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.
- 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.
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
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.
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.
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.