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The Disgruntled (Ex) Sales Rep
November 27, 2007
The following situation/questions came in to me via email this morning. I thought I’d Blog my answers and ask for your comments as well….
“Dear Bill—A friend and former colleague of mine -- a 20-year print sales veteran -- recently left the industry because the mid-sized sheetfed/digital shop he was selling for changed its commission structure (and voided their agreement, he claims). Is this a company owner's knee-jerk reaction to bigger problems, or are drastic measures like this actually necessary for some printers? And what's the long-term effect of reduced commissions on a sales force's overall effectiveness?”
My own knee-jerk reaction to this is that there is something wrong with the rep’s story. Does it make any sense that someone would show a valued rep the door (which is essentially the result—and likely the intention—of the commission change)? And what kind of agreement was voided? But that aside, let me answer the questions:
<< Is this a company owner's knee-jerk reaction to bigger problems, or are drastic measures like this actually necessary for some printers?>> Neither. This reeks of a rep who was coasting on repeat orders and the owner decided he/she didn’t need a six figure order taker. It sounds like an outdated commission structure was in place, time passes, profits shrink, perhaps even some resentment exists, and the owner reworks the numbers to his/her liking. Rep leaves. Clients stay. Hard to tell from just the information that has been presented, but my gut says the owner decided this was NOT a valued rep after all.
<< What's the long-term effect of reduced commissions on a sales force's overall effectiveness?>> This is an easier question to answer: It pisses the reps off and fosters distrust! I’ve never seen a commission change that doesn’t result in this type of thing. My sister once told me, “Everyone is the hero of their own story.” I’d love to hear the other side, too. In my opinion, management changes commission most often when they believe the rep is overpaid for the work being done. Oh sure, there are times when a restructuring is done successfully, but commission agreements are considered to be permanent by the reps and temporary by management.
The best commission plan I have seen OVER pays (15%) for all orders from new customers for the first 12 months and throttles back to a more reasonable rate (6% or so) for the life of the client. That incentivizes the rep to hump for new business.
Okay, enough from me. Let me hear from the rabble….
Posted by Bill Farquharson on November 27, 2007 | Comments (10)
