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Counselor Commentary: Time For A Compensation Upgrade

(6/12/2014)

From the dawn of the promotional pen, most industry salespeople have been paid only by commission – because, well, that’s the way it is. This approach might’ve motivated Baby Boomers with mortgages, two kids in college and a wedding to pay for. Younger generations prefer a little extra security, more benefits and a chance to claim bonuses. Good for them.

According to the most recent sales compensation survey from Advantages magazine, 44% of industry reps receive straight commission pay, down 10% from a year ago. Just 20% receive a salary plus commission, and a paltry 3% are offered a salary, commission and a bonus. Less than half (42%) receive health insurance, around 30% receive a 401(k) and about 25% receive a company phone – which is kind of important when you’re selling things. So what’s to be made of all this?

First, if the ad specialty industry wants to attract the best people, it can’t pretend it’s 1957. This is a $20.5 billion industry – money is being made. It’s astounding that 48% of respondents to the Advantages survey said they’re receiving 40% or less of the profits from a sale. A 50/50 split is a more reasonable start.

Next, perks need to improve quickly. You know what the #1 salesperson benefit reported in the Advantages survey was? Yup, samples and promo gifts. Now, a logoed product is great and all, but it’s not paying for a checkup at the dentist. Salespeople in the IT field representing firms like SAP, Microsoft and HP aren’t listing free T-shirts as their top perk. Ad specialty industry companies should be doing better.

Third, bonuses should stop being an afterthought. Rewarding salespeople for a strong quarter or year and acknowledging them around the holidays shows you’re a loyal employer. By their nature, salespeople are competitive – but they don’t have to be me-me people. Offering a team bonus could be a way to build a better culture that puts a premium on customer satisfaction.

One last thought: There are successful Top 40 firms whose employees embrace the commission-only model. These are well-established brands, though, that offer strong back-office tools, perks and better profit splits. Most likely, you’re not them, and you need to more creative to attract top salespeople. Justifying a commission-only approach because that’s how you got started in sales is stale thinking. Don’t let it be the end of you.



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