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How To Calculate Paying Commissions To Recurring Sales

When you have a strategic compensation plan for your sales professionals, you’ll experience an increase in recurring sales. Paying commissions is one way for your company to become efficient. Your sales professionals will want to sell, meet your company’s objectives, and fulfill financial budgets.

As a business owner or sales consultant, you may wonder, “How much should I be paying sales professionals?” That’s a common question any salesperson would ask during the hiring process too. Well, there's no specific rate. Keep in mind your sales team will be more motivated to close sales for you when they're getting paid in commissions.

Paying commissions means your sales professionals won’t get paid until they close the sale for you. Sometimes sales will be difficult, and sometimes it will be more comfortable. Your salesperson only gets paid for the hours they’ve worked to close a successful sale. If they were unsuccessful at closing, then it’ll drive them to improve their skills until they become stable.

When you give your sales team a purpose to help you win, you’ll be able to calculate recurring sales. Your profit margins will increase, and it'll appeal to your competitors. You can dominate the marketplace and afford to pay out higher commissions. And the more generous you are with paying commissions, the more you may achieve revenue goals confidently.

Here are some ways you can calculate paying commissions to recurring sales:

What’s Your Commission Percentage?

The best way to pay your salespeople is by commission-only. They would prefer this method too. The way you’d go about this method is to decide on a percentage you’re willing to pay your salespeople from each sale made.

Let’s imagine you’re selling a marketing course for $5,000, and you offered sales professionals a 10% commission. When there’s a sale, you’ll be paying out $500 to your salesperson. You still keep $4,500 of the sale. What would a couple more deals do for your business?

If your products or services are at a higher price range, you might attract more salespeople to help you win deals. It may be more challenging to convince leads to buy, but salespeople are willing to do whatever it takes to close since their bigger pay will be worth the effort. The majority of sales jobs pay based on results. That’s more commission for them and could be more recurring sales for you.

To calculate what your commission percentage should be, you should consider your gross margin. You can subtract your direct expenses from your sales price. Then find the commission percentage you're comfortable with, and that seems to be a reasonable incentive for sales professionals. As a business owner, these are your goals to calculate your ROI (return on investment). Make sure to factor in any other costs when you offer to pay commissions.

How To Influence Sales Commission

To make sure your business is keeping up with recurring sales, you should see what factors could influence sales commission. And depending on which industry you’re in, commissions may vary based on performance.

How many salespeople do you need on your team? How often are you receiving inquiries and needing someone to talk to leads for you? Sometimes you may require more work from your sales team other than answering calls on the phone. If you need further assistance, then you should consider raising your commission rates. Some common functions you may need help with are consulting, training, testing, etc.

“Keep your sales pipeline full by prospecting continuously. Always have more people to see than you have time to see them.” – Brian Tracy, Motivational Speaker & Author

Do you want your sales professional to only close sales or follow up with old potential leads too? Find out how much you want to get your salespeople involved in the actual sales. Perhaps you’ll be able to generate more leads when you have your salespeople reach out to people who weren’t ready to buy from you at a previous time. 

What You Need To Calculate Recurring Sales

Research shows that if you can accurately predict your sales success, your business will likely grow 10% more of your revenue. But sometimes it’s not that easy to predict how your next sales month will go. That’s why you have to keep track of results and any issues during each sales process.

You can estimate how much sales you'll get based on the trend of your team's performance. If you start to notice a decline in one area, then there must be some potential issues you’ll have to avoid. Maybe there’s an issue with your compensation plan that discourages your sales team from work harder. Maybe you need to hire more quality sales professionals. Or maybe your competitor launched a new promotional campaign that you have to compete against.

Several elements you’ll need to help you calculate recurring sales are:

  • Individual and team sales goals (monthly, quarterly, and yearly)
  • Structured sales process
  • CRM/Pipeline tracker
  • Accountability

Try to discover any possible issues as soon as possible. Don’t wait until the end of every sales month to avoid bad behavior or habits. Taking action sooner will be a more significant impact on driving substantial growth and results for your business.

Factors That’ll Impact Your Sales

What else can you do to close more consistent sales for your business? Several internal and external factors can help you impact your sales results.

Some internal factors include hiring/firing and shift work hours. Once someone leaves your company for any reason, you might see a decrease in your revenues. And until you find someone else who can take over or will be a better fit, you can then start to calculate your sales predictions more accurately. That’s why it’s crucial to hire quality sales professionals. You can still succeed with only a few dedicated salespeople. And if you hire salespeople from all over the world, you can count on people working for you when you’re not working. Your business will always be closing and reaching a greater audience.

Some external factors include competitive changes, economic conditions, market changes, industry changes, legislative changes, product changes, and seasonality. You always have to prepare yourself and stay informed of the changes in your industry. Your market could change next month. Know when leads want to buy and why they buy. The perfect opportunity to close a sale is when you’ve caught a lead looking to buy your services at the moment. Don’t wait any longer because leads could turn cold fast, or they may turn to your competitors instead. Make sure your sales team is responsive and available to answer any inquiries. 

Summary

We’ve covered how to calculate paying commissions to recurring sales. Be mindful of how much commission you’d like to offer to sales professionals. Find a percentage your salespeople would be comfortable with, and that’ll help you achieve ROI. Remember always to keep your salespeople motivated so they’ll prioritize helping you win more sales. You’ll be able to calculate consistent monthly sales when you begin to see a strong trend. There are some internal and external factors that could help impact your sales. If you need more quality sales professionals on your sales team to help you reach your goals, you can always hire a sales pro here.