“Give and take” is a component inherent to all personal and professional relationships – a desired outcome cannot be expected if something appealing is not offered in return. It can be a match made in Heaven; however, once the balance between give and take is unstable, one partner might decide to hit the road.
Implementing an effective sales commission structure is no different. The benefits for your organization are two-fold: optimizing your bottom line and providing competitive pay to create and retain a top-performing sales team.
A deep dive with three industry-leading partners has proven that while a commission structure cannot be a one-size-fits-all solution, it is beneficial to mix and blend components that make the most sense for you, your team, and your bottom line.
417 Magazine – Springfield, MO
Logan Aguirre, publisher of 417 Magazine, understands the necessity of reevaluating your plan in order to keep up with this evolving industry. “Years ago, when we first introduced digital offerings, we set the commission at 18% to incentivize digital. We had print at 13% and they received an extra point when bundled with digital, for a total of 14%. Eventually, bundles became 90% of what we sold so most account executives were used to earning 14% on print. This portion of the commission structure benefitted them for any advertiser they had on the flat rate card.”
With this previous structure, there were more diverse earning options based on the products sold which made calculating commission each month very challenging. And in 2022, they decided to work toward making a change. With the ever-evolving digital side of the publishing industry coupled with the need to simplify things, Aguirre and her team decided to implement an across-the-board flat rate commission structure.
In 2023, the new plan was launched. Aguirre’s new account executives are now provided with an initial “ramp up” period that can last six to 18 months, depending on their level of experience and the quality of the list of clients they are provided when they start. After this initial ramp up period, account executives transition to a commission-only structure earning 14% on all core products.
With the initial structure being set up more than 20 years prior, it eventually became unsustainable and hard to attract talent. “Initially the base lasted for only about three months and often no list was provided,” said Aguirre. “So, we have become more flexible with the base and are trying to provide an account list to get them started.”
Innovative Designs & Publishing – Palmer, PA
When it comes to keeping things simple, Paul Prass, President and CEO of Innovative Designs & Publishing (IDP), could not agree more. “We just changed our commission structure a little over two months ago,” said Prass. “We [previously] had six-plus commission percentage brackets and it was very arduous. So, we changed it to a flat commission structure with bonuses.”
Leading up to the transition, each team’s average was calculated. “From there, we made the flat commission schedule higher so all reps would be better off than on the old structure,” said Prass. “We added flat bonuses for being over instead of higher percentage brackets.”
IDP offers an annual base salary with monthly print and digital commissions. There is a 10% flat rate commission on all print advertising sales. If the employee exceeds their sales goal, a stretch goal bonus will be paid out, depending on how much percentage over the goal was met (ex. When attaining the goal of reaching 4.9% over goal would earn them $100, 5% over goal to 9.9% over goal would earn them $250, etc.).
Playing into the bonus side of the structure, account executives can also earn quarterly bonuses for meeting print, digital, and e-mail marketing goals.
With their previous structure being more than 20 years old, Prass and his team recognized the need to simplify. As far as challenges faced during this process, Prass said, “Draft something with your accounting team, sales manager, and few senior reps and ask for their help and guidance.”
Omaha Magazine — Omaha, NE
As a company who has tried the flat rate commission approach, Omaha Magazine found the need to get creative in how they reward their top sales professionals. Todd Lemke, publisher of Omaha Magazine, believes in allowing account executives to create their own sales goals in order to achieve a more realistic outcome. “For the last 15 years, we have followed a draw against commission structure,” said Lemke. “Draw is determined by an agreed annual sales amount and then reviewed quarterly. Commissions are increased as your annual sales volume increases. The increase is retroactive for all qualifying sales back to the start of the year.”
In essence, Lemke’s account executives are in control of their own destiny – a goal is agreed upon, it is divided into 24 pay periods (paid twice a month), and they are given good faith they are going to hit their goals. Essentially, this means account executives are guaranteed regular paychecks throughout the year. If they meet their goals, they receive an added retroactive yearly 1.5% bonus on top of every dollar sold and collected.
When ask for advice on creating and implementing an effective sales commission structure, Lemke advised, “Know your company’s average sales amount, your company’s average yearly renewal rate, and your company’s average sales per appointment. Knowing this will guide you.”