ProSales’ LinkedIn group members continue to debate the value of a 100% commission. Here’s an update on some of the latest comments. Find our initial recap here.
Marc Whedon, a Portland-based senior sales analyst at HD Supply, joins the discussion in favor of a base salary plus commissions. He agrees with the notion that straight commission forces sales people to fully commit to the big sale and shirk long-term relationships which often have larger margins but take more time to cultivate. Yet it’s the latter that “shows up on the bottom line and helps pay the expenses and extends the profitability of the whole company,” he says.
While a single sale may require “5 to 10 touches,” the sales rep is likely working to find and close other deals at the same time, says Michael Gellhaus, a Seattle-based independent management consultant. Because the sales team depends so much on other, often salary- or wage-based employees for help during this process, he recommends an incentive-based program for all employees in order to directly or indirectly “get the needed buy-in from everyone.”
Although a 100%-commission program can keep both the salesperson and the employee honest, Tom Gorr, general sales manager and Reinke Supply Companies’ Outdoor Resources division, cautions that a cap on commissions, territory restrictions, limited inventory or delivery issues can foil its benefits.
Instead, he agrees with Whedon that a base salary plus commissions is more reasonable. He finds that the salesperson is less focused on covering monthly expenses but still has opportunities to improve on productivity without mitigating factors like inventory levels making such a big impact. Plus, the employer can better predict expenses, likely have a lower commission liability, and manage a “less-stressed-and-likely-to-jump-ship sales force.”
