Why Commissioned-Based Sales Plans Fail to Work with Justin Clark

Justin Clark is the Director of Sales for a janitorial and packaging products distributor. Over time, Justin's company found sales reps spending more time auditing their paychecks than selling. They also found the commission-based sales plans failed to motivate reps to do the best for their customers. To overcome this challenge they moved their sales staff to a pure performance review based salary plan. In this interview, Justin shares the story of how they were able to make this extraordinary change in their compensation plan.

Challenges Faced

• Money is emotional. 100% commissioned sales people would spend as much time making sure they're paid what they earned vs selling.
• Reps pushed products that brought the most money. There were SPIFs (Sales Performance Incentive Fund) for products that were not good for the customer.
• Wanted to promote consultative sales and stop sellers pushing products and instead finding solutions.
• Commission-based sales plans were holding the company back.

Transition Plan

Because of these challenges, Justin slowly created a transition plan to move the organization.

• Did not move immediately to salary compensation.
• Slowly moved from commission-based sales plans to salary and bonus plans
• Still too much focus by reps understanding the bonus
• Commission-based sales plan was slowly phased out

Final Plan

Once the final plan was finalized it was found to contain:

• Paid full salaries on most recent best year.
• Reps paid same as last best year.
• Money is a manager. Without commission-based sales plans you need to manage. more hands-on and ensure accountability. The final plan requires more coaching and more investigating into reasons reps are not successful.
• People do good work for many reasons, not just money.

Results

Since the plan has been in place, the results contain:

• People felt like they needed to hit their goal because the company was ALREADY paying them.
• Everyone is now on the same team with the exact same goals.
• Raises are based on performance review.
• Some employees didn't like the plan and found they are not a good fit for the company. Some reps have left the company, others asked to leave.
• It's been a 10 year process.

Transition Advice

Now that they've reached success, Justin has some clear advice for others interested in changing their compensation plan:

• Management team needs to look at staff, consider how they will manage them and if they are OK if people leave.
• Answer this: is it worth getting everyone surrounded around the same purpose. It probably is!

How To Connect With Justin Clark

Commission-based sales plans no longer exist in Justin Clark's sales department.

Connect with Justin on LinkedIn and learn further details.

How to Manage Sales Teams

• How to Hire a Sales Rep that Hits the Ground Running #174
• The Invisible Sales Organization with Mitch Russo #147
• How To Be Your Customers Hero with Adam Toporek #104
• Strategic Sales Skills from Sales Management Author Ken Thoreson #57
• 6 Simple Steps of a Sales Process: Sales 101

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