Here at the Coaching Blog- one of the world’s leading blogs on the subject of Leadership and Coaching we quite often post articles by leading authors and authorities- today we are delighted to post an article from Bill Phillips.
A different view perhaps of a life less ordinary. What is it about having commission sales people working in your business that’s so damn hard?
We spend a fortune in business getting clients. It is often said that the most expensive cost to business is acquisition of clients and retention of these clients.
When we recruit partners, contracted sales people or commission advisors, franchisees the commission remuneration packages are largely made up of reward with minimal or no retainer. As employers, we celebrate our success in recruitment and put them through a training program and trust to their experience and self-management skills to become successful in their new role. It is their investment and once we have provided the training and the resources it’s up to them to manage their own destiny.
“About half of all new establishments survive five years or more and about one-third survive 10 years or more. As one would expect, the probability of survival increases with a firm’s age. Survival rates have changed little over time.”
– Source: U.S. Bureau of Labour Statistics, BED
Human resources often see this relationship as something between serfdom and an employee. Why is this? The recruitment and training costs are similar and sometimes greater than for employed souls because of the very nature of those commission roles. It is harder to find good people and to retain them so the acquisition costs are greater because of this. The high risk element to these roles is offset by potential return and the independence of being self-employed. Successful people in these models are sought by every competitor in many industries.
No pension, no real asset or an asset built purely on success, income which is health dependent, no sick leave or annual leave, few benefits that are not directly linked to performance in return for potentially higher rewards for the successful.
The risk reward employment model is just like customer supplier role. Don’t love them and you lose them. Lose them and your acquisition costs spiral, more recruitment, more work, and unhappy customer’s downline who are left without the original contact sales person who sold you to them.
“But we can’t throw more money at this can we, it’s just the reality some succeed some fail right?”
Maybe it’s not that simple.
You see, these people are your customers, not an employee. In fact, they are your biggest customers, not the people who buy the products from them, them. The persona that promotes you, sells you, or your products and services is your biggest fan. The Franchisee/Agent/Salesperson is your biggest wholesale customer you will ever have, he or she or they sell to so many more people than anyone else, so their volume is much greater than any individual customer. These people are not just the interface with your distribution they are your distribution and the relationship with your clients. They are your food chain.
If you were a customer, in this case a commission agent/contractor/franchisee and you were selling goods or service in exchange for mostly or entirely commission what would you want from a supplier?
Here are some simple rhetorical questions which might get you thinking on how strong your relationship is with your food chain.
I am sure you will by now see this can be a long list. I hope you can add to it. However, it is a useful reminder about the effectiveness of your role with the down line key clients your franchisee or sales people. You see these roles already have a built in punishment regime. If you are not achieving what you want to or need to then you don’t earn enough to meet your needs. This is immediately punitive and people who are in these relationships know it well. Eating, fuelling the car paying the mortgage are motivating believe me.
My next question is how well do the support team in your organisation understand this model. It is imperative they do. They deal directly with your biggest clients. If one of your franchisees, commission advisors, consultants rings to say “I have a problem with a client?” what is the reply “I am sorry the manager is away and I am not sure when he/she is back?” or “I understand the issue I will get a call back to you in 24 hours?”. I add they must be capable of getting back in twenty-four hours if they say they will as well.
An insurance company I worked with many years ago sent all its new administration staff out into the field with an insurance advisor for a week to understand the role. They learned that these people lived or died by their successful sales. They found that the completion of business was very important for no commission was earned by the salesman if for any reason the business was not completed. They learned how hard it was to get customers, how difficult it can be dealing with people and cancelled polices meant lost commission. In this company for whom I worked for many years the administration staff did not begrudge the earnings of the high producing salesmen and had the highest regard for those who chose a life less ordinary as self-employed business people. How well do your staff understand the role of the those who work on a risk reward model in your business?
So have you set tools up to achieve the desired result? The remuneration systems you have are designed I hope to recognise performance and rewards systems to recognise acceptable, good, very good and exceptional performance. Are you driving people to achieve these goals, nurturing, loving, caring, coaching, training and supporting them in the way you would like to be in the same spot? You do this because they are your biggest customers, you do this because when you design a reward package you believed it was quite possible for people to earn exceptional money to achieve excellence in your field.
What would you say to a son or daughter who wanted to be a commission sales person? What would you expect of their employer?
If you see any changes you think you need to make and implement them from what I have said I applaud you from afar. If you have read this and feel you passed all the markers, then you will have the best sales people in your field, the most motivated, loyal and contributory team and there is applaud in itself and I salute you.
Thank you for reading the words of a member of the Old Guard a commission salesman.
Adrian Bill Phillips