Following last week's post, several people asked about paying straight commission to BSC sales people. That certainly is one way to pay although not used often in our industry.
I personally never used a straight commission structure or had anyone apply that knew anything about this industry that wanted a straight commission career with me. With a 90-120 day lead time usually needed to make the call, do the walk through, present the proposal and secure the signed agreement, the sales representative needs quite a cash reserve until worthwhile sales begin to be made. In addition, in the early months, if the representative comes from outside the industry, it may be difficult to get the sales at a consistently high level to provide any sort of straight commission income.
An exception, of course, might be that successful sales person you secure from a competitor that already has contacts. But then there is usually the issue of a non-compete contract that they have signed with their previous employer so you are unable to take advantage of the contacts they may have. By the way, I have been on both sides of non-compete employment contracts and am a firm believer in them if they are properly constructed. I offer absolutely no legal advice on them but am a believer in them.
A discussion on sales people would not be complete without a brief dissertation on vehicle allowance payments. I have used methods where I provided a car and also where the sales person provided their own vehicle and received a monthly allowance. In the words of the late New York Yankee manager Billy Martin when he appeared in the old Miller Lite beer commercials, "I feel very strongly both ways".
When you provide the car you are in control of the appearance your company makes and you can also be comfortable knowing the vehicle is properly insured as well as maintained if you are paying all expenses.
If the sales person provides their own vehicle, that assurance is not always there. You have to make sure they carry the proper limits on insurance and you need to keep an insurance certificate on file which sometimes slips the minds of even the best managers.
Gas prices are one of the most volatile parts of our economy so the entire discussion of whether the company provides the vehicle or the sales person provides their own is one that requires very careful research as it is a MAJOR investment.
As far as which pay structure to use, that is up to the individual company but I used successfully a salary plus commission program in harmony with one or more methods of executive brief and hit list mailings on a regular basis for support of the sales effort as well as periodic customer/prospect industry update luncheons.
I have on previous occasions discussed providing appropriate support to the sales people and then expecting them to produce. I think it is critical that you develop, with their input, weekly, monthly, and yearly expectations of the business you expect them to produce. I recommend an every Monday morning or Friday morning "sales meeting" to review where you are and the plans of where you are going. Good sales people hate meetings unless they are meeting a prospect, but keep in mind, your Operations and Human Resource departments need to know at all times what sales proposals are being delivered, the status of existing proposals, and which ones are a "definite maybe" to close soon.I personally had every Monday morning conference calls with each sales person in each city in which we operated. We limited them to 30 minutes each and found them to be very productive. We stayed on the subject of sales only. You see, they couldn't sell me anything and I wanted them in front of suspects and prospects as much as possible. Most professional, effective sales people will keep the Operations and Human Resource departments very busy.
As I close this discussion on compensating sales people, I want to emphasize the importance of a coordinated effort of the selling process. I know that I have mentioned it before but if you want to be really successful in your efforts you need to produce support in targeted mailings to specific markets you want to penetrate. You also need to target specific accounts within those markets with specialized mailings and meetings.
And don't forget, sales people are employed to SELL, not to send out mailings, do telemarketing, put together sales proposals etc. If they are not in front of prospects they cannot close a sale. Good sales people won't stay with you if they are asked to do all this support work. Bad sales people will love it because they then have an excuse for not making their sales quota. Which sales person would you rather have?
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Till next time.
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