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100% Commission Equals Zero Percent Control
The temptation to use straight (100%) commission plans never goes away: "Let's put our salespeople on 100 percent commission. Then, if they don't perform, we're not out any money." For small, start-up organizations, the lure is irresistible, especially when money is tight and the company or the products they sell have no track record in the market. Straight commission appeals to salespeople because of the freedom that comes with it. Because they receive no salary, these salespeople are unwilling to allow management to prescribe how they do their work. That includes hours kept, effort made, methods used, or product lines sold. The only real rules they must abide by are ethical. When salespeople are willing to give up salary, management must be willing to give up control. For someone new to sales, finding a straight commission position may be a way to establish themselves as a salesperson. For a proven, effective salesperson, 100 percent commission may be the road to making loads of money by making lots of sales for their company. Unfortunately, most small companies with straight commission plans hope for the latter and wind up with the former. These inexperienced, undisciplined, babes-in-the-woods carry a high likelihood of failure, costing their companies untold sales opportunities during the "experiment". If you choose to use a 100 percent commission plan, you must find salespeople who bring their own motivation to work every day. Each morning, the salesperson must have their own target to shoot for and a solid plan to get there. New sales people may have the enthusiasm, but it's unlikely that they have a plan that works. Conversely, many experienced salespeople know how to create a plan and go through the motions, but are no long turned on by the thrill of the hunt. They may be content with a level of sales performance that allows them to satisfy their lifestyle requirements, but underperforms the sales goals set by management. The net is there's no way a company cannot invest resources in their sales team. Either you pay a salary and then plan on actively managing and developing your salespeople for success. Or, you pay straight commission, save the salary, then pay big dollars to replace unproductive personnel while you forfeit sales opportunities lost by ineffective sales people. When you shift risk to salespeople by adopting a straight commission plan, you may in reality be risking your business. Think hard about what's really important to you when you design your sales compensation plan, and control your urge to use 100 percent commission. © 2005 Paul Johnson. All rights reserved. Note: This article is NOT available for reprint without advance written permission. Paul Johnson of Panache and Systems LLC consults and speaks on business strategy for systematically boosting sales performance using Shortcuts to Yes. Check out more salesforce development tips at http://panache-yes.com/tips.html. Call Paul direct in Atlanta, Georgia, USA at (770) 271-7719.
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Careers and Employment Sales Plan? Whats a Sales Plan? In the past, if you said the word "plan" to me, I would bolt and run. I'm the "creative type," a former ballet dancer and choreographer-I'm terrible with details. When I was dancing professionally, all the details were taken care of; all I had to do was show up and dance. Even when I was choreographing, as long as I met my deadline for when the dance needed to be complete, I could go with the moment, go with the impulse and see where the dance led. Sex, Drugs, & Rock-n-Roll at Trade Shows Here's the Scenario... Keeping Your Sales Team Motivated Sales managers frequently approach me for advice on how to keep salespeople motivated, especially when sales reps get into a rut - and seem to keep slipping deeper into it. Telling managers what not to do usually solves the problem. Most managers do things to de-motivate salespeople without even knowing it. Why Performance-Based Recruiting Produces Top Sales Performers Many recruiting ads and job descriptions include "knockout factors" that can actually screen out qualified sales candidates. One example is a requirement that candidates have an undergraduate degree, a graduate degree, or a degree in a specialized field of study such as Engineering. Another example is a requirement that candidates have a minimum number of years of sales experience. A Coachs Handbook For Sales Managers This article may be reprinted in its entirety with express written permission from Nicki Weiss. The reprint must include the section "About the Author". How Many Salespeople Should I Hire? One of the most asked questions I get is how many sales people does it take to get the revenue numbers needed. Personally, I believe in large sales forces because in highly competitive situations the largest army wins. That doesn't mean, however, that you can go out and hire 100 sales people if all you can possibly sell this year is a million dollars if everything goes right. So how do you decide how large a staff you need? Increase Your Sales Accept Credit Cards, Part 2 In part two we will discuss overcoming objections, which credit cards to accept and using the check paying option. How to Beat the 80/20 Rule in Sales Performance -- Part 2 Another key reason why companies suffer from 80/20 performance is their processes for hiring, training and managing salespeople rely almost entirely upon subjective information. Think about it: What are resumes? They are an individual's subjective portrayal of their capabilities and experiences. 4 Marketing Myths Threaten Your Sales These 4 marketing myths can cause you to lose sales if you base your marketing decisions on them. But the related marketing tips I included with each myth will boost your sales if you act on them instead. Effective Sales Territory Management How you prioritize your sales territory management activities depends upon whether you are managing a territory that has existing customers, or whether you are building your customer base from scratch. Hiring--A Vital Key In Sales Management Success Recently, I was asked to spend some time on the telephone, coaching a client's administrative assistant on how to check out an employment candidate's references. After each in-person or telephone conference, I complete a brief written report going over the information discussed. The information that I gave this worker was so vital to the company's overall sales management success that I felt impelled to share the report in my periodic client e-mailings, feeling that it might be of value to others that I serve. The information is so vital to the management process, I decided to reproduce it here as well. Increase Retail Sales With Meetups I recently attended the monthly Italian language Meetup here in Little Rock. Meetups are informal social gatherings of people with similar interests in a particular topic. Topics for Meetups range from political to cultural to intellectual to fun. Getting Off The Advertising And Sales Rollercoaster Seeing the results of advertising your business can be like watching a roller coaster. The day you run your ad you see a flurry of activity; your ph0ne starts ringing, your web site traffic increases and/ or potential clients visit your store. Your hopes soar. sales go up. Two or three days pass and the response goes down. You look at the bill for the advertising and your jaw drops. Your hopes descend. Online Sales: Secret To Increase Your Sales By Bundling Your Products Microsoft has used this online sales secret to become a giant, and the greatest software company in the world. Sales Pipeline Forecasting Is There A Better Way? To put it mildly most companies sales forecasting just isn't delivering, a staggering 90% of the deals do not close as forecasted even when the close probability is 75% or over. Even more astonishing is that 54% of forecasted deals are lost to competitors or to a no decision. Sales Forecasting For New Businesses Sales forecasting is the process of organizing and analysing information in a way that makes it possible to estimate what your sales will be. This Micro Module outlines some simple methods of forecasting sales using easy to find data. Books containing simple and sophisticated techniques of forecasting sales can be found in libraries and business oriented book stores. Book of Lists Marketing for Pressure Washing Companies The American Business Journals produces a Book of Lists each year in their many markets, it is wise for pressure washing companies to use this book of lists to find new clientele. The book of lists, lists the top companies in size in all industry sectors. Since pressure washing companies clean almost anything, it behooves them to use the book to selectively target the top companies to do business with. How to Beat the 80/20 Rule in Sales Performance -- Part 1 Business executives and sales managers frequently bemoan "80/20" performance on their sales teams, where approximately 80 percent of sales are produced by approximately 20 percent of salespeople. Why do salespeople perform so differently? What is it about top sales performers that enables them to achieve such vastly superior results? How to Develop a Proactive, New-Business Sales Team! I don't know about your business but in my experience proactive, positive, consistent new business winners are the holy grail of any sales organisation. All of my clients have their own unique ways of motivating, managing and running their sales teams yet they all have problems from time keeping those teams on target and "up for it!" In this article I am going to cover the core fundamentals of How to Develop a Proactive, New-Business Sales Team. These are the same strategies and techniques that I have used to help many of my clients explode their personal and their team's sales. These strategies all combine an exciting and proven mix of attitudinal, skills and structural development that really works and what's more they're fun so your staff will want to use them! Sales Coaching... Fact or Fiction? The old adage in selling has always been, "Find out what they want, then, give it to them." The fundamentals of selling are clearly that elemental. The application thereof, however, continues to be the litmus test that quickly separates the skilled from the rest.
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