Using Commission as a Tool to Drive Sales Performance
It is universally recognised that commission plays a role in most sales environments.
In fact, the majority of industries where the sales process is complex and drawn out (as it is in the flooring industry), use commission to create focused and successful salespeople.
The majority of salespeople in our industry in Australia and New Zealand do not have an “at risk” element to their income. They know, regardless of their performance, their weekly, monthly, and annual income will not be affected. On the other hand, owners income depends solely on how well salespeople perform. In fact, as the most highly incentivised person in the business, more often than not they are the highest performing salesperson. Usually by a big margin.
A common response to the question of commission is, “I don’t want to create a cut-throat environment; I want my salespeople to work as a team”. This is a nice sentiment, but it displays a fundamental misunderstanding as to how a commission based pay structure works, and incorrect assumptions as to what sort of environment would result.
If we look around at other commission based sales industries, do we see a “dog eat dog” environment in their offices? Do we see customers unwilling to purchase their goods and services because the salespeople have a commission element to their income? Having owned a successful flooring business myself, I can state categorically, that the move to performance related remuneration was one of the most important elements in our success.
The stated reason we don’t implement commission is the desire to preserve the team environment, but I suspect lying behind the statement is a more fundamental reason why we don’t see commission widely used. It’s difficult to do well. It creates a lot of hard work, and done manually, it leads to debates with salespeople about the veracity of commission numbers. I have seen many commission schemes fall over because of the sheer amount of work it puts on the office staff.
As RFMS users, however, you have the tools built in to your business software to quickly and easily implement a commission scheme for your sales people. Preparation of commission is simply a matter of running your commission reports; everything is calculated by RFMS. Salespeople are presented with a commission report based on the profitability of the sales they have delivered to the business, presenting little or no opportunity for debate.
The commission function in RFMS is potentially one of the most potent sales tools you can implement. If you would like to get an overview of the commission functions you have available to you in RFMS, or if you would like to discuss how you go about using it, just reach out to the Support team, and we will be happy to help.