Understanding  Sales Commission

Sales commission is a form of compensation paid to sales representatives for their efforts in selling goods or services. It is a percentage of the revenue generated by the sales representative and is given in addition to their base salary. A well-structured commission plan can motivate sales representatives to achieve their goals, contribute positively to the company's bottom line, and improve customer satisfaction.

What Is Commission Structure?

Commission structure refers to how the commission will be paid out to sales representatives. It varies from one organization to another, but it generally consists of a base commission rate and a set of bonuses or incentives for achieving certain milestones or targets.

Why Use Sales Incentives?

Sales incentives are used to motivate sales representatives to attain better results. They can come in different forms such as cash bonuses, gift certificates, trips, or merchandise. Sales incentives can help boost morale and increase productivity.

What Is Quota Attainment?

Quota attainment refers to the percentage of a sales representative's target that has been achieved during a set period. It measures how successful the representative has been at meeting their goals.

What Is Territory Management?

Territory management involves dividing an organization's market into geographic regions and assigning each region to a specific sales representative. Territory management ensures that each region is adequately covered and that the best resources are allocated in each region.

What Are Sales Performance Metrics?

Sales performance metrics are used to assess how well sales representatives are performing. Some common metrics include conversion rates, win rates, average deal size, and time taken for leads to progress through the sales funnel.


Effective sales commission plans can significantly increase motivation among sales representatives, leading to higher revenues for the company. It is essential for companies to design their commission structures carefully and use incentives wisely while setting clear expectations regarding quota attainment and territory management. Finally, it helps if companies use performance metrics appropriately to track individual performance against targets.


  • "Sales Compensation Handbook" by Jerry Colletti
  • "The Sales Bible" by Jeffrey Gitomer
  • "Cracking the Sales Management Code" by Jason Jordan and Michelle Vazzana
  • "Effective Sales Incentive Design for Distributors" by Mike Emerson and Mike Marks
  • "Salesforce Essentials for Administrators" by Mohith Shrivastava
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