CASE STUDY: To Pay a Salesperson a Salary Or Not

CASE STUDY:
Salesperson desires a salary either at hire, ongoing, or after being commission only for a period of time or facing going on commission only after the initial training salary expires.  The other more likely scenario is that the salesperson is in a slump and not making sales.  What should you do?

ANALYSIS:
You may find your salesperson is working harder on selling you on getting his/her needs met then meeting needs of customer or he/she would be confident in his/her  ability to sell and earn a living.   Some may say or you may consider that the salesperson needs sales training.  Training may or may not be the answer.  The only way you will know is to get out of the office and in the car and ridealong with the salesperson and see what he says and does and does not say or do.

YOU CANNOT COACH FROM THE LOCKER ROOM!!! 

SOLUTION:
Get out in the field of play and see what is happening.  You will probably find that the salesperson has no sales process or has migrated away from what they were taught or what previously yielded success.  He/she may be simply winging it.  You will find that he/she is not building trust, the relationship or value.  After a few ridealongs and follow-up conversations you will know whether he/she is worth training or not and worth keeping or not. 

Odds are he/she is not a professional salesperson and will ultimately need to be de-hired and replaced. 

Sales salaries breed complacency and contentment.  A true sales professional does not want a salary and instead wants a no-cap unlimited earning potential. 

The vehicle, gas, cell phone, etc. are also benefits that are earned and should be taken away.  Why pay for benefits for him/her to now go on job interviews, which is certainly happening since he/she is telling you that they do not like the current pay plan and that if you don’t give in they will probably seek employment elsewhere because in their mind they feel they cannot afford to go on commission only as they cannot make the required income and have already failed in their mind.

Now you may have hired this person based on some previous success they told you they had with a prior employer and feel that you may not want to lose someone that could be successful for you or wind up competing against you.  The problem is that most employers take the word of a potential candidate’s previous experience and results without seeing documented evidence of the previous results. 

When someone tells you they have produced results of some level previously with another company, get them to prove it.  Anyone can make up stats, but a professional maintains documentation of their own to keep score and measure their performance so they can get better.  They do not say the company has those stats.

He/She may have  told you they sold $1.5 million with a 60% closing ratio, and only closed 60% of 3 leads out of 10 he/she quoted, which would be only 2 sales out of 10 total leads run or really ONLY a 20% closing ratio.  He/She may have closed 60% of jobs that were sold below book price or non-profitable. 

Always validate quoted stats with documentation and NEVER pay a salary to a salesperson except during the initial training period. 

Call or email if I may be of further assistance.

Published: December 9, 2009 12:45 PM by Drew Cameron

Member Responses (1):

Tony Bassett

Posted on April 5, 2010 11:28 PM

I love this article, but I think consulting and pricing should be based on the area and region. Example I have witnessed first hand a consulting company out of Chicago regulating pricing and telling a business in Utah what he or she should charge based on Chicago and Tucson.

So the sales professionals are looking like there under charging even the the business shows a 45% plus profit.

Some coaches are useless because they are coaching from the locker room.

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