Skip to main content

Video: Sales Commission Schemes

Devising a sales commission scheme. Before we even think about a commission scheme, what's the point?

The point is to incentivise the salesperson to go out and sell more. But what commission schemes work?

Well, firstly, they have to be easy to calculate, both for you and for the salesperson. The best commissions scheme is where the salesperson can walk out of winning an order and know exactly how much, in pounds, shillings, and pence, that's going to be in their back pocket. But also for you, so that and at the end of every month, the end of every quarter, however you do it, it's very easy for you to tally up and calculate and agree with the salesperson to then pay that commission out. So first rules are it has to be motivational and it has to be easy to calculate for both you, the employer, and your sales employee.

I have spoken to thousands of companies and there are hundreds of different commission schemes, but they all roughly break down into four themes. And they are firstly, a percentage of GP. Now, I'm not a fan of that because it is very difficult for the salesperson to calculate. So in a lot of ways, when they walk out of that company having won the order, they don't know how much that's going to be in their back pocket.

Secondly, there is percentage of turnover. This can be commercial suicide because unless a minimum level of GP is set, the salesperson can go out and win business that's unprofitable and still earn commission on that. So you could be paying way and way over. You're just making loss after loss.

The third way is a percentage of turnover or a percentage of GP having met other criteria, such as customer satisfaction surveys, such as them meeting their KPIs, them completing all the data on the CRM. And quite often, particularly if it is a new sales manager going that's trying to change the culture of a team, it can work in the short to medium term to ensure that your salespeople become compliant, they increase their customer satisfaction reports, et cetera. It works, as well, if it's a company that's really trying to change the culture of a whole organisation.

A couple of years ago, I was dealing with a company that had a sales team that were very 'wide' and maverick. They brought a new sales manager who was bought in to completely clean up the way that they sell. So they introduced that type of system, and it ensured that the salespeople sold correctly, met all of the compliance levels, met all the key performance indicators, before they earned the commission.

The final scheme, and I think the best commission scheme, is a percentage of the gross profit that the salesperson brings in above a threshold, and the threshold is the cost to your business of having that salesperson. So how do we calculate that? First off, we look at the entire annual cost of a salesperson. And if you look at a salesperson, you've got their basic salary, you've got their commission, you've got the Employers National insurance Contributions on the whole of that, you've got a company car, you've got the fuel to go into that car, you've got expenses, and so on.

You've got your additional benefits. You'll know roughly how much that salesperson is going to cost. I've estimated, and it varies wildly from industry to industry, but if a salesperson is on 30,000 pounds, they're going to cost you between 50,000 and 55,000 pounds. So let's break that down. That divides nicely into 5,000 pounds a month. So that is the threshold of GP that that salesperson has to bring to your business before they earn a penny of commission.

There is a golden rule in creating commission schemes, though, and it is imperative that you put into the salesperson's contract a phrase. You'll see it on our website, and you can just copy that straight off their and put it into your contracts. But it goes something along the lines of, the company reserves the right at any time to amend or alter the commission scheme with one month's notice. This ensures that if you set up a commission scheme that initially is too generous, you don't have to go through the process of renegotiating the scheme with all of your sales team. So the golden rule, ensure that you put that statement within the salesperson's contract when you roll out the new commission scheme.

So I recommend either a monthly or a quarterly commission scheme. Because it ensures that motivation is there year round. By all means, have an annual bonus on top of that, perhaps for meeting key performance indicators, or customer satisfaction reports, or company gross profit, or whatever it may be, and that's the kind of thing that will pay for Christmas or pay for a summer holiday, and that's real nice to have. But monthly and quarterly commission schemes will ensure that your salesperson is motivated year round.

And the other problem with annual schemes, if you have that nice, big lump at the end of the year, so many salespeople have registered. They register a month or two months before that commission is due, and they say, look, I need to pick up my big annual commission check before I leave. And that's the predicament. In fact, there's been a couple of employers where they've had a third of their sales team leave all at the same time because they've picked up the annual commission check and then moved on.

So I hope you found this information on commission schemes useful. On, there is a lot more information on how to devise commission schemes.

About the author

Darren Dewrance

Darren spent six years in sales and field sales before joining the original sales recruitment specialist, Austin Benn, in 1998. After achieving the status of top consultant, out of about seventy at the time, Darren rose from Senior Consultant to Operations Manager of the commercial sector before leaving to join a London based Headhunter in 2003 before setting up Aaron Wallis with Rob in October 2007.

With a natural leadership style, Darren is an expert on putting his finger right on the heart of the problem. His natural commercial instincts have helped hundreds of employers make better recruitment decisions. Darren is married with two children, and when not at work or with his family, he likes nothing more than to be on the side of a river or a lake with a rod in his hand.

Please call us to discuss your vacancy

Milton Keynes



Our employers say...

Rob’s knowledge of the recruitment industry and his thoughts and how to make it better for his clients have always been eye opening. I would recommend Rob to anybody who is looking for a professional, knowledgeable and flexible recruitment specialist.

CEO, Friday Ad Online Services

We appointed Aaron Wallis in February and the successful candidate, out of the six which Aaron Wallis introduced, was able to join Alphametrics before the end of April. The whole process took less than three months. I would recommend Aaron Wallis' services to others without hesitation.

Chief Financial Officer, Alphametrics

I really liked the YouTube presentations which made the service seem both simple and accessible. The company came to see me, and my management team, at short notice to present their service and I liked the support and advice that I received about maximising the results from the applicant.

Managing Director, Leisuresec plc

I found Aaron Wallis to be very professional and efficient, taking time to understand the role and the type of candidate we were looking for. The candidates they put forward met our criteria and were of a high standard. The service they provided was exemplary and I would have no hesitation in recommending them, and will certainly consider using them again in the future.

HR Assistant, Fischer Connectors Ltd

Aaron Wallis has continuously provided us with suitable candidates that have been proactively sourced. Having used countless recruitment companies, Aaron Wallis are the only company that I can count on to deliver.

Managing Director, JARK Healthcare Recruitment

Rob is a true recruitment professional that goes the extra mile that I have never experienced from any other recruitment agency before. If you need sales people call Rob or someone in his team, as they really are experts in sales recruitment.

Sales Director, Inside Business

Giles Phillips is a rare find in the minefield of sales recruitment; an honest and thoughtful recruiter who considers the needs of both the client AND the candidate to create perfect role matches. I look forward to working with him again in the future.

Marketing Director, City of London Police

I just wanted to thank you for your help with our recruitment process which went very smoothly and has – we hope – found us just the person for the job!

Managing Director, Citrefine International Ltd

In an industry where people over promise and under deliver, Rob and his teams have consistently provided a high-quality service. It is great to deal with someone that has an excellent understanding of UK industry, and a passion for sales.

Sales Manager, TR Fasteners

Understood the type of person we were looking for and good follow ups - not too frequent.

Managing Director, bigHead Bonding Fasteners Ltd

Since joining DSGi, Rob has been a supplier of permanent staff and has performed to an extremely high standard, successfully filling 98% of roles he has worked on. If anyone is looking for a good sales and marketing based consultancy with an informal yet professional approach, I would recommend Rob.

Senior Recruitment Consultant, DSG International

We were impressed not only by the quality of candidates you found for us but also the level of information, preparation and qualification you put into the process. You continually kept us informed of each person’s feelings about the process, which is very important but often overlooked. I am looking forward to working with your company again in the future.

Commercial Director, Incentive Facilities Management

Giles is highly professional and was a pleasure to work with. He achieves excellent results through his personable skills and tenacity. I have no hesitation in recommending Giles to anyone who considers employing his services.

Commercial Director, G4S Government & Outsourcing Solutions

I have always found Rob to be very knowledgeable about our industry sector, and it is refreshing to see after all of these years that Rob continues to quickly and accurately understand my requirements.

HR and General Manager, THK

I have used Aaron Wallis to fill a number of our Sales Development Manager roles and I have found them to provide a very professional service. I will use their services again in future recruitment campaigns.

HR Business Partner, Greene King

Thanks for all your help during the recruitment process. I have been extremely impressed with Aaron Wallis especially when compared to other agencies we have dealt with. I really felt you grasped the type of person we required and found strong candidates.

UK Sales Manager, Nexcom

Our candidates say...

Excellent service, very professional and friendly, would and have, recommended Aaron Wallis.

E. Heley, Candidate

Aaron Wallis is an outstanding recruitment agency specialising in high calibre sales positions. I was working directly with Darren Dewrance who went above and beyond my expectations in sourcing me my perfect role. I was kept in regular communication with Darren and he worked extremely hard to secure my dream job. Highly recommended and Thanks Darren for all your expertise and hard work.

R. Sealy, Candidate

Aaron Wallis (and in particular Rob Scott) have been fantastic throughout the recruitment process, and even a few months down the line, still continues to care. Rob clearly cares about each individual and has a wealth of knowledge and expertise, which shows in the work he does. Each candidate is not just a number, and the support received from Aaron Wallis has helped me get a career which I truly enjoy.

M. White, Candidate 

I have to say coming across and having dealings with Aaron Wallis proved to be very successful. Being highly experienced did not seem to count for much during my job search bit a conversation with Robert Scott gave me a real confidence boost and enabled to get a position at the age of 63. Great service!!!

D. Burgess, Candidate

Really excellent experience dealing with Aaron Wallis. Liam Oakes who helped me get a great job was brilliant. Kept me up to date during the process and offered great help and advice, and a thoroughly nice guy. Highly recommended!

J. Hathaway, Candidate

Aaron Wallis have provided me with an excellent service, Giles went out of his way to help me preparing for my interview and supported me through all the processes. If you need an agency to give you a fully professional and consultative approach to finding you a new career move, the Aaron Wallis can certainly provide this for you.

D. Richards, Candidate

Good swift process with Aaron Wallis, informative regarding the role and the process was moved at a good pace with healthy interaction. Would recommend them to anyone pursuing a change.

S. Bartlett, Candidate

I can honestly say that the time and expertise you gave me was way beyond any other recruitment consultant I dealt with. You are a rarity in your industry.

S. Akers, Candidate

The Recruitment agent I used, Simon, was extremely helpful and really went the extra mile to ensure all of my questions were answered, and that I felt as comfortable and prepared as possible. Very professional company and would definitely recommend to others. Thank you Aaron Wallis!

A. Callaby, Candidate

Fantastic customer service, communication was brilliant, happy polite people to talk to, made everything a lot easier and smoother. Thank you for all your help getting me back in the work force, Keep up the good work :-)

K. Everitt, Candidate

Aaron Wallis Sales Recruitment are a very friendly and professional recruitment organisation who listen to your needs, work with you and act on your behalf which sets them apart from many of their competitors who in my experience are willing to throw anything at you. We discussed my history, my preferences and my wishes - one opportunity was introduced. It was perfect. I start at the end of June.

R. Buckley, Candidate

Excellent experience from first contact to ultimately securing a suitable placement. Giles looked after me in a very professional and friendly manner. He used his expertise and experience to ensure I was put forward for the most suitable positions for my skill set and found me a new role very quickly. I can't recommend Aaron Wallis Sales Recruitment highly enough.

M. Green, Candidate

Less than two weeks after joining Aaron Wallis I was offered my new job. I got a £10,000 rise in my basic salary, car allowance, a laptop and many other perks, which will help to further my career. I definitely would not have found my dream job without the help of Aaron Wallis.

C. Hoy, Candidate

I've had a really good experience working with Giles Phillips at Aaron Wallis. From initial contact to the finer details of securing the job, he has been very professional and a pleasure to work with.

M. Shutt, Candidate

Aaron Wallis helped me secure a position I really wanted. Giles sought to keep me updated with all the details preceding interviews and after with feedback. I would highly recommend Giles and Aaron Wallis Sales Recruitment.

L. Taylor, Candidate

Fantastic service, helped me find my ideal job quickly and smoothly. Would highly recommend them.

C. Caine, Candidate

Very good advice and support was given during the course of the interviewing process. Potential job seekers would be well advised to use this company whilst looking for their new career.

R. Speakman, Candidate

A great recruitment company to work with. Excellent experience with Aaron Wallis through the entire recruitment process. The team was really professional and extremely helpful. Darren was a pleasure to work with. He was friendly, supportive and gave me great advice. Thank you very much!

A. Bauchet, Candidate

The service provided by Aaron Wallis has been just great. I was constantly informed about what was going on with the process interview and the agent has always been supportive and kind to me.

L. Colagrossi, Candidate

Perfect from start to finish. Simon deserves a shout out. Best recruiter there is. If you need a job, this guy will get you one. He's like the super man of recruiters. Top man, can't recommend him enough.

M. Crisp, Candidate