Why You Should Want to Pay Commissions

Let’s correct the record here about commissions.

Let’s assume that the critics are correct, and that salespeople who are paid commissions will be motivated to win more business, whatever the cost. Even though many people are not really money motivated, let’s pretend for a moment that every salesperson is, and that they will really do whatever it takes to win business and collect their rewards.

That settled, let’s look at what might happen.

  • First, the salesperson who wants to make more money will have to create opportunities. Opportunities are generally generated by prospecting, and the primary method for setting the appointments and gaining the commitment for time is cold calling. And like that, we just found out that a lot of people have just bowed out of the “whatever it takes” proposition in the above paragraph.
  • Second, they would have to do well enough in front of the client during their interactions to actually be preferred over their competitors, all of whom (in this scenario) are equally money motivated.

So how does one create a preference? Is it by being self-oriented, pushy, smarmy, and aggressive? Is it by selling the client something that they really don’t need or from which they will receive no benefit? The answer is a resounding “No!” This is a recipe for losing deals, not winning them.

You create a preference by being consultative, and for working to be a trusted advisor, a recipe with only two ingredients: 1: trust (the foundation of all relationships, including commercial relationships), and 2: advice (the business acumen and situational knowledge that allows one to provide advice, also now popularly described as “insights”). A self-orientation will end your chances at winning an opportunity as fast as almost anything else. A lack of business acumen will make you irrelevant, and will remove almost all possibility of winning.

If one were to want money, their behaviors would have to serve that outcome, and successful salespeople have long known how to sell in a way that allows them to win, to serve their clients, and to make money.

Why We Pay Commissions

The reason we pay commissions is because the variation in results allows for a variation in compensation, with those who want more money and have the ability to generate more sales being paid for doing so, and with those who are only half as motivated or half as effective to be paid appropriately for the results they produce.

Treating two groups with widely different results the same is to mistreat both groups, with one being paid too little, and the other being paid too much.

Truth be told, we are really commission only salespeople, being paid only for the value we create, what we believe we are worth, and our ability to find the people who see that same value.

Filed under: Sales 3.0

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