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Step-by-Step Guide to Setting Up a Incentive System
The commission system is crucial for extracting the best performance from sales and marketing teams. What should be considered when setting up the right commission system? We have prepared a guide to answer this question for you. If you struggle with setting up your system, get in touch with us, and let's build the most suitable system together!
Commission System Setup Guide
Review Company Goals: Set sales goals that are in alignment with the company's overall objectives.
Setting Sales Goals: Ensure that the goals are measurable, attainable, and challenging. Select metrics that align with your expectations from positions and company goals. Avoid setting goals that are impossible to reach, difficult to understand, or complex to calculate.
Short, Medium, and Long Term Goals: Ensure that the goals you set provide short-term gains without damaging the company in the long run or causing the sales team to lose focus in the pursuit of long-term goals.
Choose the Type of Commission: It could be a fixed amount, percentage-based, or target-based. To understand which type of commission is more suitable for your company, read this article: Which Commission System Is More Suitable for My Company?
Set Threshold Values: Define the minimum sales level for payments and upper limits.
Determine Measurement Periods: Choose monthly, quarterly, or annual commission periods.
Set Preconditions: You can set expectations such as achieving a certain percentage of the company's total goals, completing collections, preventing customer churn, and using the CRM system as preconditions for a healthy sales structure.
Ethical Values: Ensure that the system you devise does not conflict with the company's ethical values.
Explain the Criteria: Clearly state the criteria of the commission system and the calculation method. Establish systems that allow metrics to be monitored by everyone.
Ensure Transparency: Share the system with all relevant personnel to ensure understanding.
Use Automation Tools: Facilitate commission calculations and monitoring using software. Ensure easy monitoring of the metrics you have set in the criteria.
Record Keeping: Ensure that sales and commission data are accurately and promptly maintained.
Provide Training: Educate the sales team about the commission system, tools to be used, and strategies.
Monitoring and Evaluation: Regularly monitor and evaluate sales performance.
Adapt to Market Conditions: Keep the system flexible to quickly adapt to market changes.
Be Open to Changes: Create a continuous evaluation process to allow for necessary updates to the commission system.
New Products: Make an effort to set separate commissions for new products as they arrive.
Collect Employee Feedback: Regularly gather employee feedback about the commission system.
Continuous Improvement: Make improvements in the system based on feedback and performance data.
Ensure Legal Compliance: Design a commission system that complies with local business and tax laws. Do not forget to review the system with your company lawyer and human resources departments.
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