What is the best sales compensation plan for inexperienced reps?
If a rep comes to Waxie and has little industry experience, they will initially be placed on salary program that can see them through their training program. The training can last anywhere from 90 days to up to one year, depending on how much or little industry knowledge the rep has. We have found that the rep will be more focused on training and learning the fundamentals of their job, along with product knowledge, if he/she does not have to worry about a fluctuating comp program (e.g. commission). Once the rep is done with training, they will typically be moved to a salary decline program or maybe even straight commission.
With newer/inexperienced salespeople, we have found that a salary is the best way to get them established in the business. New reps have a learning curve with product, customers and processes, so we feel this salary period allows the individual the necessary time to get up and running. These representatives have visibility to the commissionable sales and are able to monitor progress to the base plus commission plan.
Small salary base and commission — you need to give the rookies enough to “survive” but drive the work ethic to earn a “better livable” wage. It would be too discouraging with all the rejections they get if they had no income.
At our company, we truly believe in the long-term benefit of compensating our sales force through a commission based structure. On new/inexperienced sales people we usually develop a combination of a salary and a partial commission structure that gradually moves them to full commission if they are successful.
A new salesperson needs to be a blend of commission and salary. The salary should work on a declining scale so that as their training becomes less and they are more independent they should rely on their salary less and their commission and book of business more and the commission should work on an inclining scale so that in the beginning they will get a little taste of how commission is when they make a sale and as their book of business grows their commission will increase accordingly. As they continue to gain tenure incentive plans should be added to keep them excited and their book of business growing.
Our compensation for new sales professionals is similar to our veterans. The main difference, is that we start new sales professionals out with a guaranteed salary for a period of time; typically 12-24 months. As they get experience and learn our sales process, we transition them into a salary/commission blend as outlined above.
The straight commission salesperson does not seem to be out there as in the past. The market place requires a more cohesive team approach to selling, with that in mind the salary plus bonus, works best for us.
In general, some form of the draw, and subsidizing their income for a finite period to help them establish a base with ties to escalating incentives.
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