Professional Selling Skills Training: Sales Compensation and Sales Commissions

How do you think a salesperson should be compensated? How important is commission for a salaried employee? Our staff of 4 sells small-ticket food items and we used to have trouble with them competing against our outside sales reps. Our Sales Manager moved them to straight hourly, but I am looking for an incentive.

This is a great question recently submitted by a reader of "Selling Tips From The Sales Hunter." Here's my perspective:

Salespeople who are not compensated based on their level of productivity are not salespeople...they're "order-takers". I'm a firm believer that every person in an organization should have a portion of their pay based on their performance and / or the performance of the entire team or company.

If what the salesperson is compensated is determined by their individual performance, then their commissions / bonus should be approximately 75% of their individual performance plus the remaining based on the overall performance of the team or company. No matter how much a person may believe their sales are their own, it still is important to keep a sense of "team" across the entire company.

If a person is part of a sales team or if what they do is dependent on the activities of a number of other people, then they should be paid approximately 25% based on their performance and 75% based on what the team does.

The total commission should be at least 25% of their total compensation if you expect any kind of behavior impact from the commission. I encourage bonus / commission structures to be in excess of 25% of the total compensation only if management can control sales swings and the base pay will cover basic needs.

Now, a final comment: I am not a big proponent of short-term incentive games unless they are done very, very rarely. Too often, I see sales teams achieve a significant goal based on the ability to earn an incentive trip or some other prize. It's important to ensure you don't have so many incentive programs that people wind up only responding if there is one. When this occurs, all you will have done is increase the cost of doing business without guaranteeing an incremental increase in business.

Professional Selling Skills Training: Selling Tips Being Put to Use

Each week, I send out a sales tip to help people develop their selling skills and, in turn, I regularly receive emails back from people with their comments on how they're using them. Below is the response I received from a reader in the DFW area. He's done a great job of not just reading the tips, but putting them to use. Special thanks to Bob Lazenby of the Legacy Realty Group for these. Here's just some of what Bob sent me:

"QUESTION or THOUGHT IN A PROSPECT'S MIND: What Makes You Different? In two sentences, can you explicitly define what makes you different from your competition? Great salespeople can!

RESPONSE (TWO SENTENCES): We show clients how to reduce facilities costs by as much as 20% - 30% or more! Would you like to know how we do that?

IF PROSPECT SAYS YES… “Give me a couple of times THIS WEEK or NEXT that we can MEET and I’LL SHOW YOU

AT the MEETING: Theme is… Proactive vs Reactive

OPENING STATEMENT:
Those that have TIME on their side get the BEST DEALS
· PROACTIVE approach;
· In almost all cases they meet or exceed their financial EXPECTATIONS.
Unfortunately, the vast majority of companies address their facility needs on a REACTIVE basis;
· They seldom meet their financial EXPECTATIONS
· Often ends up as a financial disaster. "

Bob has sent me even more examples and I want to thank him for doing so.

A giant plug for Bob and the Legacy Realty Group in the DFW area: If you're looking for commercial property, give Bob a call....www.LegacyRealtyGroup.com.

Thanks, Bob, and all the best to you and your entire team!!