Impact of Commission-Based Compensation on Sales Revenue: A Case Study of B2C Solar Pay-As-You-Go (PAYGO) Organizations

Abstract

B2C Solar Pay-As-You-Go (PAYGO) organizations in Zambia face challenges related to sales force costs, customer affordability, and delayed revenue realization. This study assessed the impact of commission-based compensation on sales revenue in B2C Solar PAYGO organizations in Zambia, focusing on commission structures, sales agent productivity, and organizational benefits. A quantitative cross-sectional survey, guided by a positivist philosophy, was conducted among 114 sales agents and 25 managers from four organizations: SunKing, MySol/Engie, Vitalite, and RDG, operating in Lusaka and Kitwe. Data were analyzed using descriptive statistics, independent-samples t-tests, one-way ANOVA, Pearson correlation, and cross-tabulation in SPSS. Salary plus commission was the dominant compensation structure (55.3%), followed by commission-only arrangements (29.8%). Agents reported modest understanding of commission systems (mean = 3.28), while perceptions of payment timeliness (2.69) and fairness (2.74) were below the neutral midpoint. The mean motivation score was 3.52. No significant differences in motivation were found across compensation structures (F = 1.388, p = 0.251) or gender (t = 0.620, p = 0.537). However, a very strong positive relationship was observed between motivation and sales performance (r = 0.861, p < 0.001). In addition, 84% of managers agreed that commissions improve organizational performance. The findings indicate that commission-based compensation is positively associated with sales agent motivation and performance, although its effectiveness is influenced by agents' understanding, perceptions of fairness, payment timeliness, and age. The study recommends transparent commission communication, timely payments, equitable compensation structures, and targeted support strategies to enhance sales outcomes.