Posted to Shop Management Forum on 10/11/2013
Pay Plans for Sales People
I want to throw out an idea that I have regarding the pay
structure for people in sales. This could be a service
advisor, a car salesman, a widget salesperson, it doesn't
really matter. Sales positions often have pay structures
that are commissioned based with respect to the number of
widgets sold and/or the net profit associated with the sale.
In other words, you sell x number of widgets and/or net x
number of dollars in sales, and we'll give you x-number of
dollars in pay.
This has been the convention for, well, forever, at least my
forever :o) In any case, I'm not a fan of commissioned base
pay plans. Why? For one, various reports that I've read
suggest that money in and of itself isn't an effective
performance incentive. There are some who might argue that,
and frankly they may have an argument, but let's forget that
one, or at least shelve it.
My objection to commission based pay plans is that as a
trainer and training developer I was taught that training is
properly evaluated at four distinct levels. Two of those
levels are behavior and results -- in that order (they're
actually the 3rd and 4th levels). There's a reason for
this… Results are directly tied to behavior. If you
don't have the behavior right, you won't see the results.
That makes sense, right?
Now, when it comes to results in sales we have a problem --
the customer. No matter how well the salesperson makes the
presentation, the customer might (and often does) say no --
Not necessarily because the salesperson did a bad job, but
for reasons outside the control and influence of the
salesperson. So, is holding the salesperson accountable to
the final result (the sale) fair?
Some of you may be thinking it may not be "fair," but such
is life. There's a bottom line to consider -- no sale, no
money, it's pretty simple. While that may be true, I'm
thinking there might be a better way.
*IF* it's "unfair" to hold sales folk accountable to the end
result (the sale), surely it IS fair to hold them
accountable to the BEHAVIOR, assuming, of course, that
they've been trained, have the right resources (tools), and
are empowered. Yes, these are big assumptions, but these
factors are relatively easy to discern, and for the sake of
this discussion, we'll make the assumption that training,
tooling, and empowerment are in place.
So my idea (finally :o) is to have a pay plan that rewards
for adherence to the process (behavior).
Here's an example… Some techniques work better than
others for converting calls to jobs in the shop. In general
those techniques involve getting control of the call,
qualifying the caller's concern, needs, and wants,
developing a rapport with the caller, and asking for the
appointment. There's a little more to it than that, and of
course there are techniques within the techniques, but
that's the gist. These techniques constitute the process or
the BEHAVIOR, and this is what I'm suggesting the
salesperson (in this example a service advisor) be held
In terms of pay (please note that I'm thinking out loud here
and making this up as I go), I'm thinking along the lines of
establishing a commission or bonus for working the process
the right way.
Yes, this is takes more work to evaluate than just looking
at sales numbers on a spread sheet. It requires observation.
But isn't that part of a manager's job?
Again, as a trainer, training developer, and analyst of
training outcomes, I've seen it many times where the results
are less than hoped for. In other words, company ABC trains
their people, but nothing much changes. In many of these
instances it isn't that the training failed. It (the
training) passed along the right information to the right
people at the right time, and they acquired the necessary
knowledge and skills. The problem is with the sustained
implementation of those learned skills (the behavior part).
I'm just wondering, WHAT IF there was a direct relationship
between the behaviors expected and pay? Would this
incentivize people to work the process the right way?
MDH Automotive Services
Richville, Michigan, USA