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Salary Vs Commission
Rank: Member Joined: 12/2/2009 Posts: 161 Location: nairobi
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where i work, we have been experiencing a challenge with our sales team for one of our products. The sales people engage in direct sales and are usually given a basic retainer plus a percentage on every sale. The performance of the team is mediocre and I am strongly convinced that it has something to do with their remuneration model.I am beginning to think that they should work on commission only but the percentage should be higher than the current figure of 10%. What do you guys think? redondo attached the following image(s):  salesagg.jpg (8kb) downloaded 2 time(s).
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Rank: Elder Joined: 11/7/2007 Posts: 2,182
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have ever been a sales person? LOVE WHAT YOU DO, DO WHAT YOU LOVE.
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Rank: Member Joined: 9/19/2010 Posts: 237 Location: Republic of Graham & Doddsville
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Could the product be the reason as to why your sales team performance is mediocre, since you pointed out that the sales' challenge is in one of your products? Over to you and your sales team. We Will Either Find a Way or Create One - HANNIBAL
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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Ehh heee! I've always wondered about this balance. One of the best sales people I know preferred 0% retainer and a good percentage of the entire business he brought to the company.
But many upstarting sales people need an amount to move to and fro. And they need the product marketed well. And the company needs to have a known corporate profile. Then they need the product to be an easy sell... or is it sell itself?
On a Sunday I stopped outside OilLibya Westlands, and this lady was selling registrations/products for a Cancer event - she had gusto! She made her pitch to me but I declined - wasn't interested really. But as the hours wore on, without even a sale, I saw her begin to falter...
I approached her again, and said I'd take a shirt. She said I was the first buyer of the day and this was the hardest job she'd ever had. I asked why she took it, she mused "Do you know how hard it is to get a job?"
In time I've come to wonder whether this is the most/2nd most important job in an organization? That is why the top brass engage in it...
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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In 1911 [yes,101 years ago!!], Frederick Winslow Taylor published "Principles of Scientific Management". You can read the full text of the book here: http://www.ibiblio.org/eldritch/fwt/ti.html
Taylor's method was based on the principle that workers should be scientifically selected, trained, and developed rather than passively leaving them to train themselves. Offering higher commissions alone does not guarantee better results. Money is not the only motivator. You need to develop a working sales formula; then train you sales force on how to use it. Supervise them closely to ensure that they produce results....and when they do, pay them the generous commission. Do not assume that since the sale people have some diplomas and degrees in sales, then they can sell. That is hardly ever the case. Good luck. Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 11/27/2007 Posts: 3,604
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any employer, in order to offer the best service must feel to be part of the firm or company. this is actually not the case in organisations that insist more oon commission because they are just interested in the returns and not the welfare of the people working for it. this explains why the 'sellers' take off when they get any other opprtunity. African parents don't know how to say sorry.. the closest you will get to a sorry is a 'have you eaten'
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Rank: Elder Joined: 12/13/2006 Posts: 2,589
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First of all you need to hire a mature sales force with commitments and therefore are naturally driven. You can also have a blend of young upstarts but who seem hungry to earn. Sales is commission driven and should be as such. However, when you offer a retainer, you get many upstarts who want to joyride on this as they look for an office job. Be careful not to fall into that trap. You can offer a retainer based on achievement of first 2 or 3 sales or on a scale based on performance i.e. let's say you offer 20k as retainer for the first 3 months but the sales person has to achieve their target, failure to which you reduce it to 15k or 10k depending on what you agree on. You can also offer a higher retainer to people with a track record in sales but still based on achievement of set targets. Mukiha's point is crucial, money is not the only motivator and there's has to be suppport in form of training and development.You can get good tips from sales managers in various fields. Good luck BEER IS LIVING PROOF THAT GOD LOVES US AND WANTS US TO BE HAPPY!
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Rank: Member Joined: 12/2/2009 Posts: 161 Location: nairobi
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Thank you all for your very insightful feedback. Just another thought/query:
Norm Brodsky in his book "The Knack" asserts that commissions tend to isolate sales people from the rest of the organisation.
It makes them feel as though the client is theirs and not the organisations.
Commissions can also tempt sales people to over-promise prospective clients even if they know that the product/service will not deliver all that they promise. Reason being that all they are interested in is to have the client sign up
His recommendation is that sales people should be on a salary only! That way, they become better team players. If you get a really excellent sales person who insist on a commission, offer him one then over time "buy" out his commissions buy offering a higher salary that is guaranteed meaning that whenever he is out of work eg. sick leave he will still earn what he would have earned working.
What say you?
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Rank: Member Joined: 12/2/2009 Posts: 161 Location: nairobi
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Thank you all for your very insightful feedback. Just another thought/query:
Norm Brodsky in his book "The Knack" asserts that commissions tend to isolate sales people from the rest of the organisation.
It makes them feel as though the client is theirs and not the organisations.
Commissions can also tempt sales people to over-promise prospective clients even if they know that the product/service will not deliver all that they promise. Reason being that all they are interested in is to have the client sign up
His recommendation is that sales people should be on a salary only! That way, they become better team players. If you get a really excellent sales person who insist on a commission, offer him one then over time "buy" out his commissions buy offering a higher salary that is guaranteed meaning that whenever he is out of work eg. sick leave he will still earn what he would have earned working.
What say you?
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Rank: Veteran Joined: 4/16/2010 Posts: 906 Location: Nairobi
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This is very good info! Ehe...
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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@redondo, interesting once again. Your Norm Brodsky may be on to something. I have an account with one broker who's paid on commission and another account with one who's not.
Man, the broker on commission hustttleess; he can even make me buy the wrong share if there was even a dime on my account - very effective guy when I want a share badly, he just must make the deal.
Now the other guy is as professional as steel. Fits me into his queue and when I can't reach him his associates can chip in.
Whatever the prognosis, let me tell you the first guy is very possessive and seems to bring more business to the firm. The second guy is more composed and seems to come to the office later, longer lunches, and takes long uninterrupted leave breaks.
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Rank: Member Joined: 12/2/2009 Posts: 161 Location: nairobi
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mukiha wrote:In 1911 [yes,101 years ago!!], Frederick Winslow Taylor published "Principles of Scientific Management". You can read the full text of the book here: http://www.ibiblio.org/eldritch/fwt/ti.html
Taylor's method was based on the principle that workers should be scientifically selected, trained, and developed rather than passively leaving them to train themselves. Offering higher commissions alone does not guarantee better results. Money is not the only motivator. You need to develop a working sales formula; then train you sales force on how to use it. Supervise them closely to ensure that they produce results....and when they do, pay them the generous commission. Do not assume that since the sale people have some diplomas and degrees in sales, then they can sell. That is hardly ever the case. Good luck. @ mukiha, very useful insight. incidentally upon close reflection i have realized we uknowingly implemented Taylor's method on all our successful products. But for this one problematic product our direct efforts have gone into product development and the selling has been assigned to sales people who were not part of the original "think tank" I wonder though if we are saying that sales people are just robots! What will happen to my company if for one reason or another am not there to shepherd them?
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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redondo wrote:I wonder though if we are saying that sales people are just robots! What will happen to my company if for one reason or another am not there to shepherd them? This was one of the criticisms leveled against "Taylorism". That it treats workers (not just the sales force) like robots. Taylor tried his method mainly on Labourers in the steel factories.... read the book from the link I gave earlier... However; you have found that leaving the sales people on their own doesn't work. So you must find out a working selling method, then train them on it, and then insist that they stick to it without change. Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Member Joined: 4/14/2010 Posts: 183 Location: Nairobi
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mukiha wrote:In 1911 [yes,101 years ago!!], Frederick Winslow Taylor published "Principles of Scientific Management". You can read the full text of the book here: http://www.ibiblio.org/eldritch/fwt/ti.html
Taylor's method was based on the principle that workers should be scientifically selected, trained, and developed rather than passively leaving them to train themselves. Offering higher commissions alone does not guarantee better results. Money is not the only motivator. You need to develop a working sales formula; then train you sales force on how to use it. Supervise them closely to ensure that they produce results....and when they do, pay them the generous commission. Do not assume that since the sale people have some diplomas and degrees in sales, then they can sell. That is hardly ever the case. Good luck. @ Mukiha How do you ward off head hunters? These guys let you do all the legwork and training, then step in and whisk away your staff with better offers. Any suggestions on this? So nice that its nasty, so bangin' its busting,
So slick that its sick, so dope its disgusting!
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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@msotoville; It's a simple choice, really. Three options available: 1] Train the team and give them competitive offers to retain them 2] Train them and offer poor rewards and run the risk of losing them to your competitors 3] Don't train them and get poor results ... and they will look for better offers elsewhere. Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Veteran Joined: 4/16/2010 Posts: 906 Location: Nairobi
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Esh, popcorn imeisha. Lemme get another bucket! Eheee...
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Rank: Elder Joined: 11/27/2007 Posts: 3,604
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msotoville wrote:mukiha wrote:In 1911 [yes,101 years ago!!], Frederick Winslow Taylor published "Principles of Scientific Management". You can read the full text of the book here: http://www.ibiblio.org/eldritch/fwt/ti.html
Taylor's method was based on the principle that workers should be scientifically selected, trained, and developed rather than passively leaving them to train themselves. Offering higher commissions alone does not guarantee better results. Money is not the only motivator. You need to develop a working sales formula; then train you sales force on how to use it. Supervise them closely to ensure that they produce results....and when they do, pay them the generous commission. Do not assume that since the sale people have some diplomas and degrees in sales, then they can sell. That is hardly ever the case. Good luck. @ Mukiha How do you ward off head hunters? These guys let you do all the legwork and training, then step in and whisk away your staff with better offers. Any suggestions on this? then, look for money and whisk the already trainned staff. African parents don't know how to say sorry.. the closest you will get to a sorry is a 'have you eaten'
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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@Sober; Scientific management doesn't work like that. You first develop a working system, then you train your workers on the how to use it...and supervise to ensue that they follow it to the letter. Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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...If you poach people from other companies, then you will not be successful because you will not have a SYSTEM... remember what happened to Castle after they poached almost everyone from EABL? Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Veteran Joined: 4/16/2010 Posts: 906 Location: Nairobi
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How about commission-based payments, with an extra percentage added after good performance?
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