A multiplier, or accelerator, in sales compensation is a factor that is used to increase the amount of commission that a salesperson earns. Multipliers are often used to incentivize salespeople to achieve certain goals, such as meeting or exceeding their quota.
For example, a salesperson might earn a base commission rate of 5% on all sales. However, if they meet or exceed their quota, they might earn a multiplier of 1.5x. This would mean that they would earn a commission rate of 7.5% on all sales that they make above their quota.
Multipliers can be used to create a variety of incentive structures. For example, a company might use a multiplier to incentivize salespeople to sell more products or services, to sell to new customers, or to sell more expensive products or services.
Multipliers can be a powerful tool for motivating salespeople and driving sales performance.
However, it is important to use them carefully. If multipliers are too high, they can lead to excessive costs for the company. If multipliers are too low, they may not be effective in motivating salespeople.
Here is an example of how a multiplier might be used in a sales compensation plan:
Base commission rate: 5%
Quota: $100,000
Multiplier: 1.5x
If a salesperson sells $120,000 in a year, they would earn the following commission:
Base commission: $6,000 (120,000 x 5%)
Multiplier: 1.5x
Total commission: $9,000 (6,000 x 1.5)
In this example, the multiplier increased the salesperson’s commission by 40%. This is because the multiplier was applied to the entire amount of sales that the salesperson made above their quota.
For compensation plan examples that include multipliers, check out the following templates: