standard may be the easiest way to measure the sales performance, but it is useless for an extended sales cycle. In many cases, it is more meaningful to use enthusiasm to measure the performance of new sales personnel, such as how many calls they make, how many suggestions they give, and how they follow up.

Achieve balance
For most employers, basic compensation plus commission is the best solution. How can we achieve an ideal balance between salary and commission? Research shows that the ratio of 50/50 or 60/40 is the best. Of course, any formula and proportion should be suitable for your business or sales cycle. No matter what solution you choose, make sure it is simple and straightforward. A complicated incentive solution is actually an obstacle. Translated by Liu Mingjun)

The author is a writer of entrepreneur.com's "sales" column, president and founder of the president's resource organization. This is an American company that provides consulting and advice for SMEs.