Sales Compensation Focus, July 2010 – The economy appears to have taken a positive turn and many companies are starting to think about growth: hiring more sales reps, launching a new product, or breaking into a new market segment. One of the first questions that is raised when a company returns to growth mode, especially if there has been significant retrenching, is, “What should we do with our sales compensation plans?”
Our small sales team is paid 100% commission on gross margin. Sometimes, we claw back commissions that were paid after the customer is past due and in collections, is this legal?
Sometimes customers return products, or they just don’t pay. As a result, some companies do a charge back on commissions paid to the sales person on the sale. The legality of this practice can vary…
My answer is different for contests and SPIFFs than for core incentive components. For core components, give some thought to what you’re trying to accomplish with your eligibility requirements…