a cap on commission tells sales reps there’s a limit on how much they can earn, which can demotivate them to go above and beyond to bring in the most revenue possible. As a rep approaches their commission cap, they’ll understandably put less effort into building out pipeline and closing deals.
Some companies establish an extremely high commission cap, thinking: “reps will rarely or never hit that limit, but this protects us from overspending just in case they do.” but even a seemingly unreachable cap can have an adverse psychological effect on sales reps. Knowing there’s a ceiling on one’s earning potential can demotivate, no matter how high that ceiling is.
It results in less overall revenue
businesses implement caps with the hope of thailand phone number list saving money, but this often produces the opposite result. A cap can reduce not only a company’s commission expenses, but also the total amount of revenue being generated, once sales reps have no incentive to close more deals.
It incentivizes poor sales behaviors
some sales reps react to a cap on commission by simply becoming less productive. Others look for loopholes around the commission gap, the most popular method being to push a use ai to help create deal to the next pay period so they’ll receive commission for it. These tactics might b2b fax lead negatively impact customer experience, as the sales rep is literally making the customer wait.