Sales commissions refer to variable financial compensation provided to sales representatives based directly on performance metrics like closed deals, new revenue contribution, volume sold, or quota attainment. Commission structures aim to motivate and incentivize sales behaviors that generate growth and profits.
Many sales compensation plans include a moderate base salary plus commissions rewarding higher productivity. Drawbacks like overdiscounting require oversight. Visibility into commission payouts keeps reps focused on goals.
Balancing individual and team commissions enables cooperation alongside healthy competition. When designed thoughtfully, sales commission plans significantly boost motivation, performance, and business expansion achieved through a motivated salesforce.