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.