The temptation to use straight (100%)
commission plans never goes away:
"Let's put our salespeople on 100 percent commission.
Then, if they don't perform, we're not out any money."
For small, start-up organizations, the lure is
irresistible, especially when money is tight and the company or the products they sell
have no track record in the market.
Straight commission appeals to salespeople because of the
freedom that comes with it.
Because they receive no salary, these salespeople are
unwilling to allow management to prescribe how they do their work. That includes hours
kept, effort made, methods used, or product lines sold. The only real rules they must
abide by are ethical. When salespeople are willing to give up salary, management must be
willing to give up control.
For someone new to sales, finding a straight commission
position may be a way to establish themselves as a salesperson.
For a proven, effective salesperson, 100 percent commission
may be the road to making loads of money by making lots of sales for their company.
Unfortunately, most small companies with straight commission plans hope for the latter and
wind up with the former. These inexperienced, undisciplined, babes-in-the-woods carry a
high likelihood of failure, costing their companies untold sales opportunities during the
"experiment".
If you choose to use a 100 percent commission plan, you
must find salespeople who bring their own motivation to work every day. Each morning, the
salesperson must have their own target to shoot for and a solid plan to get there. New
sales people may have the enthusiasm, but it's unlikely that they have a plan that works.
Conversely, many experienced salespeople know how to create a plan and go through the
motions, but are no long turned on by the thrill of the hunt. They may be content with a
level of sales performance that allows them to satisfy their lifestyle requirements, but
under-performs the sales goals set by management.
The net is there's no way a company cannot invest resources
in their sales team. Either you pay a salary and then plan on actively managing and
developing your salespeople for success. Or, you pay straight commission, save the salary,
then pay big dollars to replace unproductive personnel while you forfeit sales
opportunities lost by ineffective sales people.
When you shift risk to salespeople by adopting a straight
commission plan, you may in reality be risking your business. Think hard about what's
really important to you when you design your sales compensation plan, and control your
urge to use 100 percent commission.
© 2005 Paul Johnson. All rights reserved. |
