That’s the question we posed to members of our LinkedIn group earlier this month, spurred by veteran entrepreneur Norm Brodsky’s column in the December issue of Inc. Magazine that makes the bold assertion: “There’s a lot more to selling than closing, and all good salespeople aren’t closers.” In Brodsky's view, sales is a team sport and there’s an advantage to having one rep woo a client while another seals the deal. We thought the issue was a bit more nuanced in LBM, where a strong vein runs in favor of paying reps solely on commission. If Brodsky’s right, and the advantage rests in a team approach to sales, are dealers with commission-based pay plans that focus only on the closers losing out? Here’s what you said:
Mike Momb: With great risks come great rewards. Having spent my life involved in sales, give me a competitively priced product, with a product and a company I can believe in, and turn me loose on commission. A base-plus-commission situation means I am subsidizing those who are non-performers or marginal performers.
Others weren’t so convinced:
David Kahle: As a sales person, [100% commission] was the only way I wanted to be paid. As a consultant to sales organizations, I see some problems with it … No. 1, it engenders a sense of ‘entitlement and independence’ on the part of the reps, emasculating your ability to managed. In other words, since they are being paid 100% commission, they feel they can do whatever they want. No. 2, it prevents improvements in sales productivity … When you fix a percentage of sales or gross profit for sales costs, it is impossible to improve productivity.
John Tri: Only commission is not going to get a valued employee. A company paying just commission, in my opinion, will just turn over employees. Not good for a company. Need livable wage, plus bonus, commission if goals set are achieved.
Marke Wismer: In the building material industry, relationships and customer service are just as important as closing. We have to be afforded time to deal with issues and concerns with customers. If I have to spend an hour with someone who already bought something and isn’t planning on making another purchase for a while, I can’t be concerned with the fact that I am not making a dime while dealing with them. … If a rep is being paid a base plus commission, standards and goals need to be set and if the rep is not performing, a quicker exit plan should be in place. Sales reps shouldn’t be there just to collect the base.
Mark Schiffman: Most sales-driven company philosophies have been replaced by extremely scrutinized profit-and-loss inventory control program readers. Relationship building has been replaced by blast emails, inventory dollars have been used to buy ‘just in time’ inventory programs. The reason for sales people and their relationship-building skills and problem solving is to overcome the shortcomings of the company, its products, or services.
Daryl Lucien: The net is there’s no way a company cannot invest resources in its sales team. … [But] when you shift risk to sales people 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% commission instead of some mix of fixed variable plus rewards.
Sal Easterly: I think what’s at the heart of this discussion is ‘sales management’ and the usual lack of it. Corporations do use commission to guide effort rather than training the sales and training managers. Companies try (and do) use the compensation program as a cure-all rather than common sense approaches.
Read the full discussion and share your thoughts on our LinkedIn Group.