Handling commissions for orders booked under subscription

Handling commissions for orders booked under subscription

Postby LoveGolf » Thu Jun 10, 2010 8:54 pm

What did you find worked regarding a policy for crediting against sales commissions for orders booked under subscription?
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Joined: Wed Jan 20, 2010 7:58 pm

Re: Handling commissions for orders booked under subscription

Postby InsideSpin » Thu Jun 10, 2010 8:57 pm

There are a few approaches that work, both somewhat hard to put in place depending on your overall commission culture:
• Quota credit is earned at the same rate as the subscription. If the customer commits to $100/month, the sales rep gets $100/month credit.
• Provide some up-front credit if the subscription has some aspect of a commitment to it. Let’s say it is a 1-year subscription worth $12,000 ($1K/month). You might credit half up-front and the rest prorated throughout the year.

It may also depend on when cash payment occurs – if you bill monthly, it’s hard to offer credit any faster than that. If you bill up-front but the customer earns it down over the period, there is rationale for paying more up-front. Sometimes a deal sounds great at the start with a high subscription sold but actual usage comes in lower, you need to hold back on commissions to align with what is actually used.

You can also offer a SPIF if the rep brings in a very large subscription commitment -- it depends on what sales model you are preferring to get people to focus on.

I would not take the position of offering full credit up-front for a subscription. The rep still has to earn their sale kudos by following the account through the period, including sometimes going after unpaid bills, missing usage reports, etc.

I hope this helps.

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