By Tim Hughes | @timothy_hughes
I was lucky enough to meet the Australian, Graham Hawkins when he was over in London just before Christmas. While chatting over several hours we talked about sales commission and how this seems to be at odds with the the customer experience culture that most companies want to implement.
Graham and I both come from a long track record of selling complex, large scale B2B solutions. Where the rewards have been excellent. I certainly don’t grumble.
I recall getting a role at a large US software company and given a set of accounts to “look after”. Now I’m a new business guy, I like taking an empty territory and turning into a lush area that can fed not just me and my family, but also a team of Farmers.
When I took this role I was given one account and was told “something seems wrong, but we are not sure what it is”. I visited the customer and it was clear what we sold and what they thought they had bought were two very different things. The value proposition, was and should have been sold to big companies and this was a mid-market company.
When I got back to the office, I got a copy of the approvals and found out they had all been forged. I was asked to write a report and my conclusion was “to apologise and give the customer their money back”. Of course the supplier didn’t and a fractious relationship carried on for another two years until the client cancelled.
What about the sales person who originally sold it? They were posting photos on social media about their yacht near Barbados.
I’m sure, customer after customer can tell you about signing for something only for the sales person to disappear.
Now this blog isn’t about hunters vs farmers. But selling something and disappearing in 2018 does not fit most buyers idea of a great customer experience. Surely if you sell something you need to have some “skin in the game” on the success of the project?
As part of the sales transformation at my previous company where we took 4,000 sales and pre-sales people from an on-premises to a software as a service (SaaS) selling mentality one of the many things we changed was the commission plan. You can imagine this was a highly contentious issue and luckily it came from corporate, so it was a “take it or leave it” situation.
That said, what was created was genius. Why? As well as people a simple percentage, if you sell X for Y then you get Z commission. But it also had a multiplier. If for example, we want people to sell lots of the SaaS accounting software to gain market share you gave them a 7 multiplier, where as the on-premises software, we didn’t want people to see, we gave them a 0.8 multiplier. So what? The principle is that you can change people’s compensation to get them to sell in different ways.
Compensation does drive behaviour.
Now, before I go any further, I must say I’m not advocating a pay cut. Sales people take a big risk and they are the engine road to drive the future cash flow of the company. But we need to be thinking “long term relationship” rather than “one night stand” in a any risk and reward relationship. As my friend James Muir and author of the great book “The Perfect Close” says “don’t you just hate it when sales people have commission breath!”.
In Graham Hawkins article from August 2017, he argues that why is it that only sales people get paid commission. Not sure I totally agree with this, many people across a business earns a bonus. That said, Graham does argue that maybe that sales people should get bonus on customer success. I purchased a sofa of a guy who was paid this way. How do I know, he told me. He said “in a week, you will get an email, that will ask you to rate me. If you rate me anything less than 5 stars I don’t get paid any commission. It’s totally up to you what you rate me, but you need to know that.” I guess as sales people, we will always find a way “around” a well meaning process. It’s often what makes us successful within our customers, so why are employers surprised when we do it back at the office? By the way, he got 5 stars, I actually nearly offered him a job. He was brilliant.
The other issue, I have with being paid on customer success is that I’m reliant on other people, that may not be bothered, for my bonus. But maybe this is a sacrifice worth making to support on customers long term business?
So how should sales people be paid?
At my previous company we had a particularly dysfunctional team. Bunch of great people, but they had a succession of bad managers. So at the next sales meeting we ran a “brain storming” session where we got people to write “good behaviours” and “bad behaviours” on post-it notes.
We then got the sales people to rate them.
It was a fun session, with many of the sales people writing or confessing to bad behaviours.
We then got two white boards and put bad behaviours on one white board and good behaviours on the other. The sales people then all signed the good behaviour white board.
Dysfunctional team no more. In fact they also policed some of the other teams.
What has this got to do with commission?
Maybe measure should be on behaviours? I bet you would update the CRM system if it was the difference between being paid and not being paid?
Graham finishes his article on commissions with the following summary:-
“Key take away: no buyer cares about YOUR quota or YOUR commissions (and they never did)… or how hard or easy it is for your employer to generate profits. With the innovative vendors already moving down a path, you are now being left behind if you continue with revenue quotas and commissions. The time has now come for these anachronisms of the past to be replaced with a truly buyer-aligned approach that fosters a long term relationship, and that all important win-win.”
What do you Think?
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