Sales Compensation Plan

Sales Compensation Plan

The issue of compensation is central to the management of not only employees but also the financial performance of a firm. Conventionally, payment is used as a reward for the efforts of workers who are indeed motivated by their specific needs. While salaries and other reparation plans are an expense to companies, their incentive effect has a direct influence on the overall output of an entity since motivation stimulates productivity. Employers, thus, design payment structures to promote organizational goals by appealing to the expectations of the workforce. Commissions on sales are one of the important strategies used to reward the marketing team by offering them a percentage of the deals accomplished. Such an approach motivates the salesforce to exercise more vigor in seeking new clients as well as retaining existing ones. Memphis Grizzlies can increase the performance of its sales team by affording them commissions for sales on both new and existing customers as well as revenue bonuses.

The base compensation of Memphis Grizzlies would be set at $12.30/hr. The figure is guided by a survey of 1,129 ticket sellers and similar job advertisements (“Ticket Sales Representative Salaries in the United States”). Notably, industry rates are used as the leading guide in setting salaries. Workers expect employers to match prevailing terms, which are primarily guided by the federal minimum wage as well as current economic conditions (Adom 3). Therefore, Memphis Grizzlies salespeople would be provided with the average market wage for ticket sellers to ensure consistency and limit turnover.

The company would also provide salespeople with commissions for both group and season tickets. Group tickets attract higher revenues, especially for premium games. In this regard, a commission of 7% would be offered to the sales team to encourage them to pursue such clients. Similarly, a rate of 5% would be provided for season-long tickets, which are equally crucial to the income of the firm. Their assurance is essential to sustained revenues and allows the club to plan its resources.

Paying commissions to salespeople for repeat purchases is an essential strategy of promoting customer retention. Notably, some firms only give out rewards for new clients and a lower or no compensation for regular clients. However, acknowledging the role of the sales team in maintaining buyers and the effect of such stability to the business warrants a different approach. Consistent customers are vital to the sustainability of business operations through regular income. In this perspective, Memphis Grizzlies would treat all purchases equally to encourage the sales personnel to focus on recruiting new clients as well as retaining them over the long-run.

Another motivational form of compensation that would be used by Memphis Grizzlies is the use of bonuses. The club would set specific and moving targets for the cumulative sales made per season. Representatives would be compensated for the margin they realize. A typical 2.5% rate will be used to calculate an individual’s reward. The figure is the base limit for the established 2.5-7% range provided for standard bonuses (“Types of Bonuses: 10 Bonus Programs for Employees”). Such an approach ensures that the sales team is incentivized to hit higher targets every season (Kishore, Rao, Narasimhan, & John 16). The scheme also avoids the demoralizing effect of setting a single cap, which is usually very high.

Markedly, the company will not set a maximum sales figure for its representatives. Such a system could result in complacency, hence, minimizing overall performance. However, a minimum amount will be established based on past records and the club’s sales potential. Creating a base figure encourages salespeople to enhance their efforts. A further tactic can be setting a three-month limit for those who do not meet the minimum sales target. Failure would disqualify one from the base salary system to commissions and bonuses only approach.

Memphis Grizzlies can upgrade revenues by motivating the sales team through commissions and bonuses.  Employing varying rates for group and season tickets, in addition to a base salary of $12.3/hr, would encourage the team since it demonstrates justice in compensation. Season bonuses would also hearten the staff to pursue higher targets. Thus, strategic payment is useful to both the employees and the club.