By Kevin Gephart
(I hope any sales rep readers will forgive me if I put on my management hat. I spent over a third of my career in management.)
Any compensation plan that disadvantages either party will eventually disadvantage both parties. I’ve resigned from a number of rep positions because of the compensation. Not the amount, but inequity in the comp plan that my employer wouldn’t address. Be sure your middle managers are monitoring/reporting your reps comp feedback.
Often high-level management discussions revolve around “the cost of sale.” Consider the staggering cost of “NO sale”. Too often the hear-no-evil, see-no-evil approach to comp costs a company dearly. In the middle of this “turnover” pandemic, don’t be ambushed by your top biller quitting. For reps, remember, like clients, anyone in your company can say “no” to comp…only key decision makers can say “yes.”
No one has fully cracked the code on compensating sales reps but with the sameness of compensation plans, there seems to be little innovation. No OOH company can afford “cheap” salespeople. If someone is willing to work for small money, you must question why.
I have worked as a straight-commission rep for the bulk of my media career (and making a very good living), From a company standpoint, it is not the ideal model for the new world. Straight commission sales, while it rewards productivity, it only appeals to a limited sales personality type. The very best sales department will have a diverse personality group that will include: Drivers, Expressives, Amiables, and Analyticals. (Because we think anyone that talks/acts as we do is brilliant, it is difficult for sales manager to branch out and hire/nurture all types.) A more robust team requires a more universal comp plan. Straight commission gives the salesperson permission to not sell.
The very best sales compensation model was developed by a small market very sales/profit-driven media group 25+ years ago. They are still using it, proof it works. While this company leads their marketplace, by far, in sales, they also have the best trained, best compensated sales reps, and have the very lowest rep turnover rate in their market!
Their compensation pays a full salary plus bonus. It is steeped in accountability. Some companies use a very token salary to avoid having straight commission salespeople categorized as contract employees. This is essentially straight commission.
The model plan tracks KPI ‘s like cold calls, face-to-face meetings, data gathering meetings, and yes, sales. It also has a strong incentive for rep-generated new business (not call-ins or a new account from a friendly agency).
Another essential area is ownership stake/stock options for tenured, high performing salespeople. It is critical to understand the amount of ownership is not the carrot but rather that they have ownership. Ownership would be ended upon leaving the company, but it is a powerful retention/growth component. The same company I mentioned above was slow to understand the ownership dynamic. When they did, their sales rep retention and profits grew even more.
Next week: Strategies for assigning accounts
Send me your questions/comment at: KevinJGephart@gmail.com
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