How to set the variable salary of your salespeople
What is variable pay and how does it work?
The variable wage is the Part of the salary From a worker which depends on your performance or results achieved in a specific period.
In the case of commercials, this type of compensation is essential to encourage your sales. The more sales you make or the better results you achieve, the higher your monthly salary will be.
EXAMPLE: A commercial has a base salary of 1,200€ per month. In addition, you earn 10% in commissions on sales made. If you sell products for €8,000 in a month, your total salary will be €1,200 fixed + €800 variable (10% of sales).
This model benefits both salespeople, who are rewarded for their effort and dedication, and companies, which manage to align individual objectives with corporate objectives.
What types of variable compensation are there?
The variable wage can adopt different forms according to the needs of the company. Here are the main types of variable compensation that are most commonly used:
Standard commission
A fixed percentage that is Amount to the base salary for each sale made. This percentage may vary depending on the difficulty of the product or service.
EXAMPLE: A salesperson earns 5% for each transaction. If you sell a service for €10,000, your commission will be €500.
Commission by objectives
Based on the achievement of predefined and agreed goals in a specific period. It's ideal for encouraging continuous effort.
EXAMPLE: If a commercial achieves sales of €20,000 in a quarter, they receive an additional incentive of €1,000.
Escalated commission
Increase the commission percentage based on sales volume.
EXAMPLE:
- Sales up to €10,000:5% commission.
- Sales between 10,001 and 20,000€: 7% commission.
- Sales over €20,000:10% commission.
Practical examples of incentives for sellers
Next, some examples of how to structure incentives to keep your salespeople motivated:
- Bonuses per new customer: Reward sellers who attract new customers with an extra payment.
- EXAMPLE: 100€ for each new customer attracted.
- Quarterly Awards: Incentivize the best commercials of the quarter with a bonus or gift.
- EXAMPLE: The salesperson with the most sales receives a trip or a voucher of €2,000.
- Exclusive commissions: Increase the commission for specific products or services that you want to promote.
- EXAMPLE: 20% commission for sales of high-end products.
How to combine a fixed plus variable salary
To design a balanced system between fixed and variable pay:
- Determine the base salary:
- This should be sufficient to cover the salesperson's basic needs and maintain their initial motivation.
- Set the variable percentage:
- Generally, the variable wage represents between 10% and 30% of the total.
- Align business objectives:
- The variable component must be directly related to the company's goals, such as increasing sales or attracting new customers.
Practical example
A salesperson has a base salary of €1,500 and a variable of 15% on sales. If you achieve sales of €20,000, your total salary will be:
- Fixed: 1,500€
- Variable: €3,000 (15% of €20,000)
- Total: 4,500€
Key factors for setting the salary of your salespeople
To ensure that the salary is fair and competitive:
- Level of experience:
- Junior: Lower fixed salary with a variable between 10% and 15%.
- Senior: Higher fixed salary that varies between 20% and 30%.
- Commercial Director: Variable part based on team results.
- Type of industry: Some sectors require higher salaries due to the complexity of the product or market.
- Expected return: Analyze how much the salesperson must sell to be profitable and adjust their objectives accordingly.
How to motivate your sales team to maximize results
- Avoid rigid limits: Set goals that can be easily overcome, such as a base objective with additional incentives to exceed it.
- Constant communication: Meet regularly with your team to review their progress and adjust strategies to achieve objectives.
- Public recognition: Highlight individual accomplishments in internal meetings or newsletters to reinforce motivation.
CRM and management software: an essential tool for sales
Un CRM software allows you to organize, analyze and optimize the work of your sales team.
Some key benefits:
- Detailed record of each customer and their interactions.
- Task automation such as tracking sales opportunities.
- Metric analysis to evaluate business performance.
With taclia, you can manage not only your customers, but also invoices or quotes, tasks, suppliers and more from a single platform.
Find out how taclia can help you boost your team commercial and achieve your goals.
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