Building the Team – Bonus for the Salespeople

Ellen Rohr, Contributing Writer
Bare Bones Biz

Salespeople are paid hourly according to skill level and licensing or skills training achievement.  Aim for a consistent hourly rate for the position.  Overtime applies according to state and federal wage and hour laws.

Use a Bonus Plan to reward production over Goal.  Performance at Goal is what is expected of those who hold the Position of Salesperson.

Goals are based on your Budgeted Sales and Productivity targets.  Have a viable, working Budget in place before you implement a Bonus Plan.  Gather one quarter’s worth of Scorecard data before implementing a Bonus Plan.

The recommended Productivity factor is Salesperson’s Wages as a % of Sales.  Use the Wages % needed by your Budget to hit Goals.  (Range will be 18-22%)

Bonuses are paid monthly, within two weeks of the end of the month.  Bonuses are subject to all Payroll taxes and withholding requirements.

Once a Bonus is given, the amount cannot be reduced or adjusted in subsequent quarters.  A new Bonus opportunity begins with the new month.  Don’t use the Bonus Plan to resolve call back issues and “screw ups.”  Resolve operational issues by determining if the problem is a training problem, or an accountability problem, and follow through appropriately.

Work out the details with your team and customize the Bonus Plan for your company.  Have a “trouble-shooting session” to overcome any challenges with your Bonus Plan.

 

You may want to “practice” with a Bonus Plan for a month or two before implementing it to make sure your Budget is viable.  “Practice” by doing the Bonus Plan on paper to see how the numbers and dollars work out.  It is not OK to follow a Bonus Plan that is at odds with the survivability of the company!  Paying Bonuses should be a JOYOUS occasion for everyone at your company.  It means you are ABOVE your GOALS!

Follow the Standard Broadcast Calendar for the Scorecards.  The game is played Monday through Sunday.

Bonus Plan – Version One

Qualifiers…

If the Salesperson hits Goals for…

  • Total Sales per Week and
  • Productivity %
  • Close rate %

And has NO Corrective Action documentation for the time period….then, he or she is eligible for a Bonus based on performance. (These Goals come from your Budgeting program.)

Share a % of Sales dollars above Goal.

Suggested % is 10% to 20% of Sales dollars above Goal.
Example:  Sales Goal is $25,000 per month.
Actual Sales = $30,000.
Using 10%, the Bonus is 10% of $5,000 = $500.
Using 20%, the Bonus is 20% of $5,000 = $1,000.

Calculate on a Monthly basis, and provide a written Bonus Bulletin to show progress.  Pay the Bonus Monthly.

NOTE: The Sales Manager can be Bonus-ed with a matching 10% for all Sales over goal under his or her direction.  Other qualifiers may be applied.

Bonus Plan – Version Two

Qualifiers…

If the Salesperson hits Goals for…

  • Total Sales per Week and
  • Productivity %
  • Close rate %

And has NO Corrective Action documentation for the time period….then, he or she is eligible for a Bonus based on performance. (These Goals come from your Budgeting program.)

Share…

Week one  = $25
Week two  = $50 …if week one goals were met
Week three  = $75…if weeks one and two goals were met
Week four  = $100…if weeks one, two and three goals were met
Week five  = $125…if weeks one, two, three and four goals were met (in the one month per quarter with 5 weeks.)

Here are the basic Rules of the Game.

  • The focus of the game is SALES.  While every aspect of performance is vital this game is intended to celebrate and encourage SALES.
  • The Salesperson who makes the Sale, gets the score, even if the work is installed by someone else.
  • Record the deposit as the Sale for the day that the deposit is collected.  Record the balance of the Sale as the Sale for the day the job is completed and billed.
    • Use 1/3 down as the standard deposit.
    • The assumption is that all work is C.O.D. and the balance is to be collected upon the completion of the job.
  • Have a “trouble-shooting session” to hammer out the Rules of the Game specific to YOUR shop.  Some things to consider….
    • If you don’t get a chance to sell, you can’t be expected to make a Sale.  Check out the Installers’ Bonus plan in The Getting it Done Suite.
    • Ideally, each Salesperson should get a Fair Share of the opportunities to make a Sale.  For the development of your team, determine if you are dispatching opportunities fairly.
    • If you have Salespeople who lack the skills to handle every job, then they are at a disadvantage when it comes to dispatching.  Work out a training schedule for your Salespeople that will help them develop the skills necessary to handle any Sales call.
    • If the Owner or Service Manager makes Sales, he or she needs to account for his or her Sales on a Scorecard.  If the Owner or Service Manager regularly makes the Sale, he or she is robbing the Salespeople of Sales opportunities…and inhibiting the growth of the team.  The Owner and Service Manager should start passing on their skills, and opportunities to sell, to the Service Salespeople.
    • Remember the Game is Sales….and it is just a Game.  Don’t look to the Scorecards to account for all the skills necessary to be a great Salesperson.  Technical Skills and Installation Skills can be measured…and we can create Games and contests for these skills.   “Sales” is always the “senior” statistic.  Without Sales, we don’t get to do the other things.
    • The Sales Goal should take into consideration the days needed according to the budget to hit Goal.  Pull the allotted vacation days and personal days from the Scorecards when they occur.  A sick day or personal day beyond the allotted will not remove the Goal from that day.
    • Return Calls don’t count against you.  However, if you go on a Return Call and turn it into an additional Sale, it will count FOR you.  Show it as a Call Run and Call Closed on your Scorecard.
    • A scheduled Maintenance Visit does count as a service call, an opportunity to make a Sale.
    • As you craft the Rules of the Game at your shop, be careful not to get caught up in “once in a blue moon” circumstances.  Will the Game be fair to all overall?  Will each Salesperson have the same number of opportunities to sell over the course of a quarter or a year.  For instance, if Salesperson A helps install a job that Salesperson B sold, would Salesperson B help install a job that Salesperson A sold…over the course of a year?  Think broad…not narrow.
    • The Service Manager will make the final decision on the Rules of the Game.
    • HAVE FUN!

NOTE:  For the Accounting team…record the deposit as “received on account” for the customer on the day the deposit is received.  Enter the entire invoice on the day the job is completed.

Ellen Rohr helps you create a winning business by helping you start, fix and grow your own business.  www.barebonesbiz.com

 

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