The JOY Tests TM: World's First in "Total Sales
Ability" Assessment TM
Sales Ethics, Sales Commission and Pure Commission...
If you are an employer, Dan Joy, Inc. advocates respect, appreciation and fair compensation
for your sales and marketing team. They have a difficult job to do, are the lifeblood
of the organization, and deserve your full support and cooperation at all times.
Likewise, we urge all salespeople to be conscientious, dedicated and loyal to their
employer, and discharge their responsibilities with the highest degree of ethics
Selling is one of the TOUGHEST Professions in the
World: Yes, a Sales job is one of the toughest jobs in the world!
Here's why: Sales is probably the ONLY Profession in the world where at the end
of the day, despite a person's best efforts, the end-result (i.e., the decision
to buy or not to buy) is not in that person's (salesperson's) own control. Someone
else (the prospect) determines the final outcome. It is not like Manufacturing where
you can simply decide you want to make 100 widgets a day then go ahead and produce
them. A salesperson can say and do all the right things, work diligently towards
a sales goal, and still not have much to show for it because the sale did not close
due to any of thousands of possible reasons beyond the salesperson's own control.
A sales job is not only physically demanding but emotionally draining. It takes
a very special individual to still keep going at it even after a thousand people
have already "closed the door in your face". Good salespeople are rare. Once
you do find them they are to be respected, admired and rewarded for their skills,
mental toughness and the ability to persist in the face of constant rejection.
Note: If your sales team has to try too hard or resort to "begging" for orders,
often cutting prices drastically in order to land the sale (at low profit margins)
then your company probably has poor branding, weak positioning, a feeble sales posture,
ineffective leads generation, substandard sales tools, improper internal systems
and/or inadequate training. Just hiring good salespeople might not solve the problem.
Please see Consulting.
Sales Traps: Some employers have concocted
creative phrases to lure good unsuspecting people into a life of sales drudgery,
such as "Reverse Commission", "We Pay for Performance", "Draw Against Commission",
"There is No Limit to what you can earn working for us", etc. As for that last one,
even if there is no limit (no cap) on the commissions in theory, in practical terms
there is always a limit because landing and servicing an account takes time and
effort, and there are just so many hours in a day. Then there is the classic pyramid
scheme / multilevel marketing (MLM) trap: "If you recruit "X" people, then each of
them recruits "X" people, who in turn recruit "X" people each... you will make a
Billion Dollars in commissions alone". There is just one problem with that.
If you carry their calculations to the ridiculous extreme and temper it with the
reality of market potential and closing ratios, you may discover that you would
need a population of 4 Trillion people (prospects), and a timeline of 75,000 years
to accomplish that goal. Since the entire population of our planet is about 6 Billion
people, unless you plan to hunt for intelligent life on other planets (and live
for thousands of years), chances are that you won't make that goal of earning a
Billion Dollars working on pure commission in a pyramid scheme, not to mention the
fact that certain pyramid schemes are also illegal. However, the owners of the company
might make a Billion Dollars if they can find enough unsuspecting people to believe
in their "fairy tale" and buy their products upfront.
Pure Commission Usually Equals Pure Exploitation:
A good salesperson should never work on Pure Commission for someone else (with one
exception, as explained below). However, an incentive component (Bonus, Commission
and/or Equity) IN ADDITION to a guaranteed fair and livable Base Salary may be fine.
If you are good at selling, and comfortable working on pure commission, you should
probably start your own business, which brings us to the "exception" mentioned above.
If a company pays a salesperson a guaranteed livable wage (fair compensation) for
an initial trial period, then helps that salesperson establish and run their own
business by using the company's name, systems, sales leads, licenses, goodwill,
branding, etc., then it might be a fair deal. What makes it fair is that a). The
company paid the salesperson a guaranteed livable wage during the initial trial
period where both the company and the salesperson got an opportunity to test each
other out, b). There is no compulsion or coercion for the salesperson to continue
selling for the company once the initial "paid" trial period ends and the "pure
commission" period starts, c). No upfront purchase or financial investment is required
on the part of the salesperson, d). The salesperson can contribute his or her own
"sweat equity" but use the company's brand, systems and knowledge (which the company
might have built after spending sizeable sums of money over a long time) to run
what is pretty much the salesperson's own business, and e). The salesperson can
get out of the arrangement easily at any time, without any penalty, if things don't
Pure Commission Hurts the Society, and Weakens the
Nation: When honest, hardworking salespeople cannot support their
families and maintain a decent standard of living, the consumer debt (e.g., credit-card
debt) goes up, home foreclosures and loan defaults increase, stress increases and
can lead to health problems and broken families, kids suffer, and crime increases.
In the end, the salesperson, the company and society at large can suffer due to
an employer's greed of not wanting to pay a fair living wage. If you are good at
selling, you already possess a rare combination of skills and mental toughness,
and many good employers will be willing to reward you well for the same.
a. "Pay for Performance" may be acceptable only if it is a guaranteed pay for results
which are absolutely in the salesperson's own control. For example, if a company
wants to pay you a certain fair and reasonable amount for each phone call that you
make or each email that you send, that would probably be fine because the outcome
(number of calls or number of emails) is directly under your own control. However,
if a company wants to pay you pure commission based only on the number of orders
or amount of sales, it is not the same thing, as the final outcome (sale) is not
in your own hands, but in the prospect's control. A certain number of sales don't
close despite the salesperson's best efforts, and it is not fair to penalize a salesperson
for the same.
b. A "Draw against Commission" for a fixed term (for example, 6 months) may be acceptable
only if the company is already paying a guaranteed fair living wage (Base Salary)
on which the salesperson and her/his dependents can survive decently and comfortably,
and where the Draw is just an added incentive to work harder and perform better.
They key point here is that the Draw should be IN ADDITION to a fair and reasonable
guaranteed Base Salary, not to compensate for a low salary or for the lack of a
salary. If the Draw will be "forgiven" after a certain length of time (e.g., 6 months)
and will eventually not be refundable, it may be fine. If you are a salesperson,
the stipulation can be that if the company terminates your employment for "no cause"
during the Draw period then the Draw would be forgiven, but if you leave voluntarily
during the Draw period then you can agree to pay it back. Any Draw against Commission
which makes you indebted to the company long term or locks you into a dead-end sales
job is a definite "no-no". As a good sales professional, you should not have to
pay any employer for the privilege of working for them! Remember, a Draw should
be IN ADDITION to a fair and reasonable guaranteed Base Salary, not to compensate
for a low salary or a lack of salary.
Pure Commission Hurts the Employer too:
Trying to hire a good sales professional on pure commission is like the farmer saying
to the land, "Give me the crop first. If I like it, then I shall put in the seed".
That is not how it works. It is a law of nature that you must sow before you can
reap. Successful, market-savvy businesses reward their business development professionals
well. Good salespeople are few and far between, and there is intense competition
for good sales talent. Hiring substandard sales talent on pure commission is self-defeating
in the long run, especially after you figure in the constant personnel turnover,
recruiting / training / re-training costs, the loss of continuity and sales momentum,
and the costs of lost opportunities. The salespeople who agree to work on pure commission
are either new to the profession (and will most probably leave when reality sinks
in) or desperate (it is never a good idea to try to benefit from someone else's
misfortune, because what goes around does come around). In the end, we'll all be
answerable to the Highest Authority above, i.e., our Creator. Please do the right
thing as an employer. Be fair to the hardworking folks who keep the wheels of commerce
turning -- your salespeople! It is also the Golden Rule: "Do unto others as you would
have them do unto you". Good sales people and sales leaders are hard to
find, because there just aren't that many of them. Once you do find those rare individuals,
please treat them well.
Whose Fault is it When it Doesn't Sell?: Sometimes,
when a product or service does not sell as well as envisioned, the salesperson might
not really be at fault, but rather the company's own product, service, reputation
or lack of quality, improper positioning, weak branding, incorrect pricing, the
management style of the company, competitive market conditions, lack of understanding
of the "Science of Marketing", inadequate sales tools, ineffective leads generation,
general state of the economy, etc. Just hiring good salespeople might not solve
the problem, unless the core underlying issues are also addressed and fixed. Please
Sales Ethics is a 2-Way Street (Salesperson's Responsibilities):
Good and ethical sales professionals respect and uphold the trust that their employer
places in them. They work hard, diligently, honestly and efficiently, and always
represent their employer in a professional, conscientious and ethical manner. Good
and ethical sale professionals upgrade their skills through training and learning.
They continually strive to improve their sales performance to benefit their employer.
Ethical sales professionals do not "moonlight" or work for another employer on the
side or engage in any side business activities where a breach of trust, conflict
of interest or leakage of confidential information of their employer might occur.
They utilize their time effectively in the sincere and honest pursuit of their employer's
sales goals (the Cosmic Law of "What goes around comes around" works both
ways). "Sales" is a tough but rewarding profession. Anyone who does not give it
their personal best or cuts corners on diligence or ethics does not deserve to be
in the Sales profession.
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