As each sales department requires a profit from the products, Sephora employees receive a commission as a reward for their efforts. The commission system is motivating because it allows all the salesperson to increase their profit.
The fixed salary which the salesman receives, whether he is concerned by the commission or not, is called the fixed remuneration.
Variable pay
Variable compensation is the individual or collective performance of employees. Its purpose is to encourage employees to achieve the result expected by the company by remunerating them according to the performance achieved.
Variable compensation to produce motivation is not the only tool to drive performance. Managers have an essential role and the marketing tools must also be taken into account for the performance.
The Benefits of Variable Pay:
Variable remuneration is so important for the employees’ motivation. Employees and employers can benefit enormously from variable compensation.
For the employee, the objective is simple: the more successful he will be in the sale, the more his remuneration will increase. This benefit will also benefit the company.
The disadvantages of variable compensation:
Incomes can easily fall if employees do not work or do not achieve the right results. Financial management will be difficult if we do not know in advance how much we will collect per month.
This compensation can even be anxiety-provoking for people who cannot stabilize their incomes.
Commission on the sale means
Sales commission is a variable remuneration method that allows the seller to collect a percentage of each product sold. It helps motivate salespeople effectively. There are different types of commissioning models.
The remuneration on commission
This type of compensation is based on performance and its advantage is to attract the best sellers in search of large commissions.
The capped commission
The number of commissions is capped and the advantage of this type of commission is the control of the payroll because no commission will be paid to employees once the ceiling is reached.
The tiered commission
This method is frequently used because the different levels support the motivation of the sellers. For example: if the seller reaches between 70 and 100% of his target, he will receive 100% of the commission.
With a target between 100 and 140%, it will receive 120% of the commission. These tiers motivate salespeople to earn more by selling more.
Calculate commercial commission amounts
This calculation is based on the turnover of the products sold for a specified time (for example a month) by the rate of profit that the company will give to the salesperson. The salesperson has a fixed percentage on each product for sale.
For example, if the commission rate of each product is equal to 4% then to calculate the amount of the commission, just multiply the sum of the products sold by this percentage of 4% at the time interval defined by the company.
On the other hand, the commission rate may differ for each product in the company, for example, 3% and 4%. In this case to calculate the amount of commission it is enough to make the sum of the total amount of commission of the products 3% and that of the products to 4%.
Is commissioning a good method to motivate employees?
The disadvantage of the sales commission is that it focuses only on quantitative objectives, which cannot be adapted to the strategy of certain companies. To overcome this disadvantage, a premium strategy must be adopted that takes into account both quantitative and qualitative indicators.
The target bonus:
The Goal Bonus is variable compensation based on the allocation of a target bonus to achieve the goal and a maximum bonus when the goal is exceeded (a capped amount). It also makes it possible to take better account of the qualitative aspect of the commercial relationship.
How to attract customers?
The commission depends on the marketing quality of each employee, that is, how they advertise the store’s products to customers.
The commission that employees receive is just synonymous with « The more I sell, the more I earn » a percentage of revenue.
Sephora must make promotions with price reductions on the various products for sale in the shop.
Conclusion:
Finally, a mixed strategy based on commission and premium is the best way to reward employees who fight to sell a large number of products. This strategy is beneficial for employees as well as the best performance of the company. Hence we discussed that do Sephora employees get a commission.
