Why is it so commonly accepted that salary + commission makes for better results and a happier staff?
The truth is, commission-only keeps salespeople on their toes and working their buns off. It’s rare that any decent salesperson will gravitate to a swanky salary + commission job and actually do better.
And why do you think those who work in a commission-only environment strive to one day work a job where they get base pay + commission?
Most who would leave the uncertainty of commission-only do so because they want to relax. To not work as hard for a paycheck. To have that guaranteed salary waiting for them every two weeks in case the “sales don’t come to them.”
Men and women who thrive working solely on incentive-based pay structures love the unlimited income potential offered almost as much as they love the challenge of having to hustle for a living. These are the types of individuals you want working on your sales team.
Here’s a few of the key advantages to offering commission-only pay to your sales staffers:
1. Changes Team Focus From Work to Sales
A sales employee who’s paid a salary will find time to clean their desk several times a week, chat it up with everyone at the water cooler, and otherwise spend time doing things that don’t ever lead to an actual sale. Why wouldn’t they, after all? They know there’s a piece of paper with their name and a monetary amount on it waiting for them regardless.
When a closed deal is the only way they’re going to get paid, the entire agenda inside the building will change. There’s no time to sit at a desk, let alone clean it. And what salesman has time to talk to anyone but a potential lead or the gatekeeper keeping them from said lead?
Aside from the changes to your salespeople’s mission each day, the environment will also become a training ground of sorts for the existing and up-and-comers. You may find people practicing their pitches in little groups, mentors teaching their mentees the ropes, objections being analyzed, and cold-calls being broadcast over the PA system.
2. More Competitive Atmosphere
An environment filled with a commissioned sales force is a cutthroat one. This is a good thing though. You want your team to get along, but their job is to close as many customers as they can. Having this kind of atmosphere will also help keep sales strong through the lean months.
Put a bunch of sharks in a tank filled with chum and each will do whatever it takes to get their fill, including “forcibly” taking what’s theirs. This is the atmosphere you want. You want them competing with each other and with themselves and their previous achievements, too.
3. More Customer Service Participation From Sales Staff
In a base-pay-plus or strictly salaried sales position, after-sales service is typically bunted off to CSRs or administration, leaving the client wondering where the jovial, smiling salesperson who convinced them to do business with your company went. This can hurt future sales, word-of-mouth, and long term growth initiatives.
Any good salesperson working on commission realizes that their job isn’t done when the sale’s signed off on. Successful salespeople need to nurture relationships with their clients indefinitely, since we all know that it’s easier to close an existing customer on future orders than it is to cultivate a relationship with new ones.
4. The Stars Align for Your Business
They literally line up inside the walls of your business, ready to kill it every hour of every day. When you don’t give your sales team a financial safety net to lean on, most of the dead weight who isn’t there to work will move on – or be easier to identify and fire.
The sales stars will also spur on trainees and generally bring a more positive, upbeat attitude into the office that wouldn’t be there if you allowed anyone with an inkling they can do sales to work for you.
There are several other advantages of commission-only pay that vary from industry to industry such as it being easier to terminate the dead weight if they don’t work out, and less accounting and tax issues to consider such as income tax woes and vacation pay to pay out.
A commission only pay structure for your sales team may be just the performance boost your company needs to transcend to the big leagues. Once the winners have proven their worth after years of service, let them retire to a big corner office with a view, pay them a ridiculous salary, and let them train and manage the salespeople of tomorrow.
Next time you need some fresh blood on your sales staff, consider paying a higher overall commission to attract more sales, and leave the salary for your support staff.