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Why Commissioned-Based Sales Plans Fail to Work with Justin Clark

Justin Clark Sales Babble 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.

 

How to Manage Sales Teams

2 Responses to Why Commissioned-Based Sales Plans Fail to Work with Justin Clark

  1. Cory December 27, 2017 at 4:20 pm #

    I thoroughly enjoyed your podcast with Justin Clark. I have moved from a good salary with a bonus based on my salary that was very difficult to figure out, to a very good salary with a commission that was very quick and easy to figure out, to a low salary with a higher bonus that is time consuming to figure out.
    In the agricultural chemical sales business, all the salesmen were paid a very good salary, with just a higher multiple for bonus than the average employee. I think Justin had a lot of good points, but in an industry where everyone is paid that high salary, it seemed to me that salary was taken for granted a little more. I definitely find the “eat what you kill” mentality much more stressful, and it takes a lot of focus to keep my perspective on the long-term goals, rather than the short term numbers.

    • Pat January 2, 2018 at 3:21 pm #

      Cory, I appreciate you sharing your personal experience on a contentious topic. I doubt many companies will embrace this point of view quickly, but I do believe it will take hold over time. When I was an account rep, I didn’t worry about making sure I was paid for every cent. Instead I focused on earning my next new client. Don’t sweat the small stuff. Good luck, Pat

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