I’m often asked my opinion regarding commission sales. Is it good? Is it bad?
Well, knowing me as you do, you’ve probably already figured that I’m most likely to say that “in and of itself, it isn’t good or bad; it just is.” And, I’d then follow that by saying it is the salesperson himself or herself who makes it good or bad.
However, I’m going to go a step further and say that, in and of itself, commission sales is good. Very good!
Why? Three reasons.
First, because people should be financially rewarded to the degree that they produce by serving others (in this case, via helping fulfill the person’s want/need in terms of their product or service they sell). Actually, if you are in business, you are in commission sales. When your product sells, you make money. When it doesn’t you don’t.
Also (and this would be a continuation of the above) there is an…indecency, if I may, in punishing the producer for producing while rewarding the non-producer for not producing. And, remember, “behavior that gets rewarded, gets repeated.”
Which brings up the second reason, and we’ll discuss that in Part 2.
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I always wanted to have everybody at the company on commission. It is difficult because not everyone is comfortable with commision, but that is really the point. If they do not like commision, there is a good chance they are a slacker, not always, some just don’t like risk.
Bob,
I am glad to see you commenting on this. I agree that commission compensation is very good! At our company, we don’t offer salaries or draws, just strict commission. This helps us in two ways. We need consultants who will be active-both in creating value in others and in creating understanding in themselves (professional development). Those who do, succeed and those who don’t – don’t! When I interview possible consultants, I look for people who see commission compensation as a positive and have been successful in commission income before as much as possible! Looking forward to the next post!
Could not agree more, and it keeps one on their toes! Produce or lose keeps me from getting lazy, I know that much!!! Looking forward to the next two points Bob! (New web design looks GREAT! Kathy Zader did a fantastic job!)
LOVE IT!
Harrison
And the way the economy has changed. more and more positions (not just sales) at more and more companies will have to go to paying upon performance.
-RG
Thank you, guys. I appreciate all your insightful comments.
If you are in business, you are in commission sales. I totally agree. Not just because I totally grew up in the ’80s,(like totally!) but because the inverse is true, as well. If you are in commission sales, you are in business, for yourself. And the the higher your income is dependent on the commissions (as a percentage of your compensation package,) the more this is true. Dan Pink, in his book Drive, explains this further and, in my opinion is misunderstood by most. Dan makes the point that external rewards often work against an individuals motivation. But, even though commissions are external rewards, salespeople don’t view them as such. High commission six-figure sales people feel in control of this reward system which makes it feel intrinsic for them. This is similar to how business people are highly creative, autonomous, and purpose-driven and at the same time can be money motivated. Bringing this back to the question of “commission sales. Is it good? Is it bad?'” Bob hit the nail on the head. It’s the salesperson that makes it good or bad. I hope this sounds like a circular argument to you… ’cause it is! #petitioprincipii
Some folks cannot choose to take the risk of commission sales. Sometimes the unexpected happens and some cannot take that risk. Take the example of a family living in a tight financial situation, with just the mom working. If the mom is making commission, and fails to meet her goals/targets, the family goes hungry, homeless etc. If she accepts a wage job, she (at least to some degree) gets an insurance policy that as long as the company is solvent, and she isnt fired/layed off, she will have money for food.
It also depends on base salaries. Ie, a top exec who makes 40k base but +100k in commissions can afford the worst case scenario. But scale it down for the secretary, 10k base but +30k a year in commissions, if the commissions dont come, then she starves.
That being said I love the whole Idea of pay for performance, that is why I am building a team of driven individuals who are like minded.
-Mike Graf
renewyj [ at ] gmail.com
Commission structures are great. Thy reward creativity, my most valuable attribute. Work with ‘hours for dollars’ pay is safe, as secure as the company’s fortunes, but ultimately stifling.
On the road to being Uncommon..
Anthony