Is Commission-Only Sales the Answer to Payroll Blowout? Bus Hire Guy Tells All

When we started with a dining club membership sales programme our bonus structures had a base pay. Coming from the hotel dining card industry however, we had always had renewals in our sales mix and didn't realise how much the base pay was costing us. But since we were selling only new sales, the costs were quite apparent. Those making zero or one sales per week were really costing us. In fact the amount they were costing us was in the region of $60k per week - ouch!!

This had to stop or we risked our whole business (or at least that part we called profit). We then went cold turkey and went "zero for zero". This meant that if you got no sales, you got no pay. This had a disastrous effect on our sales rooms initially. Why work in a place where they gave you essentially no base pay when everyone else gives it? This of course wasn't the ultimate solution.

What about someone who has never sold before but wants to give it a go? Surely they can't be expected to work for what is essentially "commission only". So, we instituted the training wage. This meant that there would be a base pay for the first say two weeks of training and after that the base pay would drop away and you needed to make at least 2 sales per week or it wasn't worth anyone's time you being there.

This of course has makes recruitment a challenge but it is basically where we stand today.

What is the ultimate solution to the problem of commission only versus base wage? Well, there is nobody on zero or one sale in your renewals and conversions offices so the issue of base pay isn't an issue at all!! So, we get back to "no such thing as a cold call" as our solution. If we can make sales conversion sales then we don't have to worry at all about base pay. The sales consultants will all be making at least 5 sales per week and if they can't then a natural selection process will operate. In other words, make it possible for your consultants to sell more (by giving them leads for instance) then you won't have to worry about people who don't sell!

When we started with a dining club membership sales programme our bonus structures had a base pay. Coming from the hotel dining card industry however, we had always had renewals in our sales mix and didn't realise how much the base pay was costing us. But since we were selling only new sales, the costs were quite apparent. Those making zero or one sales per week were really costing us. In fact the amount they were costing us was in the region of $60k per week - ouch!!

This had to stop or we risked our whole business (or at least that part we called profit). We then went cold turkey and went "zero for zero". This meant that if you got no sales, you got no pay. This had a disastrous effect on our sales rooms initially. Why work in a place where they gave you essentially no base pay when everyone else gives it? This of course wasn't the ultimate solution.

What about someone who has never sold before but wants to give it a go? Surely they can't be expected to work for what is essentially "commission only". So, we instituted the training wage. This meant that there would be a base pay for the first say two weeks of training and after that the base pay would drop away and you needed to make at least 2 sales per week or it wasn't worth anyone's time you being there.

This of course has makes recruitment a challenge but it is basically where we stand today.

What is the ultimate solution to the problem of commission only versus base wage? Well, there is nobody on zero or one sale in your renewals and conversions offices so the issue of base pay isn't an issue at all!! So, we get back to "no such thing as a cold call" as our solution. If we can make sales conversion sales then we don't have to worry at all about base pay. The sales consultants will all be making at least 5 sales per week and if they can't then a natural selection process will operate. In other words, make it possible for your consultants to sell more (by giving them leads for instance) then you won't have to worry about people who don't sell!

Note however - before we instituted the zero for zero system we opted for the "let's manage it" system. "We just have to be tougher" was the cry. But that didn't work. Those who could not sell were not getting laid off and if they were it was two or three weeks too late. Managers could manage the system effectively so the system had to be the one. The system of zero for zero was automatic and indiscriminate in its treatment of non-performers and that is the systrem that saved us from a profitless future.