The 5 Myths of How to Compensate Your Sales Team!
I often times find myself in conversations with Business Owners and Sales Leaders on the topic of sales compensation. What’s that perfect balance of commission % that will keep these sales animals salivating at the prospect of bringing home that extra bacon? Why do these sales people seem to still do average work when I’m paying them the base I’m paying them? When I was a sales person early in my career I made peanuts and still worked my tail off — what’s wrong with these kids today? Trust me, I’ve heard it all. Below is an attempt to help you out with some of the myths that you probably believe about the proper way to comp your sale team!
- The Best Sales People Should Be Willing To Work for 100% Commission. WRONG. As a student and veteran of the sales game, I would put myself and my abilities up against any single competitor in just about any industry. I’m not saying that to brag. I’m saying that to tell you that I would be in the top percentile of people you would interview for an open sales role and I wouldn’t take a 100% commission only job in a million years. Is that because I need the base and don’t trust my ability to sell and earn commission — nope. It’s because you as a company should be willing to meet your sales people in the middle by putting some skin in the game. Base salaries are a sign of respect to a salesperson. They are an early sign of how much a company values its people as a true investment. Now, if a sales person is over persistent on a high base in an interview I would be alarmed as well. It’s a balance, but base salaries are 100% necessary if you want good talent.
- Those Damn Sales People Make More Than Me! THEY SHOULD! The top sales people in your company should be the highest paid people in the organization. I’ve seen leaders and entire organizations mess this entire thing up, leaving them scratching their heads in the end. Trust me when I tell you that the pain of writing those big (yet deserved) commission checks is far less painful than the pain of losing a top producer. However, don’t get it mixed up. It’s not the actual money itself that drives your best people out the door. It’s the lack of deserved respect that they feel when you don’t live up to your end of the bargain when they go above and beyond. You need them to be paid that much — keep paying!
- Our Commission Structure Is “Industry Standard” — YIKES! This is the most frustrating thing I hear on this topic. Yes, your comp structure may be “industry standard” and you may pay similarly to what your competitors pay. But, what kind of attitude is that??? Are you really comfortable doing things the way they have always been done, floating mediocrely in the same average lane of the highway as your competitors? Like we have learned in so many business examples as of late — INNOVATE OR DIE! This is true in the offering you give your customers and the way you pay your sales people. Get creative, find new ways, try new things, think outside the box, and be the leader in your industry. Oh, and take “industry standard” out of your vocabulary. There should be nothing standard about what you do.
- Sales People Only Care About Short Term Rewards. FALSE (mostly). This statement is actually fairly true, but with just one added caveat. It is true that most sales people are incapable of thinking past this coming month’s commission check — fine. I actually think that is a good thing and helps keep most of them pushing as hard as they do. But, it is extremely important to not forget the long game! Every sales person in your company should have some kind of a long term carrot that is enticing them to think about and drive toward the long term, bigger picture goal. Now, there are a lot of ways to do this and we don’t have time to discuss them all. These can be individually based for each different sales person or the same across all sales people in the company. Either way, there needs to be something in place that is a big reward for when the big number is hit. The good news is…you get to chose the big number and this strategy only encourages long term retention of the top people.
- I Offer Extremely High Commission So These Sales People Should Automatically Be Successful. WRONG. Having an amazing comp and opportunity structure isn’t enough to drive a high performing Sales Team. The number one epidemic I see across this country in our companies today is the existence of a philosophy of little or no management. Somewhere along the lines we quit managing people. Like rich parents, companies are attempting to buy good behavior by throwing money at their teams. As easy as that sounds and as nice as that would be, it works just about as good as that kid you knew in high school who rolled in his Sophomore year in his new Range Rover that mom and dad got him. How did he turn out? Before you get upset with me, I realize that this is not a constant. But, you get the point. The fact that you can afford to pay your teams high commissions means you can afford to have great managers managing them. Don’t let this slip — its the most important point of them all!
I’m sure I’m biased, but without your Sales Team you have nothing. And without a smart compensation strategy you are skating on thin ice. You will never know how bad it hurts until the best people start walking out the door…
Written by Josh Mastel — Founder, CEO of UpRoar Partners
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