Instead of paying fixed-rate commissions one company pays its salespeople an extra 1% for new customers.
A problem with paying salespeople fixed-rate commissions is that, with enough steady customers, they could get lazy. Content to service the customers they know, they may be less eager to sniff out prospects. Bill Bozeman, CEO of Delta Audio-Visual Security Inc., a $3-million company in New Orleans that sells alarm systems to businesses and institutions, found a solution. His salespeople, who normally earn a 4% to 12% commission, can earn an extra 1% when they sell to first-time customers. On a $50,000 installation, that's another $500.
It may not sound like a lot, Bozeman concedes. But the opportunity to earn a bit more has influenced how Delta salespeople -- especially the younger ones -- spend their time. In the two years since the incentive was established, new-customer sales have risen from 25% of revenues to more than 35%. "Once we have them," Bozeman says, "we're in a strong position to convert them into regular customers."