Last week we ran a Kevin Gephart column on Sales Rep Commissions for a New Digital Billboard.
View Outdoor President Pete Schroeder comments that you need to be careful about adjusting sales commissions too much.
“I have found it difficult to “adjust” commissions especially lowering them as sales ramp up. Most AE’s don’t accept that well. Maybe a better strategy is to implement a contest or pay a bonus.
Also training your AE’s out of the gate to focus on long term contracts can greatly reduce short term business. This has worked well for us as 85%+digital contracts are 13 period… annual. We’ve been known to walk from 1-2 period deals. Generally not a successful campaign for that short of a duration.”
We asked Kevin Gephart to respond.
I appreciate Pete’s feedback about digital sales commission. He makes some very insightful points.
As a sales rep I detested it when my company would mess with the sales commissions. The reality is that commissions do need to be adjusted periodically and the changes can benefit reps. Once when my company changed focus and started rewarding self-generated new business sales, my income went up by 18%!
I think Pete’s idea of paying a bonus is an excellent one. You can sunset it without creating the hit to morale that often does come from adjusting commissions.
I applaud Pete’s success in selling longer term digital deals and his courage to walk from short term deals. OOH sales reps and companies are too willing to take a deal to put some short-term dollars on the books. It is well proven small, short-term sales do nothing for the success of the advertiser or the OOH company. My mantra when selling was “No Small Sale Goes Unpunished”. For many reasons, small, short-term sales, require too many resources for the dollars involved, eat up scarce sales time/attention, fail the advertiser, and very seldom lead to renewal for something bigger. It only feeds the advertiser myth: “Billboards don’t work”.
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In my opinion when company begins to change commission % and lowers the income an experience rep has made it knocks the wind out of sails… Profitability is the name of the game for any company, but if you pay poorly you can expect poor performance. Any rep worth their salt should be making 6 figures in a few years. Companies not paying this, can expect turnover. Strait commission is a BIG Incentive and I have loved it. I get a bonus on every sale. IMO of course.
from nearly 3 decades…