Blog Information

• Posted By : Emily Clarke
• Posted On : Jan 21, 2022
• Views : 186
• Category : Technology
• Description : On paper, putting a cap on sales commissions makes sense. Caps can prevent runaway incentives and give you a better idea of how much you'll have to pay your employees.

Overview

• On paper, putting a cap on sales commissions makes sense. Caps can prevent runaway incentives and give you a better idea of how much you'll have to pay your employees.
  
  

  But in the eyes of your team, capped commissions do more harm than good. Here's why.
  
  

  Caps Can Limit Sales
  
  

  Believe it or not, but sales caps can end up hampering your sales. Picture this:
  
  

  You implement caps to spend less on incentives. Suddenly, your team knows their upper limits. So, they try to spread out sales to have a steady stream of income throughout the sales period.
  
  

  That cap inadvertently trained your team to perform less, decreasing potential revenue and preventing your company from growing. The best commission plan structure has the opposite effect, encouraging constant growth. Get the best commission plan structure by visiting this website.
  
  

  Commission Caps Demotivate Your Team
  
  

  Why would anyone on your team want to continue pushing sales when they know they won't earn anything more? Once they hit their commission cap, there's no motivation to make any sales. In fact, additional sales would be a bad idea from your team's perspective.
  
  

  Instead of making a sale now, they can push it off until the start of the following sales period. Caps can lower morale and create major retention issues if you're not careful.
  
  

  Caps Don't Solve Spending Issues
  
  

  Many businesses that implement a sales cap do so to control spending. However, doing so isn't addressing the problem at hand. If there's an imbalance between revenue and commission payouts, that's a sign of poor overall compensation planning. Capping commissions aren't going to fix that.
  
  

  Addressing spending problems requires careful alignment of sales goals and incentives. The best commission plan structure will motivate your team while improving your company's bottom line. It may involve a cautious strategy. But once you have things right, your spending issues will go away.
  
  

  Let Commissions Help Your Business
  
  

  Ultimately, sales incentives are there to drive sales and improve revenue. Capping them is only going to have negative ramifications. Reward your team for their hard work. With the proper commission structure, everyone wins.
  
  

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