My friend Dave Cooke lamented online today about sales professionals who are looking for work and are absolutely uninterested in working short term for some of his clients while they look for other work. He postulates that while you are looking, there is no reason not to accept a commission only position for his clients and in fact, those who don't have the heart to work for commission only are not really sales professionals at all. Dave is not only my friend, he is a man I trust, a consultant I respect and a sales philosopher I listen to. Except today.
You see, as a sales consultant, and the founder of Arizona's largest professional sales association, (AzSalesPros) I went down this road also. In fact, I have engaged out of work sales professionals for short term work AND payed them a stipend from my client in the process. I have found the value available from this arrangement and I have seen the price paid by all involved. While it does indeed have value in the very short term, it is in many ways a dangerous trap.
On the upside, an out of work sales professional has a "job" to be hired from, keeps his skills sharp, has a place to go every day and a purpose in life, and can make a few bucks if the stars all line up, the sun shines and God makes his countenance to shine upon you. For the business owner, the sales reps efforts help uncover new opportunities, perhaps bring a deal to fruition while there, and can often provide much needed knowledge on how to actually close deals that may be in progress when he/she gets there. All this is good and when it works, the Angels sing.
The dark side of this story Luke, is that it generally doesn't work for anyone. It looks good on paper but in real life the heartaches outweigh the payoffs. Here's why for the sales guy;
- The length of a sales cycle from finding the opportunity to implementing the sale sufficiently to be paid a commission is often longer than a good sales person will be available. Of course, the sales pro can be paid after he is gone but then he has to turn the sales effort over to the owner of the business to close and clearly the owner needed help with that already.
- I have watched literally hundreds of business owners who don't understand the sales process, blame the sales person for not providing results on the business owners schedule regardless of reality.
- Business owners who are already under-capitalized, (it's why they want commission only sales people) are sometimes (read this as often) sketchy about actually paying commissions once the sales professional has moved on. I have seen them make a variety of excuses as to why the sales person doesn't deserve the money and it should instead go to either the owner or the operation of the company.
- The small business owners are most often unaware at all of how their behavior affects the sales person, and don't understand they are responsible for managing all the leading success indicators (activity.) Consequently, they expect the sales person to go off and "do some of that sales stuff" that makes their revenue happen. When their expectations aren't met, it is always the salespersons fault.
- In under-capitalized organizations like this, the sales person generally has to create all the marketing material, all the correspondence and all of the sales process. (not including the organizations Dave is involved in of course.) Unless there is a separate agreement on the creation of these materials, and I have yet to see one in well over 35 years in sales, the sales professional is giving up sweat equity to the owner for no reward. The owner on the other hand is getting free marketing.
The downside to the business owner includes;
- No real control of the sales effort
- No real control of what the sales person says to or about the company while they are selling.
- No real way to capture the efforts of the sales person as the sales person doesn't really have to use any database if they don't want to, and they often don't.
- If the sales person gives away the farm while selling, the owner still has to honor "bad" deals AND pay the sales person for bringing it.
- Constant training of product knowledge so the sales person can understand and speak to the value the product brings buyers
- Constant hiring process to cover effort due to extremely high turnover.
- Innumerable distractions from the salesperson asking questions of the owner to respond to prospects.
- Limited mind share or concern from the sales person on behalf of the owner, their real concern is getting back to money based on what they had previously earned.
- Limited pool of talented people to pull from as the people Dave really wants to hire are rarely without a sales job in the first place.
Interestingly enough, on the AzSalesPros discussion list we had these conversations about 8 years ago and these were the overwhelming responses. Since then I have consulted with a number of companies and advised them against this plan. Just to be sure, I tested it with a client. I experienced all these issues and have watched as companies went against my advice and experienced them as well.
Some of these issues will be offset by having a professional sales consultant in the mix for as long as the consultant is there. Once gone however, the owner is subject to potentially business fatal results.
To be fair, there are businesses where the entire compensation plan is based on performance only. Things like real estate, insurance sales and even specialty items (Logo pens and the like) as industries are commission only by their nature. I am not speaking of companies designed and prepared for this kind of effort, only those that are small companies, thinking commission only compensation is the way to get ahead.
In truth Dave, commission only compensation is a lot like drinking sea water to slake your thirst. It seems like a good idea at the time, all the way up until it kills you.
Respectfully submitted,
Michael D Goodman
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