Three parts, and what each one does
- Base. Covers the person's basic costs so they are not thinking about survival. No more than that.
- Commission on personal sales. Ties the rep's income directly to money in your bank.
- Bonuses for specific metrics. These steer behaviour: response speed, touch count, a filled-in CRM, work on the base.
The first part gives calm, the second gives hunger, the third gives direction. Remove any one of them and the scheme stops working: with no base people leave, with no commission they stop pushing, with no bonuses they only do what brings quick money.
The proportions
under halfthe base as a share of expected income
5%typical commission on personal sales
3-5metrics in the bonus part, no more
×2-3how much more a strong rep should earn than a weak one
That last figure is your stress test. If a strong rep and a weak rep take home something similar, the scheme does not work, whatever it says on paper.
Metrics worth putting in the bonus
- first response time, the median for the week
- the share of conversations where price was quoted
- touches on stalled threads
- how completely the required CRM fields are filled in
- instalments collected, if you offer payment in parts
That last item gets forgotten a lot. Selling for $2000 is easy, collecting the second part of the payment is a separate job. If nobody is paid for it, nobody does it, and up to 40% of profit hangs in the air.
The usual mistakes
- A high base. The rep lives on it and stops fighting for deals.
- Commission on team revenue rather than personal sales. The strong carry the weak, and the weak take their time.
- Ten metrics in the bonus. The rep cannot hold them in their head, so they do not steer by them.
- A scheme that changes every month. People stop believing it and work to the old one.
- A bonus for leads rather than payments. You get leads.
How to test your own scheme in half an hour
- Work out what a rep earns on plan and what they earn at half of plan. If the gap is less than double, the scheme is weak.
- Ask a rep what they get their bonus for. If they cannot list the items, there are too many metrics.
- Check whether there is money in the scheme for whatever you have been asking people to do lately. If there is not, it will not get done.