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At a recent conference, I wasn’t surprised by the reaction of workshop delegates when they figured out that we recommend eliminating commissions and paying salespeople salaries.
I didn’t present this position explicitly—after all, it’s a secondary consideration, not the primary that everyone assumes it to be. But our position was inferred and it didn’t take long for delegates to put two and two together. So when one delegate eventually summoned up the courage to have me confirm that this is, in fact, the way we feel, the room descended into pandemonium.
Before thinking this notion is insane, answer this question: Does it make more sense for sales to be performed by autonomous agents or by team members? How you compensate your salespeople is a natural consequence of your answer to this question.
In line with the point above, you cannot and should not convert existing salespeople in a traditional sales environment from commission to salary and expect an improvement in performance. You must first—if you deem it appropriate—change your basis of engagement with your salesperson. They must willingly give up their autonomy and become a part of a tightly integrated team.
Also, you must replace your laissez-fair approach to management with a formal management structure—one that gives you control over the activities performed by salespeople and visibility of the relationship between those activities and the results they generate.
Lastly, a bit of a reality check. The truth is, if you put a salesperson on commission, you have given that person permission not to make sales. In other words, you’re communicating to that person that the only consequence of producing less than the optimal output is simply an incremental reduction in total take-home pay.
Why would you do this? Why would you make it optional for salespeople to sell? What is the cost to your organization of those prospects that aren’t visited and those contracts that aren’t signed simply because your salesperson is comfortable to earn, say, $100,000 a year as opposed to $115,000?
If you had a plumber on salary, you would not make it optional for this person to fix leaking taps. It would be an expectation. If he chose not to, he would be risking his entire salary—not just the potential to earn an extra dollar or two.
If sales are important to your organization, why would it make sense to treat your salesperson any differently?
Performance should not be optional.
Justin Roff Marsh
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