Commission Vs Base

[Gr-Andy]

I've noticed commission has modivated my team of sales agents. Some however are requesting base. Should I give it to them? I am the Sales manager of an established webhost. Money is not an issue its just I want them to have a constant drive to make kthe sale.

[BusinessAdviser]

Monetary compensation can be a motivation. However, there are two things to consider:

1) Monetary compensation plans can be detrimental to a company where they are not aligned with the company's goals. For example, often a base salary, as some members of your sales team have requested, creates an incentive to do the minimum work necessary to remain employed, and to spend as little time doing this minimum work as possible. I highly recommend reading Steven Kerr's article, "On the Folly of Rewarding A, while Hoping for B." Very short, very informative.

2) Money is actually not that great of a motivator. Studies have shown that the most effective motivators are such things as recognition, increased responsibility, personal gifts that an employee would never purchase himself/herself but which he/she will enjoy, etc. Of the top of my head, I can't suggest a specific reading, but again I highly recommentd researching this topic if you are truly interested in motivating your employees.

Good luck.

[Gr-Andy]

Monetary compensation can be a motivation. However, there are two things to consider:

1) Monetary compensation plans can be detrimental to a company where they are not aligned with the company's goals. For example, often a base salary, as some members of your sales team have requested, creates an incentive to do the minimum work necessary to remain employed, and to spend as little time doing this minimum work as possible. I highly recommend reading Steven Kerr's article, "On the Folly of Rewarding A, while Hoping for B." Very short, very informative.

2) Money is actually not that great of a motivator. Studies have shown that the most effective motivators are such things as recognition, increased responsibility, personal gifts that an employee would never purchase himself/herself but which he/she will enjoy, etc. Of the top of my head, I can't suggest a specific reading, but again I highly recommentd researching this topic if you are truly interested in motivating your employees.

Good luck.

Thanks I realy appreciate your insight.

[DPayne]

You could try something like paying for a car lease on a nice lexus or BMW and the top producing seller can drive it for 3 months or something. This is a way (less inexpensive than base pay, depending on your number of employees) to make the top producers feel like kings. It all depends on your budget though. Just some food for thought.

[pentupentropy]

I notice that a lot of people looking at sales forget the 3rd method, which is draw vs. commission. This means that you would make a base pay of say $300/wk or whatever might be suitable. This would come out of their commission checks later on.

One other aspect you may want to think about is the level of residual income they get and the schema under which it is offered. Are they getting an industry average 4% on sales? Is this an enterprise level demographic? If it's not, why isn't it?

Are your salespeople truly up to the task of selling webhosting? it's kind of a saturated market where the supply far outweighs the demand and it pushes many lesser known companies to take to short sighted methods of selling like cutting prices below what is actually sustainable. Perhaps you could take a few sales people who you truly know are motivated by any kind of compensation and offer them a competitive marketing/sales arena in which they can use some of their time selling on a method they think may work better than the typical forms of sales you are currently engaged in.

Perhaps if you have 5 or 6 sales people you could divide them into two or three teams (two teams of 3 would probably be better) Let them each come up with something and test the market like Donald Trump's tv show. Remember that the most reliable sales number is the law of averages (300=30=10) and that you should work ideas around it because if a sales and marketing campaign can't hit those numbers, you're basically screwed. If you can't hit those numbers but have a reliable target market to increase that average, work from that. Make sure you have the resources at your disposal to test it.

I would like to point out that while your site is pretty small and your operation is obviously not enterprise, I will give it to you on getting your name out there on the net. I see a lot of links in forums. You need to spend some money on some real advertising. Your 3 page views a day is never going to get you any sales.

Yes, I verified your info =) sorry, but I've worked in corporate hosting environments and I know how the sales there works. Buy some google adwords. You can start an account for very little, but I would siggest taking at least $100 and seeing how much it takes to get 10 sales. There will be a pretty large fluctuation in those first 10, I'm guessing, but it will be well worth it just to get the average from that. Then figure out how much you will need to be able to pick up clients and grow your adwords budget by 10% month after month, even if that means 2 clients, then 3, then another 3, then 5, etc...

I need to reboot my pc... if anyone ever views this post and has question s about webhosting marketing I'll answer them later =)

[Nigami Enterprise]

I've noticed commission has modivated my team of sales agents. Some however are requesting base. Should I give it to them? I am the Sales manager of an established webhost. Money is not an issue its just I want them to have a constant drive to make kthe sale.

I believe you always need a base as it provides security. Without a base your workers won't have the opportunity to go on holidays ect and will spend so much time making a living that they wont make a life which equals an unhappy worker who won't perform at there maximum capacity. Base + uncapped commision usually works as the employee feels that they are apart of the business and with every dollar they earn t hey get a piece of it.

Money isnt everything though.

[Welshrarebit]

In my experience people respond differently to base or commission - usually short term versus long term vision. Depends on your business/industry. How about including profit share? I don't understand why companies don't use this more often, as I have seen it produce nothing but positive results.
However, I am in UK and this may be viewed differently in USA.

[Gr-Andy]

I believe you always need a base as it provides security. Without a base your workers won't have the opportunity to go on holidays ect and will spend so much time making a living that they wont make a life which equals an unhappy worker who won't perform at there maximum capacity. Base + uncapped commision usually works as the employee feels that they are apart of the business and with every dollar they earn t hey get a piece of it.

Money isnt everything though.

Well technically We do have teams. My Team is The "Sales Team" We also have a support and server team. I handle my team. I'm not going to break them up any more then that as they do good as a group. And BTW for my team( the sales team) I mostly hire teeenagers that don't need the money as much as there parents pay for the house and there food.

[rogercbryan]

I notice that a lot of people looking at sales forget the 3rd method, which is draw vs. commission. This means that you would make a base pay of say $300/wk or whatever might be suitable. This would come out of their commission checks later on.

One other aspect you may want to think about is the level of residual income they get and the schema under which it is offered. Are they getting an industry average 4% on sales? Is this an enterprise level demographic? If it's not, why isn't it?

Are your salespeople truly up to the task of selling webhosting? it's kind of a saturated market where the supply far outweighs the demand and it pushes many lesser known companies to take to short sighted methods of selling like cutting prices below what is actually sustainable. Perhaps you could take a few sales people who you truly know are motivated by any kind of compensation and offer them a competitive marketing/sales arena in which they can use some of their time selling on a method they think may work better than the typical forms of sales you are currently engaged in.

Perhaps if you have 5 or 6 sales people you could divide them into two or three teams (two teams of 3 would probably be better) Let them each come up with something and test the market like Donald Trump's tv show. Remember that the most reliable sales number is the law of averages (300=30=10) and that you should work ideas around it because if a sales and marketing campaign can't hit those numbers, you're basically screwed. If you can't hit those numbers but have a reliable target market to increase that average, work from that. Make sure you have the resources at your disposal to test it.

I would like to point out that while your site is pretty small and your operation is obviously not enterprise, I will give it to you on getting your name out there on the net. I see a lot of links in forums. You need to spend some money on some real advertising. Your 3 page views a day is never going to get you any sales.

Yes, I verified your info =) sorry, but I've worked in corporate hosting environments and I know how the sales there works. Buy some google adwords. You can start an account for very little, but I would siggest taking at least $100 and seeing how much it takes to get 10 sales. There will be a pretty large fluctuation in those first 10, I'm guessing, but it will be well worth it just to get the average from that. Then figure out how much you will need to be able to pick up clients and grow your adwords budget by 10% month after month, even if that means 2 clients, then 3, then another 3, then 5, etc...

I need to reboot my pc... if anyone ever views this post and has question s about webhosting marketing I'll answer them later =)

I’m also a big fan of draw on commission packages. This is an industry standard in the auto auction industry. It gives you the best of both worlds (from a financial perspective). It allows the employee a base line from which they can plan their living expenses. It also allows for ‘sales motivation’ based on higher earning potential.

[jandmsolution]

I work with the inside sales team of a fortune 500 company and the big issue I see with commission is that when work comes to them and it does not help them increase their commission they careless about it. It simply isn't their job.

[Lance_Best]

I believe you always need a base as it provides security. Without a base your workers won't have the opportunity to go on holidays ect and will spend so much time making a living that they wont make a life which equals an unhappy worker who won't perform at there maximum capacity. Base + uncapped commision usually works as the employee feels that they are apart of the business and with every dollar they earn t hey get a piece of it.

Money isnt everything though.

I agree that a base is important as it provides your staff stability, because everyone hits a dry spell. I also believe that money is a great motivator, however that carrot gets old.

Be fun, have sales competitions, someone mentioned a leased car, sounds GREAT, cycle it through the staff who are producing!

Be creative, these activities drive sales, create unity which drives satisfaction and results.

[Gr-Andy]

I agree that a base is important as it provides your staff stability, because everyone hits a dry spell. I also believe that money is a great motivator, however that carrot gets old.

Be fun, have sales competitions, someone mentioned a leased car, sounds GREAT, cycle it through the staff who are producing!

Be creative, these activities drive sales, create unity which drives satisfaction and results.

No budget for a leased car. Atleast as of right now.

[njbusiness]

I've noticed commission has modivated my team of sales agents. Some however are requesting base. Should I give it to them? I am the Sales manager of an established webhost. Money is not an issue its just I want them to have a constant drive to make kthe sale.

Sounds good. I wish you the best of luck

[KatherineB]

I agree with jandmsolution above about salespeople not being motivated to do all the unavoidable non-sales tasks that come with any job, even sales. A lot of great salespeople are frankly lousy at admin and management (including managing themselves).

In giving a base you can set out minumum requirements for all those pesky tasks that are not directly related to getting the sale, but that need to be done.

A base is also good for staff who have just joined and have yet to make any significant commission. I once worked in a job where the base was pretty minimal (only just enough to survive on), but a godsend when starting out.

Once I got going, I could easily have done without the base. On this basis, a draw system, maybe with a guaranteed "base for the first month or two, could be the way to go.

[flnazrael]

Great posts on a topic that has recently come up for me as well, thanks for the insights here.