Commission-only or base salary – which system gets companies better bang for buck?

Observer writer

Wednesday, July 18, 2018

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Many companies have taken the position to offer commissions only, and no base salary, for salespeople. The idea is that salespeople must go out and hunt and companies can then determine who is the best fit, without the additional cost of salaries and benefits.

Is this a strategy that gets the best results?

According to Duane Lue-Fung, founder of THINK GROW LEAD, a sales training firm, “If you do variable only and no base, the only way that works is if its fast- moving products, so the person is always earning. Otherwise it would be very hard to keep people. For products that have a long time cycle it is never good for commission-based only, and we don't recommend commission only. A stipend is recommended, as in the real world it takes people a while to get moving and people have bad days, so you don't want your salespeople to go home without any money.”

All that said, why is the sales team of most companies like a revolving door, why can't they keep people?

According to Lue-Fung, “The first thing, in our vision, is to have companies see the importance of building a high-performance sales culture that starts with recruiting, then coaching, then mentorship. It's in the development of sales leaders. There are no bad salespeople under good sales managers. Most sales managers are not good, and they cannot coach. The most important position in a sales organisation is the sales manager.”

Lue-Fung is of the view that sales recruiting is a lifestyle in Jamaica that has to be a part of the corporate culture.

“Most companies have no resources to pick good salespeople. Sales is not a profession that is taught in school, so you are recruiting from nothing. Who is training these people? Most are not ready to sell. Again, companies teach you how to sell products. What about closing techniques? What about consultative selling? What about negotiation? So the result is companies are ailing due to poor recruitment; and our research from the companies we work with show that once you have a proper system in place, sales goes up by 30 per cent.”

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