Tweet

100 Commission Equals Zero Percent Control

Written by: Paul Johnson

Article Overview: Straight (100%) commission plans do a great job of shifting performance risk to the salespeople. While the company may think it is eliminating risk, it may actually be taking on a bigger risk that could threaten the life of the company itself.

100 Commission Equals Zero Percent Control

© 2006 Paul Johnson. All rights reserved.

The temptation to use straight (100%) commission plans never goes away: "Let's put our salespeople on 100 percent commission. Then, if they don't perform, we're not out any money." For small, start-up organizations, the lure is irresistible, especially when money is tight and the company or the products they sell have no track record in the market.

WHO PAYS FOR FREEDOM?

Straight commission appeals to salespeople because of the freedom that comes with it. Because they receive no salary, these salespeople are unwilling to allow management to prescribe how they do their work. That includes hours kept, effort made, methods used, or product lines sold. The only real rules they must abide by are ethical. When salespeople are willing to give up salary, management must be willing to give up control.

WHO PAYS FOR FAILURE?

For someone new to sales, finding a straight commission position may be a way to establish themselves as a salesperson. For a proven, effective salesperson, 100 percent commission may be the road to making loads of money by making lots of sales for their company. Unfortunately, most small companies with straight commission plans hope for the latter and wind up with the former. These inexperienced, undisciplined, babes-in-the-woods carry a high likelihood of failure, costing their companies untold sales opportunities during the "experiment".

If you choose to use a 100 percent commission plan, you must find salespeople who bring their own motivation to work every day. Each morning, the salesperson must have their own target to shoot for and a solid plan to get there. New sales people may have the enthusiasm, but it's unlikely that they have a plan that works. Conversely, many experienced salespeople know how to create a plan and go through the motions, but are no long turned on by the thrill of the hunt. They may be content with a level of sales performance that allows them to satisfy their lifestyle requirements, but underperforms the sales goals set by management.

EITHER WAY, YOU'RE GONNA PAY.

The net is there's no way a company cannot invest resources in their sales team. Either you pay a salary and then plan on actively managing and developing your salespeople for success. Or, you pay straight commission, save the salary, then pay big dollars to replace unproductive personnel while you forfeit sales opportunities lost by ineffective sales people.

When you shift risk to salespeople by adopting a straight commission plan, you may in reality be risking your business. Think hard about what's really important to you when you design your sales compensation plan, and control your urge to use 100 percent commission.

Related Articles
  80/20 – You Keep Hearing It – But What Are You Doing About It?
  Staying Motivated With CPA Affiliate Marketing
  High Commissions for Affiliates-Good Marketing or Poor
  The "100% Commissions Motivate" Myth
  YOUR OWN INCOME ON YOUR OWN HOURS

Article Tags: 100 commission, 100 percent commission, salary management, sales opportunities, salespeople, straight commission



Related Forum Posts
Commission Junction or Your Own Software - I can't tell you how easy it is to use your own software vs using something pre-created such as Commission Junction, but in the past when I've joined affiliate programs and they use something like Commission Junction, I lose a bit of respect for the company. *Why* don't they have their own software? *Why* do I have to go through all this rigmarole of joining something else? I prefer the "personal" touch - although it might not be that personal - of dealing with the company itself. Just my two cents!
Re: New Guy Here - Automobile Industry - Hi Ray, Welcome to the forum. If you use a website to promote your business, please add it to your signature file (via the User Control Panel) so that we can check it out. Best wishes, David H
Re: Hello, I'm brand new - You need to go to your User Control Panel /Profile/Edit Avatar where you will be able to put a pic or avatar of your choice. Hope this helps, any problems let us know, take care, Carol
Re: Suspicious/Problematic Users - Well spotted Trent, we must have seen this joker at the same time. I have just sent off a p.m to GT as well under the heading "Pest Control" Mal.
Re: Who is doing CPA marketing here? - [quote="Trent Brownrigg":3n71pzcm]I've dabbled in it but not really enough to say that I "do it" or know much about it. CPA marketing seems to be majorly on the rise though and a lot more people are starting to do it. I plan to look more into it this year and actually started doing a little research yesterday. What CPA network are you using?[/quote:3n71pzcm] Commission Empire and Adnetwork


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Selling On Ebay The Good The Bad And The Ugly

Bootstrapping Your Start Up Business.

Resistance to Change and How to Deal With It

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.