For the last few weeks, I’ve been doing my own personal research into how SME business owners compensate their salespeople. What I have found out is that only 1 in 10 SME owners are paying their salespeople on commission. Most have a flat salary structure.
As a business owner, how are you paying your people? Is your compensation structure performance-based or do you just pay a flat rate regardless of performance?
If you are a salesperson where you are working and you are not paid on commission, then you should demand it! It’s non-negotiable.
When you don’t pay your employees, especially salespeople based on performance, don’t be surprised if their performance remains stagnant.
Commission is one of the easiest things you can introduce if you want your sales to increase by at least 15% month on month without doing anything else
If you look at the biggest organizations, one of the things you will see is that salespeople in those organizations have unlimited earning potential. They are not capped as to how much they can earn in any given month.
At one point in my own company, I had a salesperson who took more money home than most of my managers because she produced.
When recruiting salespeople, my advice to entrepreneurs I mentor is that they should first look for attitude and then look for someone who loves money. The moment you have someone who loves money but with a great attitude, then you will have a killer salesperson who will go out of their way to produce.
One of the reasons why business owners don’t introduce commission in their organizations is that they are greedy and they don’t compensate producers which in turn limits their growth potential.
How does not paying commission limit your business’s growth potential?
When a person gets a full salary whether or not they produce, they are always going to be relaxed as they know that regardless of what they do and how much work they put in, their salary will always come in full.
The moment you have a commission in place, however, your salespeople will be able to calculate and estimate what they can earn.
If you pay someone a 10% commission, for example, they will be able to ascertain by themselves that if they bring in $50000 in sales, they will go home with $5000 at the end of the month. This is a bigger motivation than giving someone $500 whether or not they bring in the $50 000.
Lastly, when you pay people on commission, you naturally attract superstars to your organization. Superstars know they can perform and they will be attracted to an organization that rewards them for their performance rather than their presence.
In a football team, the easiest way to get players to score more goals is to offer a bonus for each scored goal. The same should be true in sales.