In the U.S., more than 14 million people work in sales. Base salary is fixed, but commission is flexible. Sure, you may be making a salary of $40K in one of the most expensive cities. But, if you’re in sales, you could live a really comfortable life. It may just come down to getting a commission raise.
You know several team members who are bringing in $100K plus, based on their commission figures. But, you also know they’re earning higher commission rates than you are earning per sale. What will it take to get a commission increase? In this article, we’ll cover how to ask for a commission raise, without being too aggressive, or otherwise alienating your employer when it comes to asking for anything you might need to succeed in your role in the future.
How to ask for a commission raise
The first thing you have to remember is that if you don’t ask, you aren’t going to receive your raise. Every other sales team member who’s earning a high commission rate than you have asked for a raise, and they’ve been awarded that raise. So, why can’t you do the same? You can and should ask for a commission raise, but the timing has to be right.
What should you consider before you ask for a commission raise?
Utilize an offer you have with a competitor
But, do this intelligently, of course! Let’s say you are a top sales rep in your region, and you’ve been with your company for three years. You’re tired of earning the same 5% you earned when you began, even though your figures have gone up increasingly each quarter. What gives?
Well, for starters, if you’ve never asked for a raise, and you’re just now getting frustrated about it, you’re partially at fault. You can’t expect an employer to willingly come up to you and say we want to increase your commission structure. It won’t happen in sales and probably won’t happen with other positions/roles either.
But, if you have asked for a raise in the past, and been turned down, or told to hold off on your request, you might’ve gotten tired of being lied to. If this is the case, and you’ve been applying with other companies, use this leverage. A competing job offer might leverage your salary or result in a commission raise when you let your employer know you’re thinking about leaving the company for a competitor. If you’re a top salesperson, they’re going to want to keep you at all costs. So, that 5% rate might jump to 7 or 8% in the next quarter. Conversely, your employer may offer
- An increase in your base salary as compensation
- Incentives like company stock or merchandise
- Quarterly, semi-annual, or annual compensation
- Trips or other forms of compensation, to lure you in to stay with the company
For some employers, if they love their company/job, they might accept this. Another employee might feel as if they’ve been under appreciated, and take the competing position with the other employer. Regardless of how you feel about their new offer, you can utilize the competitor’s offer as leverage for asking for a raise.
Make sure you are polite, don’t jump down your employer’s throat. Take the time to talk to them about your options. You’ll not only look good and classy, but you’ll avoid losing your job or being asked to step down. You don’t want to appear being pompous with your boss just because you have a counter-offer from a competitor.
Timing is key
You can’t go into your boss’s office Monday morning, after the winter holiday or after Thanksgiving break. When everyone has been off for one-week, and you have not done any work or prepared to talk to them. Nor should you go into their office, demanding a raise, after your sales figures are down for the last two quarters, and you’ve been a mid-level salesperson for the duration of your employment with the company.
So, when is the right time to step into your boss’ office and ask for a meeting? You’ll want to make sure
- Your sales figures are up, on par with other team members, or have been steady for several periods in a row
- You have recently overtaken the top salesperson and are now the best in your region
- You’ve been with the company for over 1-year, with a solid record, and have consistently shown increases in sales figures monthly (also see: how often should you ask for a raise)
When asking for your raise, you’ll want to show the work you’ve been doing is worthy of a raise. You also want to show you’re loyal to the company. Especially in a role like sales, where people constantly jump around from one company to another. So, make sure you’re with your employer for at least one year and have the stats to back up the work you’ve done with them before you schedule that meeting requesting your raise.
If you go in after your worst quarter of the year, and your sales figures have been consistently dipping previous to that month, and you’re asking for a raise, you’re going to be turned down. Some employers might terminate you if you ask for a commission raise at this period, as it shows you aren’t aware of the work you do, or the value you add to the company. For these reasons, you must understand timing, the company’s position and ability to offer a raise, and what you’ve done recently, to warrant the commission increase that you’re requesting from your employer.
Back-up the request
When the time comes to ask for a commission increase, you need to have your recent stats in hand to go speak to your boss. You also need a business plan in place, to highlight what you expect to do in the coming months/quarter, based on the recent work you’ve done for the company. So, you should bring
- Information show your boss how you’ve overachieved, regularly, since you’ve been hired
- Your latest sales (chart/graphs that show your sales figures)
- Information regarding your biggest sales, repeat sales and keeping customers happy
- Copies of recent sales records, or repeat sales a customer plans on making in the future because they like your service
It’s also a good plan to bring your projections in for the coming months or quarters. Don’t go over the top here, however, as this can hurt you if you don’t achieve those figures. Let’s say you’ve sold $100K, $200K, and $250K over the last three quarters. You can project to your boss, that in the next quarter, you’ll sell $250K to $300K, but don’t guarantee anything. Just show a projection based on what you’ve recently done.
We live in a society today that we focus on current figures or trends. Meaning if you’ve done stellar work in the past year, this is what your employer cares about. They don’t look at the last 5 years you worked for them. We want “here and now.” Therefore, show your employer what you’ve done, and how great your figures have been, when you plan on going in to request a commission raise.
Can the company offer a raise?
It might not be the time (timing, that point we mentioned above) to ask for a commission raise. For example, if your company has lost $1 million in revenues over the past two months, due to a scandal or issue with their products, it’s probably not the best time to ask for a raise. In some cases, the company might not be able to offer you a raise at present. Or, if your company has been seeing figures dip over the past several months, and no sight of an upturn shortly, it’s probably not looking good for you to receive that raise.
In some cases, the company isn’t financially stable to offer you a commission raise. Or, it may be in the wrong time of the budget cycle. If this is the case, consider asking for other incentives or perks. Or, it might be time to think about moving to a different company that is financially stable, has its product lines in order, and can offer you what you’re worth. Only you know your true value, and know what your company is valued at, and where it stands. So, use this information intelligently if you think the time has come for you to ask for a raise, or if it might be time for you to consider moving on to bigger and better things with another employer.
Consider asking for a salary raise based on inflation or cost of living
Some companies might be hesitant to offer a commission increase to their salespeople. And, you might know this based on previous conversations, or based on the commission structure they have in place. Then, there are some contracts you’ll sign, that specifically indicate you aren’t going to receive commission increases with the company as a salesperson. If you agreed to this, it’s something you have to deal with, or you have to move on. But, this doesn’t limit you from asking for a base salary raise.
If you can’t negotiate a commission raise, consider negotiating a base salary raise. Again, you’ll do this similarly to how you would request the commission jump, so you’ll need
- Current sales figures and trends
- Information from your clients about how great you are as a salesperson
- Recent work you’ve done
- How you’ve helped the company grow
- How you have promoted products for the company
- What you plan on doing in the future as a salesperson and helping the company grow
You can’t go in and demand a higher rate without a reason. If you are a subpar employee, and if your sales figures aren’t outshining the other team members you work with, you should expect the subpar salary structure. But, if you are a top salesperson, constantly meeting and exceeding your marks, it’s up to you to ask.
Check your employer’s compensation plan
Before jumping down your employer’s throat with a list of your latest sales to top clients, make sure you have your information correct. There are some sales contracts you’ll sign as an employer that doesn’t allow for a commission raise. Others are going to necessitate that you
- Reach a certain threshold in sales ($1 million+ in sales before your increase)
- Work with the company for a certain period (1-2 years before an increase)
- Meet certain sales quotas (that you’re selling a particular product)
- Outdo your local sales reps in the region/geographic area
You don’t want to go into your boss’s office, demand a pay raise, only for them to inform you the contract doesn’t allow for it. Not only are you going to come off as a jerk, but you’ll also appear unprepared. It will show you didn’t read the employment contract you signed when you took the position.
So, do your homework and make sure you know what the terms of your employment contract. You’ll want to know this before you go demanding a commission raise that you agreed you wouldn’t ask for when you took the position in the first place.
Now it’s time to ask for a raise
You have to remember, most employers aren’t going to call you into their office to tell you how great you are and offer a 10% commission increase, above what you’re currently earning. It doesn’t happen this way, at least not for most people. If you’re lucky enough to have this offer from your boss, take it! But, for most others who have to go in and ask for the raise, you want to do it respectfully. You don’t want to attack your boss or tell them you’re quitting this minute if they don’t offer the raise. In most cases, they’ll tell you to leave the company.
Take the right approach, be forthcoming and polite with your boss, and make sure you’re confident in your request. Knowing how to ask for a commission raise is the first step in obtaining that higher salary, and moving in a positive direction with your company to continue to grow as a salesperson.