Sales Commission Plans

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Sales stars are already at the top of their game. What’s left to say about improving their performance?


The research on the best commission plans for underperformers and core performers focuses on unlocking their potential. In comparison, the research on peak performers focuses on removing the roadblocks that prevent them from being even greater.

You would never hobble a star athlete like Usain Bolt or Serena Williams. Yet, aspects of many commission structures do just that. They either block peak performers from earning more out of near-sighted fear, or keep raising the bar impossibly high until peak performers eventually falter or stop trying as hard.

Use the four research-based recommendations on sales commission plans below
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This can sometimes be very challenging if the person simply had an extraordinary year that started with a full pipeline in 2007 and 2008 is significantly smaller. Sometimes an extremely large deal comes in that is unique for the company and which might never happen again, so setting quotas above last year’s actual revenue for a salesperson should be well thought out. If last years Rock Star believes the new quota is not achievable based on their current pipeline, they often quit.—Nancy McCarthy, President of DC …show more content…
This means you should offer at least as many prizes as there are peak performers on your sales team. According to researchers Thomas Steenburgh and Michael Ahearne, this works because "increasing the number of prizes in a contest increases the chances that a laggard [underperformer] or a core performer will win a prize in place of a star, which motivates stars to work harder."

However, introducing rank-ordered prizes into contests with multiple prizewinners does not produce any boost to sales effort and revenues. In other words, the optimal sales contest should have multiple prizewinners, but the values of the prizes can be kept identical across winners.
Go forth and experiment

After considering all of the information in this article, as well as our previous articles on using your commission plan to help your core performers and underperformers [insert links] generate more revenue, where should you