In defence of commission-based sales

By Doug Tucker, Managing Director of Sales Commando, in response to “Why This CEO will never hire another salesperson” by Brian de Haaff

Despite news to the contrary – and to misquote Mark Twain - reports of the death of commission based sales have been greatly exaggerated.

The issue was raised in an eloquently constructed article posted on LinkedIn by Aha! CEO Brian de Haaff. His argument, in a nutshell, was that the days of commissioned sales people, at least for his company, are numbered.

But I do not entirely share this point of view and here’s why. There is room for both fee-based and commission-based sales in the business world.

The golden carrot

Quite simply, the majority of sales people need motivation to achieve their best. They need a ‘golden carrot’ and that’s exactly what commission gives them. If the sales people you employ – or employees you try to turn into sales people - aren’t interested in rewards for results then there’s a fundamental problem in your sales department.

Commission creates greater competition within the sales team. It is an incentive to provide a better sales service. It increases sales focus and performance. And, from the employer’s point of view, it makes payroll planning easier because the cost of employment is largely tied to the amount of new business the company receives.

On the other hand, under-incentivised sales people can lead to poor sales, high staff turnover, inadequate performance and low morale. After all, if a company is doing well because of the efforts of its sales people, those sales people will want, and should be given, a cut of the good fortune.

Why? Because “What’s in it for me?” is the basic psychology of every successful sales person.

The critical factor

I often find that those who run down the commission based sales model, maybe after a bad experience, have only themselves to blame.

The problem here isn’t sales people on commission, it’s how their commission package is formulated. Finding a perfect commission rate that motivates sales people but keeps costs under control and, importantly, clients happy, is absolutely critical.

I personally wouldn’t like to see a sales person go without some form of commission, fee or bonus – in the same way that I wouldn’t like an individual sales person to receive an outrageous income based on an unfeasible commission contract where the numbers spiral out of control.

It’s all to do with balance. Get things right and you’ll have an engaged, motivated sales force who’ll do the best for your business in the knowledge they’ll receive due reward for their effort. Without breaking the bank.

Wrong and right – a case history

Back in the noughties, some commission based Independent Financial Advisers (IFAs) got bad press and rightly so. They took things too far, misselling their products and causing mayhem. These weren’t sales people, they were lunatics running riot in an asylum.

Since then there’s been much regulation in the financial sector but it hasn’t come without its problems. The ironic downside, fuelled by an exodus of financial advisers from the market, has been that, whilst high net worth clients have open access to fee-based financial advice, middle and lower net worth clients (who can’t afford to pay a fee) have been left high and dry by a lack of commission based IFAs.

This situation is rectifying itself but serves as another example of where and why commission based sales people have a significant role to play.

In conclusion

I very much enjoyed reading Brian de Haaff’s article but I think his argument is open for debate. Commissioned sales people have a vital role to play in today’s business world.

At Sales Commando, we teach the value of building relationships between sales people and their clients. We believe the core values of sales are listening and understanding, rapport-building, transparency, authenticity, trust and information sharing - there’s no room for poor (or no) salesmanship in the modern business world.

Today we are blessed with instantly available product and peer information via the internet so putting a project manager in charge of sales makes little sense. And that’s why, rather than becoming a dying breed, highly energised, highly motivated, highly incentivised sales people have never been in more demand.

And I believe one of the best ways to incentivise, motivate and energise sales people is through a well constructed, fair and team orientated commission, fee or bonus based contract.

(Original article link: https://www.dhirubhai.net/pulse/why-ceo-never-hire-another-salesperson-brian-de-haaff?trkInfo=VSRPsearchId%3A3051700581422258413332%2CVSRPtargetId%3A5963418316985880576%2CVSRPcmpt%3Aprimary&trk=vsrp_influencer_content_res_name )