Have you ever heard a business proudly say that they don't pay their salespeople on commission? Organizations using this kind of promotion will assert that since their salespeople don't get paid bonuses, they won't pressure you into a sale. This myth has unfortunately made it into the marketing jargon of many businesses.
If you're not in the sales industry, you might react positively to this type of advertising, happy to escape the typical stereotype of a salesperson aggressively pushing you to close the deal. What you might not realize is that this isn't ideal for the consumer. You actually want someone who cares whether you purchase or not.
I was recently in the market for a new car for my wife and decided to check out the selection at a local dealership. I first reached out online and was surprised at the lack of response to my interest. Next, I headed to the car lot in hopes of speeding up the process in person. As I waited patiently in the lounge, I started to wonder 'what gives?' Salespeople wandered around lackadaisically, and until I proactively asked for help I wasn't greeted or treated like a customer. The lack of 'get up and go' displayed by the staff was so pronounced, it was almost amusing.
Eventually, I got a sales rep's attention, but his knowledge of the vehicle was limited, and he seemed to have no urgency-or even desire-to close the deal. As a veteran in the sales industry, I had to ask the guy if he worked on commission, to which he replied, "I don't. This dealership has a different sales model that doesn't pay commission per car." Everyone can likely point to an unsatisfactory sales experience they've had- I get that. But what was particularly lackluster about this experience was that it made little to no difference for him if I bought this car, a more expensive car, or no car at all. He was going to get paid the same regardless, and this was reflected in his poor customer service.
As I walked out of the dealership, it was clearer to me than ever that great salespeople would never go to work for that company ... or any company that didn't pay commissions. By paying sales reps this way, the owner of the dealership is immediately limiting the pool of people they are hiring from, because predominantly inexperienced salespeople would choose to work for a company with this payment model. Unfortunately, hiring sales reps with little work experience often translates into a bad customer experience. When I left undecided about the purchase, I received no virtual follow-up or interaction with the rep I'd spoken with.
A few weeks later I went to a different dealership in the area, and as soon as I walked in I was immediately welcomed and helped by a sales rep that could be described as nothing short of a company evangelist and expert. He was wearing branded gear, and was a veritable fountain of information on everything related to the car. You could tell he took pride in what he did, and had an understanding of tactfully and informatively up-selling. Of course, I had to ask about his compensation and he proudly declared that he worked on commission. He said, "Hands down, commissions are always better. I earn a bonus on each car I sell, so I'm motivated to learn everything I can about our cars in order to better assist our customers, and of course close deals."
I have understood and believed in the power of incentives for more than two decades. But it's always great to see examples of the motivational and behavior effects of bonuses for salespeople in my life outside of work. I didn't purchase the car that day, but the sales rep quickly followed up with me via email and text, and even searched at various dealerships throughout the country to find the specific car I was looking for. I have no doubt that the superb service I received was driven by incentives. When designed and paid correctly, bonuses drive the behaviors that organizations want from their employees. It comes down to positive human interaction, and if that fails there's no amount of automated mailings that are going to make someone purchase a product.
Contrasting these two experiences drove home the importance of motivating and incenting staff with strategic incentives. When product knowledge, exceptional service, and incentives come together, companies can create customer delight and a positive brand reputation. Now, who could think paying your sales people in a way that motivated them to interact positively with customers could ever be a bad idea?