Let’s face it. Salespeople aren’t like the rest of us. You and I want a decent paycheck, of course. But we also seek much more from our work – the chance to learn, to contribute to the world, and to climb the ladder of self-actualization.

But not the folks in sales. They are — and here comes the adjective we deploy most often – coin-operated. Slip a quarter into the slot and they’ll do a little dance. When time runs out, insert another coin or they’ll stop dancing.

In the new Harvard Business Review, I’ve got a 2-page article challenging this view. It explains why commissions sometimes backfire — and introduces a few places that have eliminated commissions and seen sales rise.

You can read it here. (Free registration required. UPDATE: Article is now free and outside the firewall.)

***
As it happens, this question — Are salespeople different from the rest of us? — was one of the first questions I got from readers after publishing Drive. And I became so interested in the broader topic of selling that for the past year, I’ve been writing a book about the subject — the first book on sales for people who’d never read a book about sales.  You’ll be hearing more about that in the coming months in advance of its January launch.

20 Responses to “Are commissions the only way to motivate salespeople?”

  1. Yes, Dan, and it’s not just commissions that need to go.

    Get rid of the territories, the quotas, the autonomy of the salesperson, and the multitasking that keeps top sales people from spending enough time selling, while wasting time (task switching) and compromising the quality of work product.

    In all but the simplest selling situations, selling has become a team sport and buyers are fielding ever stronger, more highly informed teams.

    The autonomous salesperson, with territory and quota presents a direct conflict with team play.

    Let top performing sales people sell as much as possible, let others support them to make that happen. As you urge, elsewhere: “Pay well enough to take money off the table.” Then, reward the team for above and beyond performance.

    The same sales personnel, redeployed as a real TEAM, with division of labor, standardized processes and centralized scheduling, will outperform. The fits between people and responsibilities can be much better crafted; as the 80/20 rule suggests, most were not salespeople in the first place.

    Glad you’re challenging these legacy practices.

    r.melrose@vision21.us

  2. Dan

    Have you ever been in sales?

    Do you know that there’s a huge difference in skill set, training and professionalism between retail, hardware and intangible sales like training, service and custom software?

    My IBM sales training was a two week residential course, with daily video taped role plays so that when we were finally let loose on real clients, it was easier.

    Great sales professionals are different – we can accept being constantly told no and other assorted lies. We’re used to being ignored, our calls not returned…… and we continue on every day with a positive attitude.

    That’s why motivating and paying sales professionals cannot be compared to other professionals.

    I challenge most people not to judge sales professionals unless they’ve been on a quota and had to earn 50% of their income on commission.

    It’s not right to just write us all off as coin-operated marionettes. You obviously have not met many true sales professionals!

    In the future, please distinguish between sales in general and sales professionals. It’s like saying you are just like a National Enquirer writer since you’re both writers……

    • Dan Pink Dan Pink says:

      Patti — Thanks for the comments and the insights. Just to be clear, that second paragraph of the blog post is meant tongue-in-cheek, of course. And the entire HBR piece takes issue with this stereotype. BTW, based on what you’re saying, I think you’ll really like the new book.

    • Hi Patti -

      I totally understand where you are coming from. Exceptional sales people are a breed to themselves. They are consumate professionals while understanding they have a goal to achieve.

      Many many years ago, sales was often seen by college graduates as an “honorable” profession that one could spend a lifetime in. Then came the stereotypes of the used car salesman and the Herb Tarleks of the world (from WKRP in Cincinnatti) and the respectability of the profession – and I do believe it is a profession – was tarnished by those few bad apple stereotypes.

      Today, many college graduates/college students see sales as a necessary evil to get to do what they want to do. But early in my marketing career I was given some exceptional advice by a marketing VP: if you want to be in marketing, first carry a bag/quota/territory in sales. I have – it was an invaluable lesson that added depth to my own marketing knowledge, and I’ll never regret it.

      All sales experiences cannot be lumped under one label — the dynamics, skills and abilities needed in different industries vary too greatly. But I do think there are some common traits among the great sales people.

      Christina McCale

      • hi Christine,

        That marketing VP gave you the best advice as I’ve seen way too much finger pointing and blame between sales and marketing.

        I wish sales was given more respect, especially in biz school by marketing profs who have never sold!

        It’s a great way to make a lot of money and have a great deal of freedom, even while being employed. If only it got more respect…. like Rodney Dangerfield.

        You made some good points, that there is a common thread among the top sales professionals and there tarnished image of the used car sales/loud and brash sales person.

    • Paul Rigby says:

      I just love this discussion. Sales people are paid to do their job just like everyone else. A sale these days cannot be completed by the sales person alone, it requires a team of order clerks, product managers, factory workers, customer support staff, possibly technical support staff and so on. So why should a sales person earn considerably more than anyone else if the whole team is required to secure the sale? Each has a part to play in ensuring the deal is done and the money is in the bank. I was in sales, actually I still am because I maintain that all staff are sales staff. I think the idea of the 90:10 commission split is great. It fosters team work and places everyone on a level where they see, believe and benefit from the team effort. Time to leave carrot and sticks behind and move on. Tie to give people autonomy, help them master their role and give then a true purpose for what they are doing. I really enjoyed Drive and look forward to the new book.

  3. Jon Newcomb says:

    I have been in sales for around 40 year – 33 at a Fortune 5 company on a salary plus incentive. Most salespeople are motivated by greed and I mean this in a very positive way. The other thing that turns on sales folks in being able to help customers win. i considered myself to be a consultant for their business – they win and than I do. I am now in academia in an unique and innovative high school program that has ask the business community to participate in education. I am still selling, but with no incentive other than to help high school students prepare for life after college. Salespeople have big egos as they enjoy helping others suceed as they now the rewards will follow – some with cash and others get extreme satisfaction in watching others win. Sales is still the best profession. Look forward to reading your book.

  4. davidburkus says:

    [Left this comment on the HBR blog, wanted to make sure you saw it though.]

    Dan, congrats on the new book and on this piece. It’s a great read. I’ve been researching the idea of noncommissioned work for awhile, including trying to construct a researchable model for use in academic literature that is directly influence by the ideas in Drive. I came from the pharmaceutical sales world before becoming a professor.

    I do have to correct you a little bit on GSK. Their new bonus structure isn’t based on company performance, but on a combination of algorithmic (product knowledge) and heuristic (customer service ratings). A 90/10 solution might actually be better for them, but we’ll leave them to learn from their own mistakes. (At the risk of being “that guy” I wrote more about GSK’s new bonus structure last year at http://ldrlb.co/2011/08/is-gsk-taking-the-sales-out-of-sales-rep/ ). I think we even brought up Drive.

    Congrats again Dan. Looking forward to reading the new book and plugging in on LDRLB.

  5. Mary Miller says:

    Dan,
    Look forward to the new book……EVERYONE sells!
    Think about it. I’m sorry I wasn’t interviewed for
    your book …….I “decided” to sell…..did not read a book.

  6. Michael says:

    Dan,

    I have never worked in sales, but have endured many transactions that have been helped or hindered by a sales person. I have also seen a sibiling give the sales world a go with a shift from a fixed salary to a base and commission comp structure. To be honest, I watched her quickly turn from a corporate trainer with a deep connection to finding ways to improve in her teaching role to someone who focused entirely too much on hitting a short-term sales goal and counting what her commission would be.

    Having read Drive and many of the other books you reference, I watched this transformation and did the best a younger brother could do to express concern about the decrease in satisfaction my sister found in her work. I strongly agree that sales profressionals need more than dangled carrots to motivate them to develop meaningful and loyal relationships with customers and solve complex problems.

    I look forward to picking up a copy of the new book as I expect to learn a lot about moving others.

    Thanks for your work!
    - Mike

  7. Chris says:

    Don’t know what you are selling besides the book. I might read it, but I gotta ask what are you people selling?? There is no right or wrong way to sell… I can probably sell a lot more stuff to people for a lot of wrong reasons and never get another order. . But truth be told I sell 4 times a week with over 7000 different products. Doubt anyone out there has that kind of book. Make your money while you can. You may be an expert for a few years but after that there is always someone younger and smarter than you. Sorry peeps, write the book and move on. Unless you believe in the product you are selling, you have the right product in the market and are lucky enough to be in the right place at the right time. Then there might be a chance for you. That is something a book cannot teach. Every successful person was there at the right time. Can’t teach timing.. Save your money.

  8. Pete UK says:

    Great article Dan. Looking forward to getting the book from Amazon UK.

    I work as a Team Leader in a UK call centre where we pay some crazy commission at times. I have been trying to explain for a long time that it doesnt drive engagement or performance, only to be met with ‘conventional wisdom’ explaining that it does in fact motivate, but no one knows why!

    We suffer 100% attrition on a yearly basis in our outbound sales and it is thought that throwing more money at the problem will solve it!

  9. Alex Finkelstein says:

    I am a “sales guy” for the last 12 years and if there is one thing i would like to change is the bonus based system. I have started on a 50/50 basis and I am currently on the 100%+bonus based on sales targets, so it basically means that no matter what I do, I still get 100% paycheck each month and the sales bonus is a real bonus. However, I have never made a sales effort for the bonus and the success rate didn’t change (I had a mix of good and bad quarters). It did put a strain on my worked and often forced me to do things which I didn’t like (in the context of relationship with the customer). In my current position, I actually offered my boss (company CEO) to waive the bonuses all together – and he refused…
    Based on my experience, I can say that:
    Bonus may be effective (to a certain extent) for one time sales (in which you don’t really need to create meaningful and trustful relationship with the customer – like a mall cart sale or a car sale). So, in a way, bonus system encourage short term “hunters” but not long term “farmers”.
    Sales is now more about trust and promise/deliver ratio rather than “closing a sale”, because you are looking for a long-term meaningful relationship (especially when it is a B2B long cycle sales)
    Sales is now, much more a team effort so in a way, bonus should go to many people who are involved (think about the pre-sales, tech-support, marketing, sales coordinators, etc.).
    Personally, I found out that I am motivated mainly by succeeding in convincing the customer and make him trust me and believe my message/promise. Thus, I see each sale as a vote of confidence in me, being a person that can be trusted and respected (Maybe I not such a good sales guy after all…).
    I am looking forward to reading your book as I hope that you will help to break the mold and offer a meaningful insight to the sales paradigm.
    Respectfully,
    Alex

  10. Sales is now about helping a client buy and showing value. Otherwise, you do not have any hope that a prospect will ever buy from you UNLESS you uncover a reason for them to buy from you, from your company, now at that price.

    The reason you pay sales professionals a lot of commission is to make up for the 10-20 calls that never result in a sale.

    In our western world of excess, I”ve never believed that you can sell anyone anything – you just help them buy from you rather than from the competition, as they want what you’re offering and they like and trust you. You have to give them a compelling reason to buy from you now and not anyone else.

    But notice the words I use are ‘buy’ and not ‘sell’.

  11. Chris says:

    20+ year sales veteran here…

    If you want to absorb 100% of the risk for having a paycheck next month, start your own business! Sales Reps lose sales for all kinds of reasons, many of which they really can’t control. The idea that the sales rep is punished because his employer’s product really isn’t that good, or that the development team missed a launch deadline, or whatever, is noxious to me.

    I think the comp plan that works best is a salary plus commission where the salary is enough to get by on, by not thrive on. Then hire people that want to thrive, and help them do so.

    It’s really not rocket science!

    • Matt says:

      15+ year sales effectiveness consultant here :)

      Equally noxious is the idea that sales people earn all of the upside for closing a deal – riding the quality of brand and product to fatten their wallets on the backs of engineers, sales operations, marketing, HR, finance, etc. The sales person is one person in a long chain of placement and selling, but have a sense of entitlement that far outweighs their true value. No, get back to selling!

  12. Kent says:

    I have my own company with 2 partners. They are programmer and web developer and I am the sales person. If you ask me if commission motivate me? I say “NO”. My sanctification comes from I am able to influence and convince my customer to sign contracts with us. That means it prove that my skills, knowledge in sales and marketing works! :)

  13. John Hunter says:

    Good article.

    I hope they pay you well to create content that they hide behind their walls. They have once again, closed down the full article without registering.

    Keep up the good work.

  14. Jerry Hingle says:

    Dan,
    Thanks for updating the article so that it’s free to read. I look forward to your book!

  15. I think commissions are not the biggest motivation. At Bellcom we play games connected with the sales. It is a good way to motivate the worker and to have fun. We’ve decided to create our own competition, with an incentive based on the sales results of staff pairings.

    we even did a blog on this

    http://blog.bellcom.co.uk/index.php/2012/07/bellcom-worldwide-staff-initiative-wimbledon-sales-doubles/

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