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.



100 Commission Equals Zero Percent Control - To learn more about this author, visit Paul Johnson's Website.

Like this article? Share it with your friends

E-Mail | Print | More

Related Articles
100 Commission Equals Zero Percent Control
	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...
80/20 – You Keep Hearing It – But What Are You Doing About It?
	Everybody loves to talk about the 80/20 rules of selling, but did you know that 80/20 rules apply to most things you do and are in life.
High Commissions for Affiliates-Good Marketing or Poor
	Why is it that some affiliate programs offer you 50% commission or greater to promote their products or services and others give you a meager 5% affiliate commission? As an affiliate marketer you're always on th...
The "100% Commissions Motivate" Myth
	There's a good reason why over 97 percent of progressive companies and service industry firms that I've consulted, use a form of a "hungry base plus commission" compensation plan for their sales professionals, ...
YOUR OWN INCOME ON YOUR OWN HOURS
	A pep talk, with examples, showing a few ways to set out on a business career of your own

---

Related Forum Posts
	Commission Junction or Your Own Software
	StumbleUpon sent me ~5,000 page views in a week!
	On Being Productive
	Have you tried ClickBank?
	Successful Strategies for the Self-Employed Woman
	Viral marketing campaign
	New profile options
	Seek Venture Capital & Funding