Snapshot Survey Results | Sales Compensation
In the September 2021 Snapshot Survey, contractors share their company’s approach to sales compensation in order to uncover the most successful strategies for incentivizing salespeople to achieve maximum results. Here’s one survey question and its results from the Sales Compensation summary report, which will be available in its entirety to EGIA members on 10/15/21.
Which option best describes your company’s structure for compensating its salespeople?
When designed correctly, compensation plans have the potential to create a financially mutually beneficial relationship between contracting business owners and their salespeople. Competitive pay based on salary, compensation, or a combination of both, have the ability to attract and retain top-tier salespeople, while incentivizing employees to pursue company goals. According to the contractors who took our survey, 52% of salespeople are compensated based on a combination of salary/hourly wage plus commission.
Salary/hourly wages can offer the peace-of-mind of steady income to employees but doesn’t do much to incentivize performance. Commission-only pay, on the other hand, highly incentivizes performance but also creates a sink-or-swim work environment, which can create elevated stress levels for salespeople. The most common form of sales compensation in the trades is some combination of both, which is in line with the survey data we collected. It is important to note that more complex compensation structures are understandably more complex to manage, which can put added strain on smaller companies who do not employ an accountant in-house. It’s important to consider your resources and time constraints when choosing which compensation structure is the best fit for your company.
Here’s what an HVAC contractor from Idaho said in the survey:
“We offer a $38,000 base salary plus 8% commission on equipment sales. If the sale has a lower gross than estimated, the commission is reduced.”