Feedback on Sales Compensation plan

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Hi,

Question for sales professionals:

We are new at hiring and working with sales executives/reps, so we would appreciate a sales pros' feedback on the compensation plan draft we've researched and developed. Here it goes:

Industry: Internet Marketing, product: selling site memberships and access to training resources, sale closing time: 1-2 weeks, products price range: $200 - $2,000, the job is virtual

1. The model would be draw vs. commissions + bonuses for desired sales behavior

2. Sales person would get 30% on reaching target sales amount

3. Sales person would have to hit $7,500 (50%) target in sales first month, and $15,000 (100%) in the second and further months to earn 30% commissions

4. This target would mean selling around 10-15 memberships a month

5. There are bonuses like, increased % (to 50%) on reaching $25,000 in sales, $2,000 bonus on 3 consecutive months of reaching or exceeding the targets.

6. The draw against commissions would be $2,000/mo

7. If the person doesn't reach targets after 2 months or owes the company more than $4,000 (2 draws), he/she is out of the team

If you have any feedback or comments, please, drop a line here, we highly appreciate that, thanks!

Marina
#sales compensation #sales job
  • Profile picture of the author artwebster
    This sort of 'virtual' contract could be self defeating because a real salesman wants to go head to head with a prospect and win a deal by the sweat of his brow and the utilisation of years of experience and accumulated knowledge.

    Reading your terms, it strikes me that you want to use affiliates and are prepared to allow a draw on unearned commissions (always dodgy) while imposing restrictions that most tax authorities would read as indicating that you expect the salesperson to restrict his activities to your business.

    Imposing a minimum sales target implies a degree of control that precludes the salesman claiming to be self employed because you are directing his activities and breaching the ethos of self employment.

    This would appear to be treading the very thin line between providing a service for a self employed salesman to sell and employing a salesman to sell a service.
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  • Profile picture of the author seasoned
    ALSO, does this mean that if they sell only $6000 in their first month that they get NOTHING!?!?!? If they fail to have the stated amounts later then they get NOTHING?

    It may not even be legal in the US.

    Besides, if they are employees, then doing this in the US IS illegal! If they are NOT employees, then you provide too much risk for the meager chance at a reward, and won't get many good takers.

    Steve
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    • Profile picture of the author iwisuccess
      If they dont get to the target amount in sales, they get the draw - $2000, if the next time they dont get to the target amount - again, they get the draw - $2000, but the draws will be deducted from the commissions. For example, 3rd month they reached the target amount and should get, say $6,000 in commissions, the amount they owe to the company (the draws) will be deducted from these commissions. At the point when they dont owe anything to the company and sell for for example $7,000 in commissions - they receive full commissions amount, since they already paid back to the company for the draws paid to them during the learning curve months.
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