One of my more controversial stances is that I believe you should not be paying your salespeople commission. Too often I see business owners like you who think that commissions will motivate your salespeople.
The sad fact is that commissions really do nothing but cost you money. Read on and you’ll see my reasons that commissions just don’t make any sense for your sales team.
You still have to manage your sales team.
When you have a commission program you still have to manage your sales team. It would be nice if this wasn’t true. Unfortunately, you still have to manage your people and you still have to stay on top of their activity if you expect them to be productive.
All having a commission system does is have a method for how you pay your sales staff. I don’t think I’ve seen many salespeople make an extra sales call or stay later just because they might make a new commission.
There are times when salespeople do stay late and make the extra call but that’s because they’re helping somebody solve a problem. In my experience, having your salespeople understand how they help their clients solve problems is a much more powerful motivator then paying a commission.
Learn about your sales people’s comfort zones.
Here’s something I’ve learned. Once a salesperson gets into a comfort zone with how much money they’re earning there is nothing I do that will make them work harder. Your salesperson is earning the amount of money they want to earn so why would they want to work harder?
Learn what your salespeople have for a comfort zone and you’ll have a pretty good idea for how hard most of them are willing to work. I’ve not seen many salespeople work harder just to earn a few extra dollars.
There are some exceptions to this rule. Those salespeople who make $300,000, $400,000, or $500,000 a year are often an exception. If you can afford to pay your salespeople this much money or there’s a path for your sales staff to actually realistically earn that much money then a commission program might make some sense.
If this is not true for your company stop the commission program and start paying your salespeople a bonus based on how well your company does.
Your systems will motivate more than commissions will.
What I’ve noticed is that salespeople are much more motivated when they have a system that supports them in the sales process. I find that having good systems in place is more important than having a strong commission program almost every single time.
So I have a question for you, “What are you doing to put together systems that support your salespeople by helping them solve problems for your customers?” If you can answer this question you are likely to get better results than putting or using a commission system in your company.
Why is it that you’re always wondering what your salespeople are doing?
One of the questions business owners almost always ask me is what are their salespeople actually doing? Most of these owners expect their commission program to do the work of good management. Frankly, that just doesn’t really work and more often than not an expectation that commission will help you have a more productive sales force is just false.
Your other employees wonder why your sales team deserves commissions.
Not only does a commission not create the sales you think it should, it creates resentment with the rest of your staff. I’ve seen very few salespeople who make any sales without support from within the organization.
The vast majority of the time those who are supporting the outside sales team make no commission and often wonder what the salespeople are doing to earn their commissions. Your inside staff often is the reason your customers decide to buy from you not because of what your salespeople do.
You have to realize that almost nothing in your company happens all by itself or because of the work of one person. Most of the time there are several people involved in the success of any program you have and this includes your sales processes. Do yourself a favor, stop paying commission and improve the morale in your company.
So what you think? Are you willing to try giving up on your commission program? Do you think that managing your sales staff effectively would provide better results than paying a commission?
Why don’t you click here and send me an email with what you think or just leave a comment below.