I read a discussion between some wickedly smart people. One person took a position that one could not be a “Trusted Advisor,” and be on commission. He later extended the argument to include being accountable for achieving a quota compromised the ability of the sales person to be trusted.
To be fair, there are people and organizations that are driven purely by self interest. They structure everything they do around maximizing the return they get, regardless the impact to the people they deal with, including customers.
We have movies like Glengary, Glen Ross, Boiler-room, The Wolf Of Wall Street that glamorize those types of sales people and organizations. We see news about the incentives and tactics of many of the companies behind the Opioid crisis. We have legacy stereotypes of the commission driven coin operated sales person.
So the focus on self interest, the drive for money or quota attainment can create these behaviors and destroy the concept of sales people as trusted advisors.
But I suspect these people and organizations will always find ways to exploit others (perhaps their own employees) and it’s not just the fact they are paid commission or have a quota.
But there is nothing inherent in quota or commission systems that cause people to be untrustworthy.
Let’s look at this a little more deeply.
- As sales people, we can’t make our quotas or commissions, until the customer has determined that we are the people that are the best to help them solve their problems. Stated differently, the path to our personal success is dependent on the customers choosing us and putting us in the critical path to their success.
- Perhaps restating the first point, our drive to get the order is not incompatible with the customer’s drive to solve their problem. What is critical to our shared success is aligning our individual self interests.
- The focus on self interest, of our own goal attainment, as measured by quota and incented in commissions, is no different than the focus of customers in their problem solving/buying cycles. They are driven by their self interest and goal attainment. Their job performance is evaluated on this, their ability to be promoted is evaluated on this, their ability to meet their goals is driven by this, in fact their ability to achieve bonuses or certain incentives are driven by meeting their performance objectives (a kind of quota).
- Stating number 3 a little differently, does the fact that our customers have performance goals (quota) or bonus incentives they may be trying to achieve make them any more or less trustworthy than sales people with similar orientations?
- Sales people waste their time and the customer’s time, creating huge trust gaps by chasing the wrong opportunities. That’s why focusing on our ideal customer profile (ICP), focusing on the problems we are the best in the world at solving, those that are experiencing those problems and want to do something about them is critical. These, with collaborative problem solving behaviors are what build and reinforce trust.
Selling is no different than any other collaborative process. If our individual goals and objectives cannot be aligned under a common goal/objective we will never be successful in achieving the individual or common goals.
We know 53% of customer buying processes end in no decision made, primarily because of the inability of the customer to align their individual goals an objectives, working together for a shared goal.
We know the majority of “partnerships/alliances,” whether internal or external fail because of this inability to align.
We know that the lack of flexibility, openness, collaborative behaviors in aligning around a common goal drives higher levels of distrust within the team.
What drives success in “problem solving,” in achieving goals, in resolving conflicts, in innovation, change and growth? At it’s core is the ability to align around a common vision and values. It is the ability and willingness to be open to differing points of views, to learn, to resolve conflict and align around common purposes/goals. The ability to do this both builds trust, but is essential to goal achievement.
This applies within functional groups working in an organization, across functions within an organization, or across different organizations working with each other–most often manifested in buyer-seller interactions.
It is too easy to rely on old stereotypes. blaming commission and quota for the existence of or lack of trust. There is nothing inherent to commission or quota that drives distrust. Just like within an organization there is nothing inherent to an individual’s performance objectives and compensation plans that drives distrust.
Instead it is the inability of the sales person and customer to align in what they are trying to achieve–which is always to solve the customer problem.
Saying commission and quotas drive distrust plays to the stereotypes and myths many want to perpetuate about sales people. It plays to many of the excuses people want to create around poor performance. But in reality, it diverts us from the real issues that impact building and maintaining trust in/across organizations.
We are better than this. We must be better than this if we are going to support our own ambitions and those of the customer.
Having worked in a project to create and manage, and supported a salaried insurance model “The Customer Care Team” for Colonial NZ it is worth noting that the model ran at higer costs to customers than a commission based model.
The costs of salary, vehicle, training, compliance, licensing, PI covers, Financial Advice Practice, CRM systems, research tools, professional body, Professional Indeminty Cover, Business Insurance , Administration, stationary, telecommunications, computers and mobile technology, employment contracts and employment regulations, health and safety, Kiwi Saver, recruitment, power, office, or offset time for administration, annual leave, sick leave, clothing, entertainment, sundry travel, conference, professional development, printers office equipment, mentor, coach, accountant, legal costs, business structures, mail, multimedia, complaints authority, audits, web site, monitoring systems process and regulation, attendance of events, networks, storage, office space, board or advisory board, research for business and industry regulation, books, videos, periodicals, magazines all come out of the commissions or margins of products.
I repeat my list is not exhaustive, you can add to this.
Products must have a distribution margin. This can be paid as salary, direct sales, or commission or combinations thereof. They are cost to a product or service.
The argument that margin affects advice given then means all services and products are biased in this way.
This means any of the following must be biased because people get a reward for providing them; Dental Services, Medical Professionals, Legal Advice, Consumables, any product or service we utilise. Price and margin regulation has a history of catastrophic failures. These often end up after regulation and subsequent deregulation with products and services costing more because the ancillary costs increase as we regulate: litigation, training, compliance, education, professional bodies, fees, audits, record keeping, legal advice etc. It also can increase costs to locate clients, reduce the distribution channels , remove competition and all this increases costs.
Profit is created from margins these are called, margins, fees, charges, distribution costs which include salaries, commissions and bonus.
Markets, produce, services, commerce, financial markets and services are the cornerstone of civilisations.
Wealth creates leisure opportunities that allows civilisations to pursue the arts, education and research, new ideas improved living standards, health, lifestyle.
Commision is part of commerce and civilisation.
Dont knock it we all eat because there rewards for work.