Salesperson Compensation Questions
Who Gets the Money?
A recent debate on this subject has caused me to dredge up this blog posting from the archives.
Question: Should salespeople be on individual commission or work as one team?
Answer: My answer to this one varies depending upon the nature of the store or business. Generally speaking when only one person is involved in the sale, an individual commission makes sense. When other team members are required to complete the sale then a team based compensation makes more sense.
“Can’t We Just Get Along?”
Question: How do you best solve disagreements between salespeople as to whose sale it was?
Answer: When two (or more) salespeople are arguing over a sale and I am asked who is right, I say, “You are both wrong. The commission on any one sale is never more important than your relationship with each other. I wasn’t there, get together and work it out, and then tell me what you have decided is fair.”
Then What?
Question: So what’s the solution when they cannot come to a decision?
Answer: It’s Easy; Make it a “House Sale.”
Teams Work
Question: Why does teamwork work?
Answer: It’s Easy; Unless you are a “One Man Band” you can get much better results by working together towards a common goal. Regardless how your compensation program is structured, emphasizing and rewarding teamwork as a part of it will go a long way. We can help you with that on the Morning Report. If you do not get this tool in your store, give me a call. It’s a “team builder” like no other.
December 8th, 2008 at 12:06 pm
There’s nothing worse than a greedy salesperson after my money. Commissions turn people into monsters, and cause friends to fight. What’s wrong with just splitting up the pie, or selling for the good of the company?
December 8th, 2008 at 12:38 pm
“What’s wrong with just splitting up the pie, or selling for the good of the company?”
_____________________________________________
Well, that sounds good in theory, but not in practice. The problem with the pie splitting is that the losers sit back and enjoy the benefits created by work of the winners.
And, you can’t turn a nice person into a “Monster” for money alone. Hire nice people and then let them compete.
December 8th, 2008 at 1:17 pm
Sometimes customers can’t make up their minds, come back later, and get a different person to help them. They may not have liked the first person enough to close with them, or just needed to sleep on it or go eat something. Then they show up later, and just hand over their money and want their merchandise. If the person was given a business card or paper with the original salespersons name and employee number, and knows that the first employee would like to protect her sale because she is being tracked, then sometimes the customer will make sure credit goes to where it is due. Getting a deposit is also a good idea, asking for it with a smile. Say, you would like to see me get credit for our hard work, so would you mind taking my card and if you do decide to make this purchase, allow me to get credit for it. That is what the Disney Vacation Planners do to protect their customers, because when you call back, you do not get, nor can you ask for the Team Member who spent time with you earlier.
Sometimes, the second “Team Member” does just as much work as the first, only the latter closes. Well, who gets the sale then? Usually the tie goes to the closer. But, keep in mind, that sometime later. the same thing will happen and the closer will be the other team member. It will even up later. Remain calm and professional, and say I will get the next one when the situation is reversed. That was my attitude in the past, and I was very successful, pleasant, confident and happy to show my customers an enjoyable buying experience.
No one wants to work with a whining, complaining, hard to get along with desperado. Dig yourself always or you won’t have a job to complain about.
December 8th, 2008 at 3:30 pm
Runaway has it all figured out. If everyone were to think as he does it would be a better world out here.
December 8th, 2008 at 8:49 pm
I am starting my own art gallery and trying to figure out a good commission program. Most of the art will be my own, so I have good margins, but I don’t want to be too generous. I have to pay the other bills as well. What would work best, a high salary and small commission or low salary with a high commission?
December 9th, 2008 at 8:20 am
splitting up the pie… pooling commisions… breeds contempt and Mediocrity… it is socialized sales.
Competition makes everyone perform to their best ability… to win!
Sales are not fair… neither is life… get over it.
December 9th, 2008 at 9:45 am
Jeff is right. If you can’t cut it move on. They are hiring at McDonald’s and their isn’t any competition for sales there.
December 9th, 2008 at 8:03 pm
Aloha Angelic on Canvas;
To determine how much you can pay your salespeople, prepare a budget starting with known expenses like rent, overhead, non-selling employees, insurance, and merchandise. Calculate those costs as a percentage of sales along with a desired profit percetage and see what’s left. You can now establish a sales cost budget. Be willing to spend that on good salespeople. “Geese that lay golden eggs won’t work for chicken feed.” Once that selling cost is determined hold your salespeople to it. You can lower selling cost by either increasing sales or lowering salary. Given the choice most will opt for increasing sales.
December 21st, 2008 at 9:45 pm
Hello everybody,
>>>>Sometimes, the second “Team Member” does just as much work as the first, only the latter closes. Well, who gets the sale then? >>>>
Runway wrote this above. I am a Recruiter and Retail Sales Trainer (Coach!) amongst other things, and one idea that I have transferred for my Clients to use is one that comes from recruitment. Here there are three parties - The CLIENT company who is recruiting, the CANDIDATE/APPLICANT who is seeking work and the CONSULTANT who is matching skills to job requirements (simply put). The CCO is the Controlling Consultant of the ORDER, the CCA is the controlling consultant of the APPLICANT and if, say, I was the CCO in a specific transaction, then I would be the one who is in liaison with the Client company, and as it is the Client company who is the paying party, then I would be the consultant who is ‘in charge’. If I do not have a Candidate/Applicant on my books to suit, I would then go out to the team, tell them what I am looking for and someone else would/may then be the CCA for that transaction. I would take over the Candidate, mix and match, make the placement and SHARE the commission either 50/50 or 60/40 as appropriate. As CCO I am doing all the Client liaison, I got the work in, I nurture and service ‘my’ Client regularly etc. As the CCA, I advertise for or recruit the person, bring them in for interview, do all background checks, review CV and often do some career coaching, so in turn am doing my work to ‘make’ them placeable orprepare them for interview etc. In the course of everyday consulting, everyone gets to be CCO and/or CCA and commission splits are amicable and even promote tramwork within the sales team.
My retail Clients use this system and pair off sales associates, that way when one does the opening work the other takes over when customer delays or on comebacks … works like a charm for all the same reasons and moreover, the sales staff think and know its fair.
Learnt something from you again Ron, thanks, which I will now pass on when necessary - if there is a breakdown, make it a house sale.
Cheers
Lestie
November 1st, 2010 at 9:15 pm
Aloha,
What does a straight commissioned Art salesperson make in Hawaii’s galleries?
Mahalo,
cdm
November 4th, 2010 at 10:23 am
10% on the average; a lot if good.