Are you paying salespeople enough to sell well?

Are you paying your salespeople enough to enable them to focus on selling and not worry about where their next paycheck is coming from? Because if salespeople are constantly worrying about when they are going to get paid, how can they sell well?

For many years, unlike most other salaried employees who can rely on a regular weekly/monthly pay cheque, salespeople have often been required to live hand-to-mouth – making sales and waiting for their commission or bonus to supplement their living income.

Often the commission or bonus comes in monthly or quarterly bursts; however, there is no guarantee of what money salespeople will make each month. Worse, there can be arguments and struggles with companies as to what they should or could be paid.

Earning a decent income for their efforts is never far from salespeople’s minds and if times are tough it is usually the only thing on their mind. Obviously this obsessive focus on income can lead to all sorts of issues, not all positive.

Imagine that you are a salesperson and in a good year earn anywhere from $80,000 to $130,000 per year gross. Imagine too that you are also paid a low basic salary (let’s say around $40,000 a year) and the rest of your income comes from commissions or bonuses from selling. Imagine too that your salary structure means your company recovers what it paid you as a basic salary out of the total amount you earn each year.

Like all of us, you have living costs to account for such as mortgages, daily living expenses, family commitments, etc. Over time you develop a lifestyle around earning around $150,000 per annum – which is a combination of yours and your partner’s part-time salary. You know that you have to work hard to sustain your lifestyle. And you do.

You are making contact with lots of prospects and clients but the market is tight and sales are hard to come by. As a good salesperson you are performing well but the spectre of a tight market is playing on your mind – it’s distracting. So, if your partner lost their part-time job and you are the sole breadwinner in your family, money is likely to be tight. Now imagine how you feel not knowing what will be in your next pay check!

A common scenario for many salespeople

Think about what those salespeople are focused on – is their mind in a good space of safety and reasonable certainty, where they can think clearly and make sound decisions, or have they reverted to flight, fight or freeze mode, where they are becoming fearful about their future, worried about future income and how to pay their bills?

In the salesperson’s mind they are saying: “I know markets go through ups and downs. I am doing all the right things. It’s tough but I have a full pipeline of opportunities and some will definitely come through?”

Or are they in a space that says: “I can’t see myself getting out of this. It’s really tough out there and I’m so worried about my family. Where do I start?”

Ideally the mature, self-aware, straight-thinking people manage their thoughts in the positive. But most people adopt the latter mindset and in so doing, they inadvertently start to prioritise their own interests over those of their customers. There is the possibility that they may start to engineer sales in their favour. Perhaps cutting corners or not being as thorough. It’s survival instinct in play!

A major inhibitor to achieving optimal long-term success in anything, including sales performance is being in a distressed state. It reduces one’s ability to bounce back from adversity, make effective decisions or manage ourselves. Being under constant pressure to achieve results (e.g. sales targets), with no consideration given to a stable income can quickly lead to poor quality decision-making, poor overall performance and unhealthy life practices. The resulting negative behaviour then contributes to the prevalence of poor sales results.

When we live a life under constant distress we are unable to engage the frontal cortex of our brain, because our emotional energy levels are drained away and the unconscious part of our brain runs the show. We live on “auto pilot”, in a constant state of distress. If that part of the brain concerned with basic drives, emotions and short-term memory (i.e. the hippocampus) is damaged through such prolonged stress we can become even more negative in our view of issues starting a vicious, almost self-fulfilling cycle.

With selling becoming more complex, demanding that we make more effective use of cognitive (reasoning) skills of salespeople, one of the best moves organisations can make is take earnings off the table as an issue. This doesn’t mean having no bonuses or commissions. It means moving the earning base from a low level (on average 40% fixed and 60% by way of bonuses and commissions) to a more stable 90% base salary with incentives to top that off.

What research shows is that for simple, routine tasks – which aren’t very interesting and don’t demand much creative thinking – rewards can provide a small motivational booster, without harmful side-effects. In short, if you want people to (for instance) stack boxes more quickly, offer a bonus to those who stack the most in the shortest time and to the standard you want. As long as the task is simple and mechanical, bonuses work to lift performance.

However, if the task or situation involves, even rudimentary cognitive skill, – i.e. where one has to come up with ideas or solutions, possibilities or plans – then a larger reward leads to poorer performance.

Big commissions a thing of the past?

Translating this to sales; simple transactional sales that are taking place via the internet leave most salespeople out of the equation. The rest of the sales spectrum – 100% of complex and most of B2B/complex B2C selling – requires salespeople to deal with solutions, consultation, problem-solving and prevention, creativity and collaboration. All of these tasks require cognition.

Research highlighted in Daniel Pink‘s book Drive: The Surprising Truth About Motivation outlines this research in detail. This short 10-minute video gives a very good summary

His latest book, To Sell is Human, also shows that the big commissions and bonuses which have been part of the sales paradigm for many years may well become something of the past.

Here is the bottom line – if salespeople are living in fear, worrying about their next pay cheque, they cannot think effectively or fix and solve problems, which means they are unlikely to do a good job.

Whilst money is important, not everyone – even many salespeople – is motivated solely by money. If we want high functioning, high performing salespeople we need to take the worry of money off the table. Sure we need performance measures in place and there is no suggestion that freeloaders are tolerated.

Instead allow your salespeople to be great at what they are paid to do; which is to help the customers with whom they work to find, solve and prevent problems and, in the process, make money and profits for the organisation.

In his latest book, To Sell is Human, Daniel Pink quotes Microchip’s vice president of sales, who summed it up well when he said: “Salespeople are no different from architects, engineers or accountants. Really good salespeople want to solve problems and serve customers. They want to be part of something larger than themselves.”

A great philosophical approach to appreciating the value of salespeople not bogged down with concerns over money is to recognise that companies pay salespeople well, that’s why they make money. By taking the worry of money off the table organisations are already seeing the shift in attracting quality sales staff who can deliver good, if not excellent sales results with much less stress for everyone concerned.

When we give salespeople the space and the appropriate salary to be really effective and accountable they perform at their best. When that occurs, great things happen.

Remember, everybody lives by selling something.

If you are interested in attending the Sales Management Essentials five-day intensive workshop from April 15-19 please contact us to book your place.

Who is it for? Barrett Sales Management Essentials is designed for sales managers and people moving into a role in sales management who want to ensure they are current with sales management best practice. Until now, no single program has provided sales leaders with a complete curriculum of sales management and leadership skills and techniques.