A decisive execution of your commercial strategy

Introduction

Your commission plan isn't just a way to compensate your sales team; it's a strategic tool that will significantly influence their focus and priorities. Aligning this plan with your commercial strategy is crucial for driving desired business outcomes.

Whether your aim is rapid growth, enhanced profitability, or deepening customer relationships, your commission structure should reflect and support these goals. The actual designing of the plan is not rocket science, the rocket science and your key take away is to align.

The commission plan is where your commercial strategy meets fast execution.

‍Growth and market share acquisition

For companies targeting rapid market expansion, commission plans should incentivize new customer acquisition and market penetration. Rewarding sales representatives for bringing in new accounts and breaking into new territories or segments encourages aggressive growth tactics that align with broad market share acquisition goals.

• Accelerators providing additional earnings for exceeding targets
• Accelerators for the first customers in a new market
• Revenue rather than earnings
• Number of new customers acquired (be aware there should be some threshold on type of customers or deals not to onboard poor deals)

Also consider rewarding sales reps for not just hitting their sales targets but also for penetrating new segments that align with strategic growth objectives.

‍Profitability

When profitability is the goal, your commission plan needs to encourage the sale of high-margin products or services. Tailor commissions to prioritize profitability over volume, incentivizing your team to focus on deals that contribute most to the bottom line.

• Higher commission on certain products with high margins
• Upselling on current customers to premium subscriptions or high margin products
• Commission that is based on earnings rather than revenue will encourage your sales reps to keep the prices up

‍Customer retention and upsell

Maintaining a loyal customer base while finding opportunities to upsell is crucial for sustained growth. Commission plans that reward not just the retention of customers but also the successful upselling or cross-selling to existing clients foster a culture of nurturing and expanding customer relationships. This strategy emphasizes the value of long-term customer engagement and the incremental growth it brings.

• High retention rates
• Few support tickets
• Account growth

This is also a good option for a CSM- or nurturing team. The hunter teams can for example use a growth model while the CSM team is incentivized on customer retention and upsell.

‍Conclusion

Aligning your commission plan with your commercial strategy is essential for ensuring your sales efforts contribute to your goals. If you align it well, your commercial strategy will get a fast track to execution.

I’m confident you can work out a model that suits your company’s strategy but if you haven’t read this blog post yet, start there and good luck!