Do Team Commissions Work?

The right sales incentive scheme is a must for any business that relies on sales people. Finding the right scheme means rewarding employees in ways that encourage them to achieve more and sell more. You might opt for a commission based scheme, or reward yearly bonus pay based on performance, for example.

For some businesses, sales people work in teams rather than alone. In some cases, if you are selling a more complex product to an another business, you’ll need more than one sales person to close the deal. For example, a member of your main sales team selling a piece of software might need the help of a technical sales support person.  If you have sales people working together or in teams in your business, you might have wondered whether a team based commission scheme can work for you. Or perhaps you have a team based commission scheme that’s not quite working as you hoped.

Let’s take a look at how team commissions work, how to know if they’re right for your business, and how to implement them for the best results.

How To Apply A Team Incentive

There are two main ways of applying a team commission scheme:

  • Within a single sales team and split equally between its members regardless of personal performance
  • Within a single sales team based on direct involvement with a sale

In the first example, you might have a team of people covering one specific geographic territory. Say for example you have a team of three people who cover sales of your product in the UK. When calculating team commission, you look at the performance of the team as a whole. The exact breakdown of who sold what or who holds the most customer accounts isn’t important; if the team as a whole meets its targets, all three team members get the team commission.

In the second example, if your team has the opportunity to make a large sale to a specific company, then after the sale the commission will be split between each person who was directly involved in the sale.

However you decide to apply a team incentive, there are pros and cons. Let’s take a look at them.

Pros Of Using Team Incentives

Using team incentives offers some distinct advantages for your business:

  • You don’t have to rely on one sales person’s abilities
  • If one of your sales people isn’t performing well, you won’t necessarily lose revenue because the team as a whole can pick up the slack (though you will want to look into retraining the struggling sales person)
  • You’ll be fostering a strong team spirit in your business which can ultimately boost productivity and morale, and better equip your business for growth
  • Working on shared goals can be a powerful motivator
  • Sales teams can aim for higher targets than individual sales people

Cons Of Using Team Incentives

The main problems with using team incentives are:

  • They can seem counter intuitive to the competitive nature of sales and therefore difficult to get sales people on board with
  • They go against the familiar sales structure of each person having their own targets and rewards
  • They are difficult to implement in businesses that don’t already have a strong team ethos
  • Competition between teams can lead to bad feeling and even sabotage
  • Salespeople prefer to make their own fortunes and might resist the idea of their commission being affected by how well the rest of their team performs

Are Team Incentives Right For Your Business?

There’s no doubt that team incentives aren’t right for every business. Team incentives are most likely to work if your business meets one or both of these criteria:

  • Your business already relies on team work, and team work is a shared principle in your company. It’s difficult to apply team incentives to a business that thrives on competition and individual performance, but you can have real success if your business already has a culture of team work.
  • Your business outcomes rely on teamwork. If your business outcomes rely directly on teamwork, you’re likely to have much better results with team incentives than if your business relies on individual sales people. If your product or service naturally needs a small team rather than an individual to sell it, you’re off to a good start.

How To Implement A Team Incentive For Maximum Success

So you’ve decided to implement a team incentive – what next? Follow these tips to give your team incentive program the best chance of success:

  • As with any incentive program, it’s important to start with a good plan. Set out how the scheme will work and be sure to cover every detail from goals to rewards to payment schedules.
  • Be clear on who is responsible for administering the program; teams need to know who to turn to with questions or problems.
  • Always keep in mind your business aims and build an incentive scheme that directly supports those.
  • Consider running training days for your teams to promote and encourage team work.
  • Think about whether to penalize low performers – knowing that bad performance will affect everyone’s outcomes can be a powerful motivator for improvement.
  • Have a regular review and training program in place to help weaker team members improve and succeed.
  • Don’t mix individual and team incentives – your employees will prioritize the individual ones every time.
  • Ask for regular feedback from your teams and take on board what they say.

Team incentives aren’t for every body, but if your team has a spirit of collaboration a team incentive scheme can bring out the best in your team and foster a positive, innovative and productive working culture.

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