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The Compensation Conundrum

Evolving your compensation structure to adapt with convergence.

We’ve all seen it; the industry is changing. I have been in the telecom space since 2004; first with a vendor and now with a master agent. During this time, the channel has grown considerably, the function of the master agent evolved and convergence proliferated across all aspects of the IT sales process. Convergence has brought new and different business models into the indirect channel as customers require a streamlined purchasing experience for all technology products and services.

Those new to the space are not experienced with a recurring revenue model and may lack the motivation and/or knowledge on how to evolve with this change and compensate a sales team in a way that retains them. Retaining top talent is a challenge for sales organizations across the globe, regardless of sector. So how do you keep your best reps? Incentivizing their success while remaining profitable is a balancing act so let’s talk about pay.

balance-money.jpgWhen working with TBI, the solutions you sell earn your business a residual commission payment for the life of the contract. Meaning, you are paid monthly as long as your customer is still under contract and paying their bill. But that does not mean that you need to pay your sales employee monthly for that contract.

Say your sales employee signs a deal that equals $5,000 monthly recurring charge (MRC) on a 36-month term. In this example, the sales employee receives a salary, benefits and an upfront one-time bonus equal to the $5,000 MRC. Now, you might be wondering, why, as the business owner, would I want to pay my rep $5,000? That’s a lot of cash upfront.

In an environment where the company is making 14% residual on the $5,000, the company makes $700 every month for the life of the contract or a total of $25,200. At $700 per month, the business owner recoups the upfront payment made to the sales employee fully by the eighth commission payment with an additional 28 months remaining on the sold contract.

In addition, TBI passes through 100% of the SPIFF to the business owner which can be used for additional bonuses, selling contests or further investment into the company. Also, if the contract renews, all additional income is available to continually reinvest in the business.

Keep in mind, TBI outperforms the competition on customer retention. The average customer purchases through TBI for more than six years. Due to our evergreen clauses that TBI has with our 90+ providers, the residual commissions continue to pay for as long as the customer remains with the solution, including a contract renewal.

Jumping into the residual model does not have to be an “all in” approach, TBI has your back. You determine how much or how little you need from us and we will help you learn along the way.

Got questions about structuring compensation for your sales team? Let’s discuss!

 

About the Author
As Senior Director of Sales at TBI, Schenkel leads a national channel sales team to initiate and develop successful partnerships. Schenkel assists in relationship building with ongoing support and strategic business development. He is responsible for revenue growth by expanding selling partners’ technology portfolios and working to achieve successful business outcomes. You can connect with Ryan on LinkedIn.