When your sales team compensation structure sucks (aka when you do the same thing everybody else does), this is what happens between your salespeople. Except every punch they land hurts your customers, and your business.
I had a kind of sucky sales experience this week, and I was reminded of an incredible solution one of my earliest mentors had come up with. First, the story…
I was making a purchase on behalf of a client this week.
I’d reached out to the vendor on my own, to get pricing and dig deeper into options.
I was working with a salesperson, and everything was going well.
Then the proverbial excrement hit the air circulation device.
It came time to place the order, and suddenly the whole deal was thrown into chaos.
Instead of the salesperson making it easier to buy — which is a surprisingly effective thing you can do if you want to make more sales — they made it really, really hard.
You see, I was shopping. I was the purchase influencer. But I wasn’t the guy who was actually ponying up the dough. My client was.
I’d made this clear from the beginning. I didn’t want to hide it — had no reason to. I was just contacting this vendor on my client’s behalf, as a service to them.
They knew it was for my client, not me.
But when it came down to give them money, they looked up my client in the system.
Turned out, he’d done business with them a few years ago. He was already in the system. And his “account” was under a different account executive (aka Salesperson).
Never mind the fact that account executive didn’t generate the business.
Never mind the fact that account executive was neglecting my client.
Never mind the fact I’d spent the last week working with this new account executive.
Apparently, if this order was going to go through under my client’s name…
We’d have to transfer this whole conversation over to this other account executive… And start the whole dang conversation over at the beginning, right when all I wanted to do was to give them money!
Not only that, this was making my account executive freak out. Not in front of me, but I could tell she was scrambling behind the scenes.
She didn’t want to give up the commission she felt she’d earned. (Not that she’d actually done much — I showed up, wanted a few questions answered, and was basically ready to buy unless they triggered alarms.)
And so, even though it was my client doing the buying, she wanted to put the order under MY business.
My client could still pay for it.
But I had to sign the order, and it had to be under my business.
And as far as I could tell, the whole reason why was because this salesperson didn’t want to give up her commission to another rep, right at the 11th hour as I’m placing the order.
It left a really bad taste in my mouth, as you can probably tell by this email.
Here’s the thing: I can’t blame the salesperson because she was put in a horrible anti-customer position… Because of the sales team compensation plan she was working under!
This is, to a degree, a failure of the individual salesperson. She could have at least been honest and transparent about why she wanted it to be in my name.
Instead, she gave me only a disassembled puzzle of clues, and a crappy excuse that, “We do this with media buyers all the time.” (Yet refused to give me an agency or media buyer discount.)
But the bigger failure falls on this company’s sales management.
They did what most sales organizations do, and set up a compensation plan that rewards the individual salesperson.
You make the sale, you get a commission. Someone else makes the sale, they get the commission.
And everyone has “accounts” that aren’t supposed to be touched by other reps, because it’s seen as poaching commissions.
Here’s the major problem with this “standard” sales team compensation plan…
What you end up with is catty infighting between sales reps.
Jealousy and extreme hostility against other salespeople.
Everybody looks out for #1 — it’s a fact of the human condition. We’re all immensely selfish at times. And especially when we’re competing for what’s seen as scarce resources.
And in a situation like this — where one person gets the commission, or another does — the resource is scarce.
If your salespeople could actually focus on serving the customer at the highest level while also protecting their own interests, it wouldn’t be so bad.
But most folks can’t.
So you get what happened to me.
I got a very obviously diminished customer experience as I dealt with this company. I’d recommended them to my client, and am not 100% satisfied with that decision. It could still be immensely valuable for my client, but it certainly left a bad taste in my mouth.
And if we end up doing more business with them, I may ask my client to reach out to his account executive and connect them with me, just so I don’t have to deal with the one I just dealt with again.
Good news: There is a better alternative…
In the last full-time job I had, I worked for about 3 years in marketing, then 1 1/2 in sales.
The reason I moved to sales was because the compensation opportunities were better, thanks in part to the commission plan I’m about to explain to you.
But this also gave me a deep understanding of the inner workings and benefits of this compensation plan, so I can easily explain it to you.
I won’t take credit for the plan itself. All the credit goes to my boss there and first real business mentor, Jeff.
(*Incidentally, if you manage a sales team and want ideas like this for managing it better, getting more sales and profits out of the same people, you might want to know Jeff. His availability is EXTREMELY limited right now — his time is in high demand. But he has experience growing multiple multi-million businesses and sales organizations. And one of his specialties is training SALES MANAGERS and EXECUTIVES in how to get the most out of their teams. Reply to this email if you want to be connected, and I can put you in touch for paid consulting arrangements. Whatever he asks for will be worth it in multiples if you implement his recommendations.)
The crux of this plan is to reward EVERYBODY on the sales team for contributing…
Put very simply, every salesperson gets paid out of two commissions buckets.
The first big bucket is the group bucket. Every sale your sales team touches contributes a small percentage to the group bucket. That means if you have 5 or 50 sales people, every sale they make has maybe 2% going into this group bucket.
The second small bucket is the personal bucket. Every sale that you have a proactive part in closing — whether that’s generating the lead, upselling them, or whatever reasonable contribution above and beyond order-taking — adds a much bigger contribution to the personal bucket. Let’s say 4%.
If a lead comes in, ready to buy, and the sales team simply takes the order, maybe only the group bucket gets commission. But if a salesperson actively generates a sale on their own, that sale contributes to both the personal bucket AND the group bucket. (This is important, because then there’s incentive for any and every salesperson to help serve every other salesperson’s customers.)
At the end of the month, every salesperson gets paid out of their two buckets.
They get all the commissions that have gone into their personal bucket. 4% of every sale they had a proactive part in closing.
And they get their share of the group bucket. If there’s five salespeople, it might get split five ways. If there’s 10, maybe it’s 10 ways. Or you can divide it up based on role. Maybe the sales managers get a bigger percentage of the group bucket than the individual sales people. Maybe other staff members get a chunk of this, too.
It’s flexible — do what works for you.
Here’s what’s really important about this: it rewards EVERYBODY based on the desired result of the customer getting great service…
When I worked under this sales team compensation plan for about 18 months, something quickly became apparent.
All the infighting that happens in other sales departments because everybody’s trying to protect their own commissions simply didn’t happen in our group.
We were actually helpful to each other — and each other’s customers.
If I was gone for a day, I didn’t have to worry about someone stealing my customers — and I could count on them to help my customers. And I’d always return the favor.
This led to happier customers.
It also led to happier salespeople.
Yes, we still got rewarded better for going above and beyond and creating business that wouldn’t have occurred otherwise.
But we didn’t worry nearly as much about it. We knew we’d be taken care of.
Let’s imagine an alternate scenario with this company I dealt with this week…
If they’d been under the sales team compensation plan I just described, here’s how it would have happened.
First off, because I came in with a specific purchase in mind (and that’s what I ended up ordering), the only commissions from the order would have gone into the group bucket.
Because all it took to close the deal was answering a few simple questions and taking the order, it didn’t justify the higher personal commission.
In the situation where one account executive realized the order should have been tied to the other account executive, they would have had two options. One, they could have told that other account executive that they were taking care of it, and BOTH would have gotten their share of the group bucket commissions. Or two, they could have passed it off, and still BOTH would have gotten their share of the group bucket commissions.
If this new account executive had successfully up-sold me on a larger order, they would have rightfully earned a higher commission. The other account executive (who didn’t touch this order) would still have gotten a small piece of the action, out of the group bucket. And this account executive who helped me would have gotten justifiably higher commissions.
Now, if my client was an active customer (like, last few months), and the order got misrouted because I had reached out instead of the client, maybe there would have been cause for mediation on who got the commission. But these squabbles become the exception under this system, not the rule. And they become much easier to handle — because every salesperson still gets paid on everything the entire sales team touches.
This is a genius sales team compensation plan, because it puts SERVICE as the highest priority…
If you have a sales team in place, I recommend finding a way to make the switch immediately.
It will make your office and your sales department a better place to work…
AND it will lead to better customer service, and happier customers…
Which could easily start the snowball rolling to breakthrough business growth!
Yours for bigger breakthroughs,
Roy Furr
The Marketing Rainmaker Who Also Knows About Sales, Breakthrough Marketing Secrets
P.S. — I’m serious. If you have a sales team, you know there’s a ton of training out there for sales teams. But there’s very little for how to manage a sales team. Especially for more entrepreneurial companies (versus the bureaucratic Fortune 500 corporate hierarchy sales teams). If you want training, advice, consulting on how to be a better sales manager or executive — training for you that will turn into real results for your sales team — reach out to me, and I’ll put you in contact with the guy who can be your Rainmaker in this regard. Just reply to this email, or send me a note at [email protected].
