Sales & Commissions

Commission Plan Types: A Manager's Guide

Learn how to maximize your team's potential with custom commission plans on Shopify POS. Discover the best practices for setting up and managing commissions that drive results.

Yaniv Gerber

In the fast-paced world of retail, keeping your team motivated and engaged is essential for success.

Many successful retailers choose commission plans to reward employees for their hard work and encourage them to go the extra mile. This ultimately leads to a proven increase in productivity and sales.

It's simple in theory, but when looking at the actual day-to-day operations, keeping track of a commission plan is incredibly demanding!

Read on to understand both the value and the challenges of running an effective inventive program.

a couple in a jewelry store speaking to a salesperson

Choosing the Right Commission Structure for Your Team

First and foremost, the commission plan you select should represent the type of products you sell. Points to consider include the daily volume of sales, the effort required to make a sale, your profitability per item and the value of each sale.

Make sure the system you use is flexible enough to match your required commission plan structure and any changes you plan to introduce in the future.

Luckily, EasyTeam has a built-in commissions plan that supports fixed, percentage and tiered commissions. With an ability to mix-and-match these types and assign customized plans to each employee, you'll find just what you need.

Here are some details and examples about common commission plan structures that are supported in EasyTeam:

The EasyTeam commissions dashboard, showing different employee commissions and different criteria for receiving commissions
Assigning and managing multiple commissions plans on EasyTeam for maximum flexibility

Fixed Value for Each Sale

In this structure, employees receive a fixed amount for every sale they make, regardless of the sale value. This is particularly useful when you want to encourage a high volume of sales. For example, if you're running a promotion on a specific product, offering a fixed commission of $5 per sale can motivate your team to focus on selling that item.

Choose carefully to what products you apply this commission and keep an eye on your profitability.

Percentage Value for Each Sale

With this structure, employees earn a percentage of the total sale value. This is ideal when you want to incentivize your team to focus on high-value sales. For instance, if you're selling luxury items, offering a 5% commission on each sale can encourage your staff to prioritize high-ticket products.

Tiered Commissions with Uniform Rates

Tiered commissions define sales milestones, upon reaching these an employee is entitled to a commission. Each rate is assigned a percentage commission that is used for the calculation once reaching the milestone.

With tiered commissions with uniform rates, each tier has its own commission rate. This structure is suitable when you want to maintain a more predictable commission payout. For instance, sales up to $5,000 could earn a 5% commission, while sales between $5,001 and $10,000 could earn a 7% commission, and so on.

Use this commission plan type to motivate your employees with higher rewards the more they manage to achieve. This makes sense when each sale takes a lot of effort like customized products.

Tiered Commissions with Retroactive Increases

Similar to the previous structure, tiered commissions with retroactive increases are designed to reward employees for reaching higher sales targets.

As they hit each tier, their commission rate increases, and the highest rate is applied retroactively to all eligible sales. This structure is perfect for motivating your team to push beyond their limits. For example, if a salesperson reaches $10,000 in sales, their commission rate could increase from 5% to 7%, and the 7% rate would be applied to all $10,000 in sales.

Use these when you want to make higher milestones much more valuable for your employees.

Choosing a commission plan is only the first step. Keeping track of these plans and calculating commissions manually can be a daunting and time-consuming task, especially as your team grows and sales increase. This is where EasyTeam's automated commission management features come in handy, taking the complexity out of the process, automating it and ensuring accurate payouts.

Customizing Your Commission Plans

The flexibility of commission plans is crucial for adapting to your team's unique needs and your business's ever-changing landscape. Some key elements to consider when customizing your commission plans include:

* Scheduling commissions for specific dates, like holidays, end of month bonuses, seasonal promotions.

* Limiting commissions to specific products or categories, like prioritizing high-margin items or new product lines and avoiding low-margin items.

* Restricting commissions to specific employees or roles, like assigning different commission plans for sales team members and managers.

* Assigning multiple commission plans to different employees, like having a daily goal and a monthly goal, or assigning higher rates for top performers.

* Calculating commissions based on the discounted or non-discounted item price to incentivize employees based on the true value of the sale.

* Offering bonuses for achieving milestones or stretch goals.

* Adjusting commission rates based on performance or tenure, to reward loyalty and long-term commitment.

EasyTeam's commission management features make it simple to customize your plans according to these factors and more. By tailoring your commission plans to your team's specific needs, you can create a more engaging and rewarding work environment that drives results.

a screenshot from EasyTeam on a tablet device showing different employees and their commissions

Automatic Attribution: A Game-Changer for Managers

One of the most significant challenges in managing commission plans is ensuring that sales are attributed to the correct employee. This process can be time-consuming and prone to errors, especially when done manually. However, with automatic attribution, this hassle becomes a thing of the past.

EasyTeam's deep integration with Shopify's sales and employee modules makes automatic attribution even more seamless. By syncing data in real-time, the platform ensures that every sale is accounted for and attributed to the right employee, regardless of the sales channel or device used.

No more playing detective trying to figure out who made which sale. EasyTeam's automated sales detection and commission assignment feature makes your daily operations much easier!

This seamless experience benefits both managers and employees alike. Managers can trust that commissions are being calculated correctly, reducing the need for manual audits and corrections. Meanwhile, employees can have confidence that their hard work is being recognized and rewarded fairly.

a Shopify POS tablet with a checkout process, showing commissions being calculated
EasyTeam's Automatic commission attribution and calculation

Getting Started with EasyTeam's Commission Plans

EasyTeam is a powerful staff management platform designed specifically for Shopify and Shopify POS systems, aimed at simplifying the process of creating and managing commission plans. Keep all your information in one system and streamline all your processes.

Starting with EasyTeam is a breeze, and you can be up and running with your custom commission plans in less than 5 minutes. Sales will be attributed immediately, allowing you to monitor the commission assignments right away!

To ensure a smooth transition, EasyTeam offers free dedicated onboarding support from a knowledgeable representative. Your onboarding rep will work closely with you to understand your unique needs and help you create commission plans that align with your business goals. They'll also be available to answer any questions you may have and provide guidance on best practices.

So why wait? Sign up for EasyTeam today and start maximizing your team's potential with custom commission plans that drive results.