Paying employees on a commission basis to practice great customer service.
Last year the top service adviser at $3.5-million De Mar Plumbing, Heating and Air-conditioning, in Clovis, Calif., made $60,000. That's about twice the industry average. President Larry Harmon believes if you want your employees to practice great customer service, you've got to pay them for it.
De Mar's 19 "service advisers" (the plumbers and installers) are paid entirely on commission, not by the hour or on salary. The air-conditioning and heating advisers get a 15% base commission on parts sold and labor billed; plumbing advisers get a 20% base commission, since their work is more time-consuming. There's no cap on what the advisers can make.
There are several ways advisers can increase their base commission rate. Whenever they visit a first-time customer, they earn an extra 2% commission. What's more, they get a 2% commission on any subsequent work done for that customer, whether they handle the job or not.
In addition, all service advisers can raise their base pay through a customer-service point system. An unsolicited phone call from a happy customer is worth 250 points; a complimentary letter, 500. If a customer doesn't want a particular service adviser back, Harmon subtracts 500, and so on. Points are also awarded based on telephone surveys; two De Mar customer-service reps call about 400 customers a week with 10 quick questions, such as, Did the service adviser arrive on time? Did he explain our five-year guarantee? The monthly scores are posted in the training room -- the top three scorers are rewarded with a 50% higher sales commission for the month.
Low scorers receive more training; only 5% of the advisers are fired. Another 25% quit after a year, when they find they can't make the cut. When Harmon changed his pay plan, in 1988, he paid out 21% more than the prior year's payroll, but revenues rose 45%, to $617,000. They are projected to climb to $4.2 million in 1992. -- Susan Greco