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2 Ways To Compensate Sales Reps

Name: 2 Ways To Compensate Sales Reps
Uploaded: 2024-12-02T22:00:23+00:00
Duration: 1 min 23 s
Channel: Shanli Liu, CPA, CTP
Description: In this segment, the presenter outlines a sales compensation framework divided into two columns: monetary rewards (commissions) and non‑monetary rewards…

2 Dec 2024 · 1 min

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1:23

In this segment, the presenter outlines a sales compensation framework divided into two columns: monetary rewards (commissions) and non‑monetary rewards (recognition, praise, attention, perks, and status symbols). He emphasizes that non‑monetary incentives—public recognition, leaderboards, preferred parking, and status items like striped hats for milestone sales—are powerful motivators that improve job satisfaction and performance. On the monetary side, he explains the decision to compensate both setters (who generate leads and improve show‑up rates) and closers equally, arguing that increasing the funnel’s throughput (e.g., a 20% higher show‑up rate) is as valuable to the business as a 20% increase in closing efficiency. Setters receive commissions to incentivize lead generation, while closers receive commissions for closing deals, with both roles weighted equally in overall compensation.

Chapters

You can think about compensation in two columns. You've got money and not money. All right, this is a very complicated system. I don't want to get into the specifics, a lot of physics behind this. So you've got the money you give them for closing deals, and then you've got other shit. And so that's recognition, praise, attention, approval, perks, status, things like this. If you publicly recognize them, if you have a leaderboard, if you give them more attention, you get— you actually train them more, you give them more skills, you say, hey, Attaboy, awesome job, great day today. You say, hey, the guy who closes the most gets to park in the nice parking lot. And then status, like maybe when they close 100 sales they get a hat with a stripe on it. When they close 1,000 sales they get 2 stripes. Just when you guys come on the team they're like, fuck, I want one of those hats, right? There's all these things that you can do to increase the value of the job outside of money. And as much as people, sales guys included, be like, that doesn't motivate me, sure as shit does. All right, it totally does. Because it makes your life better. On the money side, there's a couple ways to do this. Now, one of the big decisions we made up front was that we were going to comp setters and closers. The funnel is throughput. If I can increase my show-up rate by 20%, it's just as good as increasing my closer by 20%. It makes no difference to the business, all right? And so they were just as equally weighted in terms of their value. But again, it's easier to set than it is to close. Just as important, but easier. But setters still got commissions as well to incentivize the fact that they would get people to show.