The Details
Retros mean that once a salesperson hits a sales milestone, they get a higher commission rate. This rate applies not only to the sales after reaching the milestone, but also to all the sales up to that point in the same period.
How Retros Work:
- Tiered Commission Structure:
- Salespeople earn a base commission rate for each sale up to a certain number of units sold.
- Once a higher tier is reached, the commission rate increases.
- Retroactive Application:
- The higher commission rate is applied to all units sold during the commission period, not just those sold after reaching the higher tier.
Example:
- Initial Commission Rate: 10% for the first 10 units sold.
- Tier 1: 15% for sales between 11-20 units.
- Tier 2: 20% for sales above 20 units. If a salesperson sells 25 units in a month:
- For the first 10 units, they earn 10%.
- Once they hit 11 units, they start earning 15% on all units sold.
- After selling 21 units, they earn 20% on all 25 units sold, applied retroactively.
Benefits of Retros:
- Increased Motivation: Encourages salespeople to push for higher sales to achieve the retroactive bonus.
- Higher Earnings Potential: Salespeople can significantly increase their earnings if they exceed sales thresholds.
- Dealership Performance: Helps dealerships achieve higher overall sales volumes by motivating the sales team.
Retros, who cares?!
Retros are a standard in commissions. They greatly improve a dealership's pay strategy. They motivate staff and boost sales. Calculating retroactive commissions requires precise tracking and math. For the spreadsheet team, this means double-checking formulas. They must match the retro tiers and changes. For sales, make sure they can see where they stand to finish strive to hit those top retro tiers!
