Josh Melick on The Errors Businesses Make With Commissions
Josh Melick is an expert when it comes to sales and business and a recent blog post which he has written regarding setting up sales comp plans has gone viral. This blog post focuses on the way in which businesses can deliver the best sales comp plans and he also focuses on the areas where so many companies get it wrong.
Any business which deals in sales would greatly benefit from having their staff on a commission-based model, as this will offer the right level of incentive and motivation for them, which will in turn lead them to push harder to sell more. The more sales that are made, the more money they will make and in turn the more money that the business will make. This however is dependent on a system which actually works, and these according to Josh are the mistakes which too many companies are making.
Offering a Training Structure
It is impossible to expect new sales reps to deliver what a seasoned employee can regarding the amount of sales that they are making. For well established sales reps it is important that they are earning a relatively low basic rate, which is then bumped up significantly with commissions. With regards to staff who are in training however, this is impossible and it simply will not work. This should be flipped and these staff should be offered a solid basic wage and a small percentage on their sales. This will happen for a short amount of time, until the business feels that they have been given their full training.
Failure to Pay The Staff
Whilst all businesses will eventually pay their staff the commission which they deserve, and which they have earned, there are simply too many companies which have a delay in doing this and which makes their employees wait far, far too long to actually receive the money which they have worked so hard to earn. In doing this it completely fails to incentivize the staff in the way it should, and this is of course what the commission is in place for in the first place. Businesses have got to ensure that they have a very clear pay structure for their employees, and that it delivers on it.
Setting Up a Floor
Another key aspect of setting up this kind of payment structure, according to Josh, is setting up a payment floor, which employees will earn before their percentages kick in. All sales staff will sell something, but this doesn’t mean that they should be earning commission on it. What we should be looking at is paying staff from a certain point in order to encourage them to push their sales and try to reach different levels of income, in order to keep pushing them and to earn both them and the business more money.
These are 3 of the core mistakes which are being made in businesses which rely on sales, get these right and you can elevate the number of sales being brought in.