Sales Incentive Structure

Sales teams require incentive structures to be effective.

Sales incentive structures are put in place to give salespeople a reason to work hard and sell as much product as possible. They may take a variety of forms in accordance with the individual needs of the company, but they all follow certain themes.

Function

The key function of a sales incentive structure is to give salespeople a reason to sell. Not only must it give them a reason, through commissions, bonuses or other financial incentives, it must also be clear--a salesperson needs to know how much he stands to make from a sale and when he will be paid.

Considerations

Incentive structures must work in a way that gives salespeople a reason to work hard without breaking the business' budget. If the plan is too generous, the salespeople will work hard and sell a lot, but the company will not make enough money to profit and grow.

Benefits

The major benefit of a sales incentive structure is that everybody wins. The company makes money by having salespeople who are incentivized to work hard, and the salespeople benefit by having a tangible reward for their efforts. A harder-working salesperson makes more money than a lazy salesperson, which is not always the case in process-based workforces such as administration.

References

• SalesComp America: 10 Ways to Mess Up Your Sales Force and Eleven Good Ways to Fix It!
• MoreBusiness.com: Making Sales Incentives Work for your Business