Sep 22nd, 2015 - Category: Sales
What types of companies can begin to consider transitioning to a commission-less sales team? One answer comes from David Chichelli’s book “Compensating the Sales Force.” If salespeople are not the primary influence at the point of persuasion then why is commission being paid? These types of companies are common in high technology industries. If a company is the “gorilla in the marketplace” with brand recognition, effective marketing, great support, and significant mindshare from customers, then salespeople are probably not doing much to influence at the point of persuasion. These salespeople should be transitioned away from commission based compensation. R&D engineers are not on commission, support teams are not on commission, marketing is not on commission, why is the sales team so special? Apple’s retail stores are legendary for their sales performance and none of their salespeople receive commission.
In my experience, salespeople in these types of companies are laughing all the way to the bank. Their performance is only marginally influenced by big commission checks which are many times delivered at fancy sales meetings where the rest of the company is not invited. Many managers are probably thinking that their sales team would be decimated if the company shifted away from commission. The truth is that few sales engineers would leave. Where would they go? They are already working for the industry leader with job security, excellent products, and great support. Is a mature sales professional with a family going to leave that environment for a risky startup or B-player? With a lack of risk, the rewards should be correspondingly lower. Of course, this entire discussion assumes that sales professionals without commissions would still be paid a competitive salary, but that is part of the standard Human Resources type of discussion. More information can be found in the post Part 10: Sales Without Salespeople – Commissions.”
Since this is a complex organization change that will take time to implement, the next post in this series will provide some detailed steps that can be taken to begin the transition to a non-commission sales team. It looks like it is already time to start planning for 2017!