Salesperson motivation should reward ongoing work with a salary and the results the company needs with a clear bonus. First, decide which deals the business needs and what depends on the salesperson in those deals, then calculate payments and test the rules on completed orders. This approach to motivating salespeople considers both how much an employee earns and the choices they make: which work is financially worthwhile.
If you ask for new customers but salespeople stick to the customer base they know, it is too soon to raise everyone’s commission rate. An employee weighs income against effort and how long they will wait for the money. The company has a goal for the future; the employee has a monthly pay calculation. The two must line up without daily persuasion from the business owner.
Sales motivation: what work you pay for
Sales motivation determines which actions and results the company rewards with money, working conditions and opportunities to grow. Before changing payments, compare the work you need with the work that already pays the salesperson the most.
Look up the bonus paid on repeat and first orders in your records, then assess the time spent on them. For example, a repeat order worth 200 000 ₽ at a rate of 5% gives a bonus of 10 000 ₽. If it took four hours, that is 2 500 ₽ in bonus per hour. A first order worth 100 000 ₽ gives 5 000 ₽; at twelve hours of work, that is about 417 ₽ per hour. These calculations cover completed orders; searches that did not lead to a sale will add to the time spent.
With this gap in earnings, asking an employee to look for customers more actively means asking them to give up more profitable work. Doubling the overall commission rate will preserve the gap. You will need to choose between a separate reward for bringing in customers, dividing responsibilities and setting aside time to find customers with suitable pay. Simply adding customer searches on top of a full workload with existing customers leaves the employee facing the same choice.
But first, separate a conflict over money from a lack of skill or leadership. If the pay terms encourage the required work but the salesperson cannot negotiate or their team leader does not ensure the work gets done, there is nothing for a new rate to apply to. The article “The team are generally capable, but somehow things aren’t working out.” Motivation has nothing to do with it examines this distinction.
A system for motivating salespeople: the calculation steps
A system for motivating salespeople is built in this order: the business goal, the salesperson’s contribution, the amount used to calculate the bonus, salary and bonus, rules for disputed cases. The percentage comes after you calculate the desired income and the result that can be achieved.
Choose a result the salesperson can influence
Name one change you want to achieve by reviewing pay: more first purchases, fewer unnecessary discounts or more repeat orders. “So they sell better” is not enough for the calculation. It covers different actions, and a single rate can easily put them in conflict.
Next, the head of sales compares the result with the employee’s authority. Are they responsible for finding customers, do they agree the price, do they send payment reminders? When the owner decides on a discount, you cannot ask the salesperson to maintain the price while also requiring them to carry out a decision to lower it without discussion. You need an agreed process for these deals before you can calculate pay.
Decide which amount the bonus is calculated on
Revenue is suitable for calculating bonuses if the products have similar profit margins and the right to give discounts is limited. If orders differ in profitability and the salesperson can influence what is included in an order or its price, consider gross profit: revenue minus the cost of goods sold. Agree which costs to include with the person who keeps the financial records. The salesperson must be able to see the calculation for their deals and understand which of their decisions change the bonus.
It is risky to use the whole company’s net profit as the basis for an individual salesperson’s bonus: it is affected by expenses they do not control. If office repairs reduce their reward for sales already made, the link between effort and income is lost.
Calculate the rate from income when the sales plan is met
Take the employee’s target monthly income and subtract their salary. Divide the resulting bonus by the amount used to calculate bonuses in the sales plan and multiply by 100%. For example, income of 120 000 ₽ minus a salary of 60 000 ₽ gives a bonus of 60 000 ₽. With a gross profit sales plan of 600 000 ₽, the rate is 10%: 60 000 / 600 000 × 100%.
This is a way to derive the rate from your own circumstances. Choose the target income itself with the difficulty of the role and the available pay budget in mind. Set the salary share according to the ongoing workload and the length of the deal: customer searches involving lengthy negotiations need to be paid for even in months when the work started has not yet brought in an order.
Schemes for motivating salespeople: four options
A scheme for motivating salespeople must match the work: a percentage of revenue for comparable orders, a percentage of gross profit when the salesperson influences profitability, a separate bonus for a specific result. Start with the simplest formula that directs the salesperson towards your goal.
| Scheme | Where to use it | What to decide before launch |
|---|---|---|
| Salary plus a percentage of sales that have been paid for | The salesperson handles the deal through to payment, and orders have similar profitability | Which payments received count towards the calculation, and how to handle partial payments and returns |
| Salary plus a percentage of gross profit | The salesperson chooses what goes into the order and negotiates the price | Where the cost figures come from and when the amount for the deal is considered final |
| Salary plus a bonus for a new customer | The customer base needs to grow, while repeat orders already provide earnings | Who counts as new, which event qualifies for the bonus, and how to avoid counting the same customer twice |
| Salary plus individual and team bonuses | Orders require several employees to work together | How contributions are divided and how individual results affect the payment |
Salary alone leaves the head of sales in charge of priorities: the salesperson has no extra financial reason to choose difficult deals. Commission alone passes the wait for payment and fluctuations in the flow of customers on to the employee. For a role with required daily work and a long sales cycle, it makes more sense to start the calculation with a salary and a variable part.
Do not add a measure tied to pay for every duty. Entering information in the CRM system is necessary for handling customers, but a bonus for the number of completed fields buys exactly that: completed fields. A separate measure is justified if, without it, the required work loses out to other work and the team leader can see a result that cannot be achieved by simply changing a status.
An example of motivating salespeople: calculating pay
Calculate an example of a pay scheme for motivating salespeople for at least these outcomes: falling short of, meeting and exceeding the sales plan. This shows the owner the cost of the scheme and the employee how their income changes with different results.
Let’s continue the calculation: a salary of 60 000 ₽, a bonus of 10% of gross profit from orders that have been fully paid for and fulfilled, and a sales plan of 600 000 ₽ in gross profit. With sales of 2 million ₽ and a cost of goods sold of 1.4 million ₽, the amount used to calculate the bonus is 600 000 ₽. For simplicity, these figures do not include partial payments or returns; in your own model, calculate these separately under the rules you have chosen.
| Result against the sales plan | Gross profit | Bonus at 10% | Income including salary |
|---|---|---|---|
| 60% | 360 000 ₽ | 36 000 ₽ | 96 000 ₽ |
| 100% | 600 000 ₽ | 60 000 ₽ | 120 000 ₽ |
| 150% | 900 000 ₽ | 90 000 ₽ | 150 000 ₽ |
In this calculation, every additional 100 000 ₽ of gross profit adds 10 000 ₽ to the bonus. Exceeding the sales plan does not wipe out earlier results or change the rate retrospectively. If you introduce tiers, recalculate payments just below and just above each boundary. The separate risk of monthly thresholds is examined in the article “I’m willing to pay for results. Why does it pay a salesperson to sell later?”.
Now assess the whole sales team. Five salespeople earning 120 000 ₽ each mean 600 000 ₽ in total pay. Employer costs, the head of sales’ pay and all other expenses come on top of this amount. The financial calculation must hold up in each of the three scenarios, including a weak month when salaries stay in place.
And separately, look at a large order that came in without the salesperson’s usual effort. If it produces a large bonus under the current rules, the amount is predictable before launch. The decision to use a different rate for these orders belongs in the design of the scheme. The owner’s surprise at the payment amount must not become a new rule at the end of the month.
Sales team motivation: who gets the customers
Sales team motivation depends on how opportunities to earn are allocated: customers, tasks and help from colleagues. The same pay formula does not put an employee with an existing customer base and a person asked to find customers from scratch on an equal footing.
Before comparing bonuses, look at the work assigned to each person. If a new employee is only asked to approach potential customers with whom there is no existing contact, you cannot calculate their first month’s pay in the same way as for an employee with repeat orders. They need separate expectations while they learn the job, a manageable workload and income that is clear in advance. Otherwise, the company will compare people based on the results of different assignments.
For a joint sale, agree how to split the bonus before handing over the customer. For example, out of a total reward of 6 000 ₽ for a deal, the employee who brought in the buyer receives 4 000 ₽, and the one who took the order through to payment receives 2 000 ₽. This is one bonus shared between two people. If the company decides to pay both the full amount, the budget must include 12 000 ₽.
Introduce a team element where help is actually needed: covering for an absent colleague, a specialist taking part in negotiations, working together on a large customer. With an entirely shared bonus, a strong salesperson loses the direct link between their own contribution and income. The individual element preserves this link, while the team element pays for agreed work done together.
Non-financial motivation also requires specific decisions. Authority to agree terms within set limits reduces waiting; training in difficult negotiations helps people take on more profitable tasks; recognition of contributions shows that the team leader notices help given to colleagues. But a promise of career progression only carries weight if the future responsibilities and conditions for moving to the new role are specified. Praise alone cannot make up for earnings lost because of a new assignment.
How do you introduce a new scheme and see whether it works?
Introduce the scheme after a trial calculation using past data and an explanation of the rules to each employee. The first sign of readiness is that the salesperson and the person calculating pay independently arrive at the same payment for the same set of orders.
- Before announcing it, the head of sales and a finance specialist use the new formula to recalculate three completed periods, including a weak one. For lengthy sales, they use periods that cover the full sales cycle. The owner receives the old and new payment for each person, with the reason for the difference.
- Before it takes effect, record the amount used to calculate the bonus, the rate, the event that triggers the bonus, the payment date and the procedure for returns and customer handovers. Set separate rules for deals started under the previous scheme. Formalise changes to pay terms with a human resources specialist.
- Before the first payment, give the employee a calculation for their orders and a way to report an error. Resolve disputes about data using the original documents; record any decision to make an exception so that identical cases do not depend on the team leader’s mood.
- After a full sales cycle, compare the result with the original goal. If you wanted new customers, count their first paid orders, calculate the cost of bonuses and assess the state of the existing customer base. An increase in total earnings alone does not tell you whether the effort to bring in customers succeeded.
If new customers have appeared but repeat orders are being lost, the team has shifted effort between tasks. The head of sales checks whether there is enough time for both and changes how work is allocated. There is no reason to add another multiplier to pay before making that decision.
When calculating bonuses becomes the owner’s job again
If only the owner decides who gets a customer, how to split a bonus and which exception to allow, the formula requires their personal involvement every month. What is needed here is a leader who directs the work within agreed limits and is responsible for making sure agreements are carried out. Drawing up a pay table is not enough.
RENTROP takes on the daily running of the sales team through turnkey sales management, so the owner stops doing the job of the overall head of sales.
One objection remains: salespeople already earn enough, so why adjust pay to a new task as well? An increase in total income is not always necessary — sometimes it is enough to allocate customers and responsibilities differently. But if the company asks someone to do difficult work that reduces their earnings, it must decide in advance how to compensate for this. Demanding that employees care more about the company’s growth does not form part of the pay calculation.