Sales representative how to negotiate a bigger salary. Sales representative. Fixed bonus system

Remuneration goals can be completely different, sometimes diametrically opposed, if you look at them from the point of view of the company, on the one hand, and from the point of view of employees, on the other.

Let us consider in more detail what criteria and requirements a good salary and a good remuneration system must meet, taking into account the points of view of both management and subordinates. Recording these criteria can provide valuable guidance to the sales manager, even though they are not absolute.

So, a good salary system should:

1. Motivate sellers. The remuneration system should perform the function of stimulating sales personnel. It should encourage sellers to meet or exceed targets.

2. Monitor the activities of sales representatives. An effective compensation system should act as an invisible check on sales representatives, allowing management to better manage the activities of sales personnel. The remuneration system should provide sufficiently flexible incentives necessary to compensate for the efforts made to solve such diverse tasks as full-time work, “missionary” activities of salespeople.

3. Motivate to treat clients correctly. Today, companies are beginning to compete more and more in the area of service provision. A good remuneration system is one of the factors motivating sellers to work correctly with customers, thereby ensuring their greater satisfaction. In other words, if, when determining the amount of wages, attention is paid only to volumes, then losses in the quality of service will be inevitable.

4. Be good enough to attract and retain competent employees. An effective compensation system is one of the reliable tools used to create a highly qualified staff of sales representatives. Because it allows not only to retain the best personnel, but also to attract new employees to the company who have valuable qualities and knowledge.

5. Provide the employee with the opportunity to know in advance how much the salary depends on his efforts and how much he can earn. The employee must be aware of all the requirements for his job and all the rules that determine his remuneration. That is, how much and for what he receives. Otherwise, he will work in accordance with his own subjective ideas about the goals of his work and the integrity of his management in assessing his work. And this, in turn, leads at a minimum to a mismatch between the goals of the employee and the enterprise. It is clear informing of employees about the criteria for remuneration for their work that allows such problems to arise.

6. Meet the employee’s expectations on time. It is necessary to reduce the time between receiving the result and paying the bonus as much as possible. For example, performance bonuses that are achieved within a month should, to the extent possible, be paid at the end of that month. That is, you did your job - get the money you earned. A good spoon for dinner. But the performance of some workers can only be determined after a long period of time. It is also important to encourage such actions, but then it will most likely be a bonus at the end of the year. In any case, this must be done with a clear mention of the reason for the promotion.

7. As far as possible, adequately match the efforts of employees. In most cases, an indispensable condition for receiving remuneration is only the achievement of certain results. This situation can be very contradictory and even conflicting. An employee can work very hard, put in a lot of effort, but at the same time achieve modest results and, accordingly, receive low rewards. It is imperative to take into account how the effectiveness of his work actually depends on factors that are and are not subject to his control. For example, we looked at possible differences between different territories served by sales representatives. In one area you can exert less effort, but the result will be significantly greater than in another with more intense work.

8. Produce natural selection» the most hardworking and capable. That is, it must systematically encourage these qualities, their manifestations, and punish others, so that there is a constant repulsion of the incapable and lazy.

9. Be both economical and competitive. That is, companies must pay employees what they earn. If companies pay more than employees earn, nothing good will come of it. The remuneration system must be economically justified. A company whose wage costs are disproportionate to the revenue it receives will either begin to increase the price of its products or face a reduction in profit margins. Most companies, however, try to keep hospitality costs at a competitive level. It is not always easy to find a balance between cost-effectiveness and competitiveness.

10. Be both flexible and stable. It should provide the opportunity to receive both variable income, depending on the results of work over a certain period of time, and stable income. In other words, a constant salary plus interest. The remuneration system should be flexible enough to best suit the needs of specific sellers. Some companies use individual compensation systems, where the sales representative can choose what percentage of his salary will be fixed and what percentage will be based on his performance. Flexibility is also necessary to accommodate product differences. Some products are in constant demand and may be subject to frequent re-orders. Other products are sold in single copies and therefore require additional effort and a creative approach to selling, which is worthy of special encouragement. At the same time, the basis of the remuneration system must be stable. Only then can we expect from the employee at least some kind of attachment to the company, necessary for the successful achievement of common goals.

11. Provide the opportunity to earn a stable and rewarding income at the same time. Every compensation system must provide employees with at least a minimum level. The principle of this provision is that the seller does not have to worry about how he will earn a living. If it's a bad month, or the company is experiencing a slow season in the market, or a sales representative is unwell and unable to work for a while, then he should receive some income. However, this constant income should not be too high, so as not to reduce the interest in incentive payments.

12. When used for the purpose of additional incentives, the salary should change by more than 10-15%. Otherwise, it will not be able to have a noticeable effect in terms of stimulation. This is what practice shows.

13. Do not include too many components in the variable part. If there are more than six components, then they lose their motivational effect. Sellers lose the connection between their actions and different components of wages, it becomes difficult to navigate them and choose the most effective plan of action.

14. Among the components, also include points of reward for collective results. Corporate-wide bonuses promote team cohesion, coherence in employee work, and consideration of the interests of other departments. Ideally, an employee should receive three bonuses:

for individual results, which stimulates his personal productivity;
for the results of the work of his unit, which contributes to a good climate in the unit and increased productivity;
for the results of the enterprise as a whole, which contributes to the employee’s acceptance of the enterprise’s goals.

At the same time, it is necessary to convey to employees a simple truth: in the absence of collective results, the enterprise will not have the money to reward high individual work results.

15. Easy to understand. Simplicity is the hallmark of a good compensation system. Sometimes simplicity and flexibility become conflicting goals - and this is true: a simple system may not be flexible enough, and the system may achieve adequate flexibility at the expense of simplicity. However, the salary system must be simple enough for employees to easily understand it: they must quickly calculate their income. The manager's task in this case is to find a middle ground, taking into account the importance of both conflicting goals.

16. Be fair. A good compensation system should provide fair evaluation of the performance of all sales representatives. Nothing can quickly destroy an employee's positive attitude than the feeling that his pay is unfair. One way to ensure evaluation objectivity is to strive to use, as much as possible, measurable evaluation criteria that can be controlled by sellers. But here, too, one cannot go beyond the reasonable, so as not to cause confusion.

17. Be effective in the period of time in which its components meet the requirements of the situation. The point is that no remuneration system can be effective in every situation. Each company should have a system designed for its specific purposes, relevant for a limited period of time. There may be significant similarities common features systems used by different companies, but the details should reflect the characteristics of each company, as well as the specific situations in which they find themselves.

18. Developed by the company’s management, taking into account the opinions and suggestions of the sales representatives and sellers themselves. Because sales representatives will better and more enthusiastically accept the remuneration system in the process of development of which management consulted with them.

If you carefully go through all the listed points, you will notice that some of them take into account the interests of employees to a greater extent, while others take into account the interests of the company.

Main types of remuneration systems

A fixed salary is a fixed element that depends on the amount of time the sales representative works.
Direct commissions are a variable element depending on the results obtained from performing a certain amount of work.
Combined wage systems.

1. Simple salary system (hourly form or salary). The amount of payment depends on the unit of time, and not on the amount of work performed. Salary is a fixed element of the remuneration system. In each time period, the same amount of money is paid to the sales representative regardless of his sales volume.

Advantages of this method. A regular income guarantees the employee absolute confidence, stability and reliability. Accordingly, his loyalty and reliability, commitment to the company, and satisfaction with cooperation with the company increase. The result is low staff turnover. This form of remuneration allows you to require sellers to perform various functions that are quite important for the company, but are not directly related to sales. For example, sales staff can spend more time focusing on the customer's interests. That is, he can spend more time on each client and provide him with better service. Ease of understanding can also be highlighted as a positive touch. This payment system is the simplest and most understandable, which allows us to minimize the likelihood of various disputes and misunderstandings.

Disadvantages of this method. A permanent salary is not a direct incentive for an employee. Although you can compensate for this disadvantage by changing the size of the bet, which may well become an incentive. With this form of payment, it is difficult to evaluate the employee’s performance. It is difficult to relate the salary amount to various criteria that evaluate an employee’s performance. For a company, such a salary is a constant expense that does not depend on the profit received or whether sales volume decreases or increases. That is, they sold a lot - they paid, they sold a little - they still paid.

When is the best time to use this method? First of all, when management can effectively control and stimulate sales representatives. The following specific situations can be cited as examples:

sales representatives are still in training or are still too inexperienced to earn enough on a commission basis;
the company wants to enter a new geographical market or sell a new range of products, that is, when forecasting sales volumes is problematic;

2. Payment system based on direct commission payments. What is a commission? This is a regular payment for completing a certain amount of work. Sales representatives usually receive commissions based on the results achieved on those parameters that are under their control and depend on them.

The choice of commission percentage may depend on:

the target income level for sales personnel determined by the manager;
the profitability of this particular product;
difficulties in marketing specific products;
the type of customers attracted or served by the sales representative.

A higher percentage should be paid for the sale of more profitable products to stimulate their sales. The commission percentage can be constant for any sales volume, or it can be sliding, increasing or decreasing as sales volumes increase.

Advantages of this method. Has a huge stimulating effect on sellers. Provides unlimited opportunities for income growth if there is no upper limit on commissions. It is a strong motivator for employees, encouraging them to work harder. It's easier to weed out underperforming sales representatives. It is a variable expense item for the company. They sold a lot - they paid a lot. They sold little and paid little.

Disadvantages of this method. It is difficult to control and manage the activities of sales representatives in other areas not directly related to sales. The dominant desire of sellers is the desire to sell as many products as possible without taking into account the interests of the company or the client. Sellers concentrate their efforts only on products that are easy to sell and neglect the sale of difficult-to-sell products. Customers may be sold more products than they need, including items that are not the ones they need or are interested in. Sellers show no interest in providing customers with a high level of service. Since the company does not provide a guaranteed income, sellers tend to believe that they do not owe it anything. That is, loyalty and commitment to the company is at a minimum level.

When is it best to use this method:

When a company is in a vulnerable financial position and therefore distribution costs must be linked directly to sales volume.
When a sales representative begins to lose interest in work and a strong motivating factor is needed to achieve appropriate sales targets.
When there is no need to admonish the product, provide customers with quality service, or after-sales service.
When there is no need to develop long-term relationships with clients.
When a company uses part-time salespeople or independent contractors, such as manufacturing sales agents.

3. Combined wage systems. We looked at two extremes: bare salary and bare bonuses. Now let's look at something in between - combined systems. Their task is to overcome the weaknesses of using one method while maintaining its advantages.

salary plus commissions;
salary plus bonus (bonus);
salary plus commissions and bonus (bonus).

As you can see, all three options include the ratio of the constant and variable parts. Which part will be present as an element of incentives, and which in the form of a fixed salary, should depend on the nature of the sales tasks and marketing goals of the company.

Now let's try to define the terms.

Prize (bonus) is a one-time payment for achieving above-standard indicators. The bonus cannot be used on its own but must be used in conjunction with another element, salary or commission. The most commonly used basis for calculating bonuses is the evaluation of the sales representative's performance against the plan. Fulfill the plan - get a bonus. Plan (quota) per sale is a target assigned to a marketing unit for a specific period of time. A marketing unit can be: sales representative, branch, district or region, dealer or distributor.

The target may be expressed in terms of money, units of production, or sales activities. For example, each sales representative may have a sales target for a three-month period, gross profit, or he is given the task of satisfying the needs of the client. Quotas may also be assigned to each type of product or type of customer. If salespeople meet their quotas, they often receive some type of compensation or performance bonus. For example, a sales representative may receive a cash bonus cash in the amount of “X” for exceeding the sales quota by 10%.

Salary plus commissions. It is used more often than all other methods. The question often arises: what part of the salary should be fixed and what part should be variable? Typically the variable portion is 40% of the total remuneration. But you need to remember one thing. Neither option is always good.

This type of payment contains the advantages of a fixed salary, and also provides flexibility and incentives through commission payments. But we must not forget that the introduction of incentive elements to the detriment of the fixed part of the salary may lead to a weakening management control over sales staff. That is, by increasing the share of commissions, you can increase the activity of sellers and sales volumes, while increasing the share of the constant part allows you to improve manageability and control. So salary plus commission is an ideal option when a company wants to keep its employees under control, but at the same time wants to encourage their activity.

The success of a salary plus commission system or any other combination system depends primarily on the balance achieved between the elements.

Salary plus bonus (bonus). An ideal option for remunerating sales representatives if a company wants to keep its employees under fairly strict control, while at the same time offering them a certain element of incentives. The difference here compared to the previous payment method is that the fixed portion exceeds the variable portion of the remuneration much more than in a salary plus commission system. The use of a “salary plus bonus” system is effective in stimulating any action in the short term. For example, if a company is interested in attracting new customers, stimulating repeat orders, or increasing outreach efforts for a particular product.

Some companies use bonuses to help salespeople focus on long-term goals, such as increasing customer satisfaction. Many companies use bonuses to reward teams for performance. If the team achieves its goals, then all team members receive a bonus.

Salary plus commission plus bonus (bonus). By far the most common system. It combines all three components - salary, commission and bonus. This allows, on the one hand, to ensure the presence of a certain level of control, at the same time to reward employees and offer a bonus for solving special, specific tasks. An example of a specific form is base salary, commissions, and quarterly bonuses, which for each salesperson are calculated based on customer satisfaction ratings.

4. Relationship between method and goals. It is extremely important to link the compensation system to the achievement of certain goals.

Let's look at examples of goals and options for remuneration systems:

The goal is to increase revenue by 10%. To achieve this goal, some form of incentive is usually necessary, such as a commission or bonus.
The goal is to increase sales of a specific product by 10%. In this case, it may be useful to pay commissions at higher rates, on high-margin products, or on any other goods that the company is particularly interested in selling.
The goal is to increase sales to existing customers. A bonus may be paid for increasing sales to existing customers by a certain percentage. The bonus may be linked to a quota for repeat orders. An alternative is to pay higher commission rates on repeat orders.
the goal is to increase customer satisfaction. Bonus is best way accomplish this task, although increasing the salary can be quite effective.
the goal is to stimulate outreach. Explanatory activities may include training dealer salespeople, conducting presentations or preparing exhibitions, expositions, and other activities not directly related to the sales process. Some of these efforts can be measured on an individual basis and a bonus paid upon completion. Efforts that cannot be easily measured may be rewarded by increasing the salary percentage of the total.
the goal is to invade new territory. Perhaps all income should be in the form of salary, at least in the initial stages of developing sales in a new territory.

Development of a remuneration system for sales personnel

There are 6 main stages in developing a remuneration system:

Studying job descriptions.
Determining the goals of the remuneration system.
Setting the level of remuneration.
Development of a payment method.
Choice of indirect monetary payment.
Putting the system into operation.

Let's look at each one separately.

First stage. Studying job descriptions. At this stage, it is necessary to identify the essence, scale and possible difficulties associated with the implementation of each type of work. That is, to put it simply, what the seller must do, in what volume, for what period, so that the company agrees to pay for his work.

Second stage. Defining specific goals. There are examples of general objectives that are considered priorities that any remuneration system should strive to achieve. This is due to the fact that any company goes through different stages of its development and experiences different life cycles. Accordingly, at each stage the company may face different tasks. For example, the stage of entering a new market. The immediate task is to cover this market. The problem has been solved and the market has been covered, another task must be set. Let's say an increase in sales to existing customers. The next task is, say, expanding the range of existing customers. After solving it, improve the quality of customer service, then expand relationships with clients, and so on. It is important to remember that there is a direct connection between the tasks that the company faces and the payment system the company uses. If a company is faced with the task of improving the quality of customer service, and it pays sellers a percentage of sales volume, then this task cannot be solved with the help of such wages. Why? Because if a sales representative receives bare interest, then the most important thing for him will be the quantity of goods sold. He will sell as much as he can, as much as he can. And the last thing you will think about is the quality of service. After all, it does not affect his income in any way. In the same way, if a company wants to increase sales volumes, but only pays a salary, then again nothing will work. That is, you need to understand that the remuneration system that was effective at the previous stage will not necessarily be useful at the new stage. That's why there is a rule that says that wages cannot be good for every situation, always.

Examples of specific goals:

increase income by 10%;
increase sales of certain products by 10%;
increase sales volume to existing customers;
increase customer satisfaction;
develop sales in a new territory.

It is necessary to base each sales representative's compensation on those factors that are most within his or her control. Otherwise, at least the principle of justice will be violated, which will immediately entail undesirable consequences. It is necessary to carefully consider the elements that a company can measure:

quantity, sales volume;
sales expenses;
number of visits;
number of new clients;
number of presentations held;
gross income.

The more accurate the measurements, the more effectively it will be possible to use the remuneration system as a factor influencing the success of the company.

Third stage. Setting the level of remuneration. The salary level refers to the average income of a sales representative over a certain period of time. The level of pay is in many ways more important than the method.

People are more interested in how much money they made than how they made it. Very often, managers ask me how best to pay. I tell them that this is not where we should start. How to pay is not that hard to figure out. First, the manager needs to find out for himself how much he wants to pay, how much he can pay and how much he will pay to this employee. Only then do you need to move on to identifying the components of the salary, taking into account various factors and criteria. This is the only way to not get distracted, not to forget that we are talking about a person who has certain expectations and will first of all pay attention to the amount of the salary, and then to what it may consist of.

Therefore, one of the main efficiency factors is that sales personnel are paid at a competitive level compared to other companies.

Fourth stage. Development of a payment method. Management has in its arsenal the following elements for creating a remuneration system:

salary;
commission;
bonuses;
indirect monetary benefits (for example, holidays and insurance);
compensation of expenses.

Some of these components are means of rewarding employees, others guarantee stability and reliability of income, and others can help the company control distribution costs.

A sales representative is an employee who represents, promotes and sells a certain group of company products.

What does a sales representative do? He travels to retail outlets, offers goods, conducts negotiations, concludes sales deals, and also visits stores that already have his company’s products and monitors whether the goods are selling well. Sometimes performs some functions of a merchandiser.

After several years successful work As a sales representative or sales manager, you can move up the career ladder and become a business development manager or commercial director.

Places of work

The position of sales representative is in demand in almost all companies that sell products or services. These may be organizations selling:

food products (dairy, meat products, snacks, alcohol, tobacco);
medicines;
electronics and household appliances;
package;
printing products;
accessories and consumables for cars;
construction products;
some types of services;
and much much more.

History of the profession

In Russia, the first sales representatives can be considered domestic merchants. In the 15th-17th centuries, any person who made a trade transaction could be considered a merchant. Currently, trade transactions are carried out by sales representatives, sales managers and other commercial workers.

Responsibilities of a sales representative

IN job responsibilities sales representative includes:

advising clients on products or services;
work with existing client base;
search for new clients (presentation of goods or services, conclusion of contracts);
maintaining reports on work performed.

Sometimes the functions of a sales representative may include:

work with accounts receivable;
participation in the work of the sales department;
training customer sellers in the nuances of selling goods;
market analysis, monitoring competitors' prices.

Requirements for a sales representative

Here is a list of basic requirements for applicants:

higher education;
communication skills;
PC knowledge;

Sometimes requirements for a sales representative include:

having a personal car;
1 year experience in sales.

Sales representative resume sample

How to become a sales representative

You can become a sales representative without higher education, because For this profession, it is enough to have a secondary education. You can acquire the necessary skills of a sales representative on the job - companies often take applicants without work experience and teach them everything themselves.

Sales representative salary

Wages sales representative consists of a fixed salary and a percentage of sales and ranges from 10 to 100 thousand rubles per month. At the same time, a significant part of the earnings is a percentage of sales and bonuses for fulfilling the plan. The average salary of a sales representative is 40 thousand rubles per month.

A system of remuneration for sellers or sales representatives of a company, in which the amount of wages directly or indirectly depends on the amount of turnover generated by their labor. Apply various types V. k. 1) linear V. k. - a certain percentage of turnover is paid without any changes depending on how many goods the seller or representative sells 2) degressive V. k. - a certain percentage is paid, which increases with turnover decreases (for example, for the first 10 thousand dollars - 10%, for the next 10 thousand - 9%, etc.) 3) progressive VK - with an increase in sales volume, the rate of VK paid to the seller or representative increases 4 ) V. k. based on profit - wages are calculated on the basis of the enterprise’s profit, and not gross turnover. It is also practiced to use special increased V. to. in the formation of sales of any product.

In order to attract high quality sales representatives, the company should develop an attractive remuneration system. Sales representatives will appreciate regular compensation, bonuses for excellent performance, and adequate compensation for experience and length of service. The goal of management is to achieve control, economy and simplicity. Some of these goals, such as cost savings, conflict with sales representatives' goals, such as financial stability. It is not surprising that compensation systems vary greatly not only between industries, but also within the same industry.

Management must determine the level and components of an effective employee compensation system. The level of remuneration should take into account the current market price for workers in a given specialty and the required qualifications. For example, the average salary of a typical American sales representative is 50 thousand.2 If the market price for sales representatives is clearly defined, an individual company has no choice but to pay at an established level. Pay below the current level will lead to a drop in the qualifications of job applicants. It is not advisable to pay more.

Companies are recognizing that sales force teamwork is increasingly the key to winning and maintaining business. They also understand that simply asking their sales reps to act as a team is not enough. They need to rethink their compensation systems to make it more meaningful to work with dispersed clients. They must set goals and criteria more carefully with their sales staff. The importance of teamwork should be emphasized through training programs while encouraging individual initiative.

The company's management needs to consider two aspects of remuneration: its level and composition. Pay levels impact a company's ability to attract top sales representatives. If you set the pay below market level, the company is unlikely to be able to entice capable salespeople with it. However, many candidates have difficulty understanding the intricacies of differences in salary levels, since almost every company has adopted its own system for calculating bonuses and commissions.

The question of the composition of payment, in particular its division into fixed and variable parts, is even more complex. Salespeople strive to receive a fixed salary and at the same time expect that the high efficiency of their work will certainly be rewarded, and the salary itself will increase as they gain experience. On the other hand, the company tends to use a payment system that stimulates the behavior of the seller that is beneficial to it, and uses its own scheme that reflects the balance between various goals. There are three main remuneration systems for sales representatives: fixed salary, commission and mixed system payment. Let's take a closer look at them.

The system of remuneration for sales representatives used in the company should attract high-quality sales specialists to the organization. Trade workers highly value regular salary payments, bonuses for high performance, and adequate remuneration for long service. The goal of the company's management is to simplify the remuneration system as much as possible, ensuring control over the activities of employees and cost savings. Some of these components, particularly savings, conflict with the interests of sales representatives. It is not surprising that remuneration systems vary greatly not only in companies in different industries, but also in those serving the same industry.

Management must set the level and define the components of an effective compensation system for sales employees. The level of remuneration should take into account the current market price for workers of this specialty and qualifications. For example, the average salary of an American sales and marketing manager in 1998 was 110 thousand. If there is a certain market price for sales representatives in the labor market, an individual company has no choice but to follow the market lead. However, it is quite difficult to focus on this indicator, since it is often very approximate, and publications of such data on industrial sectors are quite rare and do not contain the necessary details.

In this chapter we will talk about the key aspects of the compensation system. First, we'll explore different compensation models. Next, we'll discuss the differences between salespeople with their own client base and sales representatives. Finally, we'll look at the steps in developing a compensation plan.

Pay Mix depends on the type of work of the sales staff. If a sales representative often needs to convince customers to purchase a product, then the fixed salary component of Pay Mix becomes smaller, and the planned commission amount / bonus increases. For example, the payment system for such type of work as sales to new customers will provide Pay Mix 60/ 40, and if the work involves carrying out trading operations with large clients, it will be paid according to Gau Mix SO/20. The work of sales representatives employed in the b-2-b field in the USA is most often paid according to Pay Mix 70/30,

Sixth, comparative compensation levels must attract and retain qualified people who are entrusted with key customer relationships. Plans for an effective remuneration system, as a rule, reflect both the strategic goals of the main clients and the specifics of working with such clients in remote areas. As a rule, relationship managers with the main client are focused on receiving compensation one or two orders of magnitude higher than other ordinary sales representatives in this target area. Typically, the ratio of all types of payment ranges from 65/35 to 90/10.

It should provide workers with a sense of security. IBM wants their attention to be focused on the goals they pursue as representatives of the corporation. They should not worry about basic necessities - the minimum amount of money needed for food, clothing, and maintaining a home and family. All these worries are removed by salary, provided that they successfully cope with their work. I am not at all suggesting that every employee is told “Tell us your budget and we will guarantee you an appropriate salary.” However, he knows how much income he is guaranteed and can tie his budget to it. Some companies keep their own

Any business requires effort to sell a product or service to a potential buyer. This is necessary and prerequisite. The challenge is how to pay for these efforts. Let's consider one of the possible answers to this question. Let me make a reservation right away that not a single solution can be considered universal and equally effective for any company. Moreover, the company should review the existing payroll model of its employees from time to time and change it if necessary. Such a need can be caused both by changes in the company and in a particular market, and at the macroeconomic level.

The first approach to payment - a constant salary - is common due to its simplicity. The main disadvantages of this model are its static nature and lack of incentive for employee development.

The commission model has a greater impact on the motivation of sales employees. From my experience with the practices of various companies, I can say that the commission model, when the rate is symbolic or absent in principle, can be extremely effective in motivating sellers. However, this model is not suitable for every company and not for every category of employee. Disadvantages of the model:

stimulates only those activities for which payment is made;
stimulates individual achievements (sometimes to the detriment of overall results);
stimulates the achievement of current tasks;
payment is made on an actual basis, without taking into account the dynamics of market and company development.

The option proposed below - payment based on the level of achievement of planned indicators - is also not without drawbacks. The main one is the need for the company to have a clear planning and accounting system. On the other hand, there are a number of undeniable advantages:

allows you to manage the situation: anticipate and plan work results;
takes into account the dynamics of the market, as well as the dynamics of the development of the company and the individual employee;
takes into account several factors, including group performance;
tied to the goals of the entire enterprise;

Several principles underlying the model proposed below:

Salary is only one of the components of a company's personnel policy and cannot be taken out of the corporate context.
Salary solves two interrelated problems: it keeps an employee in the company and stimulates him to achieve the best possible work results. Based on this, the optimal model for the profession of a sales representative seems to be the calculation of wages from a constant part (which corresponds to the level of his professionalism and satisfies minimum required his needs), and a variable part depending on the results of his work.
The goals that are set for employees must be achievable, since constant failure to fulfill the plan is demotivating. About 80% of employees should be able to achieve planned targets in full, 20% should be able to exceed the plan. Otherwise, the plan itself should be reconsidered.
The payroll model should be logical and understandable to employees.
The development of a compensation package is preceded by a careful selection of employees; any model necessarily takes into account and includes the factor of self-motivation.

Now the model itself. Salary is calculated using the formula:

Salary = Rate + Premium

In turn, we calculate the premium as

Premium = Bet x Performance coefficient

Salary = Bet + (Bet x Performance Ratio)

The procedure for calculating the Performance Coefficient (Kr):

the indicators and criteria by which the sales representative’s work is assessed are determined, as well as
the weight of each indicator (its meaning and degree of influence on the overall performance assessment);
For each criterion, a target indicator is established;
For each criterion, an achievement coefficient is displayed;
the sum of “weighted” results for all criteria characterizes the effectiveness of the work.

Requirements and list of performance assessment criteria:

The criteria should describe all key aspects of the sales representative's job.
The criteria values must be under the control of the sales representative.
It is desirable that there be few such indicators, no more than five, and that they do not duplicate each other.

It is obvious that the results of a sales representative's work largely depend on the work of other employees and departments of the company. It is difficult to compensate for a weak product or unfavorable market situation even with highly professional sales services. However, it is possible and necessary to evaluate the sales representative’s contribution to the overall result. For a sales representative of a manufacturer/distributor of FMCG goods, the evaluation criteria may include the following indicators:

Number of active clients: It probably doesn’t make much sense to estimate the number of meetings, since it’s not the number that matters, but the end result.
Sales volume: largely depends on the company’s marketing and production policies, the level of knowledge and loyalty of end consumers; on the other hand, a sales representative can manage a portfolio of customers and allocate his time more effectively among his clients.
Volume accounts receivable: Apart from force majeure, the sales representative must know and take into account the client's capabilities. The ideal indicator of accounts receivable is zero point, zero tenth monetary units, but in reality you have to put up with customer debts and manage the amount of debt. To do this, you can link debt to turnover and determine standard indicator return of funds as planned (share of accounts receivable in actual turnover).
Assortment: although the situation varies from client to client, in general it is necessary to take this indicator into account, especially at the stage of introducing a new product to the market or when conducting targeted marketing activities. In this case, you can additionally enter an indicator for distribution/sales volume of a specific product name or sales of a specific category of customers.
It makes no sense to conduct an assessment by distribution channels if there is no clear goal (for example, to build 100% direct distribution “manufacturer - retail chain”). It is more important to evaluate your market share. Since calculating market share can be difficult due to the lack of reliable data on competitors, you can set the goal not in percentage terms, but in physical terms, assessing absolute volume rather than relative share.
Competent distribution is a prerequisite for successful sales, therefore, when fulfilling the turnover plan, a sales representative or regional manager will be forced to look for optimal distribution channels. A sales manager can be evaluated on the basis of sales and accounts receivable volume, as well as the average performance of subordinate sales representatives.

It is necessary to establish a threshold efficiency standard. For example, a bonus is paid only if a sales representative achieves a performance indicator of at least 70%. This will keep the seller’s attention on each of the assessed indicators.

Example of performance calculation:

The base rate can be determined based on the sales plan and projected profit (proactive approach), or based on market averages (reactive approach).

Base rate = budget / (1+ min K)

where min K is the threshold performance coefficient.

For example, when average salary industry sales representatives 400 USD and the minimum acceptable level of performance is 0.7 (70%), the base rate will be 235 USD. And the salary (in our example) is 414 USD.

The disadvantage of the set of criteria proposed above is the lack of consideration of such aspects of the sales representative’s work as discipline, teamwork, self-education, etc. Therefore, this model, like any other, requires evaluation and adaptation to the capabilities and needs of a particular company.

You can motivate a sales representative to work as a team by assessing his effectiveness taking into account the results of the entire department or company. To do this, it is additionally necessary to determine the standard of employee responsibility for personal (for example, 80%) and group results (20%). In our example, if the sales department achieved a result of 90%, then the employee’s performance will be 78.8% (=76%*80%+90%*20%).

And the most important thing is to remember that a model is needed not for the sake of the model itself, but for the sake of the result that it allows to obtain. Strict discipline does not negate flexibility and willingness to innovate.

Any business requires effort to sell a product or service to a potential buyer. This is a necessary and mandatory condition. The challenge is how to pay for these efforts. Let's consider one of the possible answers to this question. Let me make a reservation right away that not a single solution can be considered universal and equally effective for any company. Moreover, the company should review the existing payroll model of its employees from time to time and change it if necessary. Such a need can be caused both by changes in the company and in a particular market, and at the macroeconomic level.