I have created a few sales comps plans but I am working with a company that has a very high margin product that has a payback of 5 years. I am thinking i do a 15, 10, 5, 5, 5 in commissions for the 5 year period for sales.... are there things I should know before committing to this type of plan... what is fair for a sales management override?

Personally, I'm a fan of sales comp plans being tied to ongoing performance. Sure, the salesperson should get some of that long tail, but only while he continues to work productively at the company. Once he leaves, he should lose the tail, since someone else will likely need to step into the relationship with his customers. But there are too many variables to give a universal answer.

The true answer is this: You need to pay your salespeople enough so that they are motivated to keep working for you rather than seeking alternative employment. This means you need to analyze at-quota pay, and ensure that your base and commission structures provide a market-level of compensation at quota. You can muck with anything you want as long as that goal is met.

Answered 6 years ago

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