Commission means that salespeople sell more doesn’t it. And more commission means they will sell even more. Right? Wrong.

Apparently commission and all incentives kill the personal motivation to get things done. More than that, the quality of work falls and it is actually a relatively poor way to motivate people, according to the research cited by Alfie Kohn in the book Punished by Rewards.

It is an astonishing conclusion for anyone that has been involved in sales for a long time. However, the more one thinks about it, the more it could be true. I know plenty of people that work incredibly hard for less than the market wage and others that do as little as they can get away with despite the chance to make a lot of money. The recent series Make Me Millionaire Trader showed several talented prospective traders abandon the project due moral objections. Despite the fact they could have made a lot of money.

The suggestion that commission does not work then begs the question, “how do we motivate sales people then”? Indeed! I have to say, the evidence is very persuasive suggesting that commission is a very poor way to encourage salespeople to sell more.

At the very least, commission in the long run appears no better a motivator to working hard than helping staff to get job satisfaction. The problem is two-fold in my view: how do you replace the deeply ingrained tradition of commission being used to motivate salespeople? And the other problem is, how do you train sales managers to adopt the better way?

STRATEGIC
It would be a brave sales organisation that ditched commissions for improved management. It would certainly be difficult to attract some of the best salespeople.

However, my experience suggests that really good sales people will do their best work where they like the company and believe in the product. It is another matter whether they would set aside their “greed” to work for such a company without commission instead of an alternative company with a great compensation scheme.

TACTICAL
If you are a salaried salesperson with an element of commission, then, frankly, there is little you can do about the commission you get. Time and again I hear salespeople moaning about the fairness or amount of compensation schemes. Sometimes they might have a point. But the inescapable fact is that they probably can’t change it.

So the decision has to be, how do you motivate yourself? My suggestion would be to say the commission is simply a way of keeping score against your fellow salespeople. The main thing is to do the best YOU can do.

Judge yourself against your own benchmarks and learn to me “intrinsically motivated”. In other words, find your reasons. And set your own goals. These should be independent of those imposed upon you by managers or your employer.

You will find this discipline will see you right wherever you choose to work and however fair the commission package.

A friend of mine who is heavily involved in property development remarked that in the last few years, “even a dog with a bank account could have made money from property”. With property prices falling now, it would be a mistake to think that all investors are such dogs and thus are now all losing money.

In fact, there is plenty of evidence that shrewd investors are snapping up repossessed properties at auctions at half their previous values. With smaller mortgages but rents pretty much at 2007 levels, it means that these are profitable investments with yields around 10%. So their capital value is less of relevance.

But why am I talking about property investment in a sales training blog?

When times are good, it is not so difficult to be among those making a profit from a particularly buoyant sector. The best operators are lumped in with the “lucky” and those jumping on the bandwagon.

Now, the good salesmen and good sales managers will shine. I worked in telecoms in the late 1990s and I saw all manner of charlatans make huge commissions selling mobile phones. Where they good salespeople? I think not in many cases, because most of these are out of the market scraping a living in a different sector.

STRATEGIC
The pie is smaller and we are all fighting over smaller slices. One of the biggest issues is how to reward the good sales people. These are the individuals that you want to hang on to when the upturn comes.

The consistently best salespeople have been shown to be the ones that don’t do the job just for the money but for the satisfaction. Big commissions and fancy holiday rewards are affordable when the business is flowing in and the more mercenary staff are bringing home the bacon. When the new business acquisition tap turns to a drip, we need to get smarter about motivation.

Why not try reducing the differential between the rewards for the best sales people and the poorer performers? The good guys should understand it is a team game and be willing to take a cut in commission and the poorer performers will be brought back into the game.

TACTICAL
There is an odd paradox that occurs in sales when times are tough. The buyers are more reluctant to commit AND are more demanding. In contrast, salespeople feel the need to close harder and generate more commitment, sometimes due to pressure from management.

This smacks of unstoppable force meeting immovable object! It is my view that buyers buy when they are ready and there is little (notice I don’t say “nothing”) we can do pin them down against their wills.
Look at it from your point of view; when you are buying, is there nothing more irritating than the salesman that wants to lead you to the checkout when you want to just have a look at the other colours available? I have certainly left shops where I might have otherwise made a purchase, but was hassled by a pushy salesperson.

Indeed, this recession is the time to REALLY build on the relationships. Spend more time researching your prospects and building the bond. Send them useful press cuttings, come up with free seminars that are useful to a client group, telephone for a chat or to pass industry intelligence. There are dozens of ways to put yourself more front of mind with the client than your competitors.

When the purse strings loosen, who will the prospects come to for a quote or to make a purchase? The pushy salesmen that just wanted the order or the “advisor” that wanted to help the prospect to make the buying decision?