New Commission Program – As I stated in the first article of this series about this Successful Company Turnaround, the gross profit margin for selling hardware was ten percent (10%), the software was fifteen percent (15%), and service was sixty-six (66%). It does not take a Rhodes Scholar to figure that selling service is going to generate the most profits for the company. When I started this turnaround, I interviewed the sales team, and they said they would not sell service contracts because of the poor delivery of services in that department. I assured the sales team that I would fix that department and when I do, they must go out and sell service contracts.
I relieved the current service manager of his duties and hired Chris, an excellent “customer and employee friendly” manager. We implemented policies and procedures in the service group to ensure quality service calls and to grow the production of the service team. The sales in the department doubled in four months under Chris’ leadership. The company was profitable now, but nowhere near it’s potential.
We developed a new commission program to motivate the sales staff to sell higher gross profit services.
I was planning on creating a sales commission program for the sales team, but first I had to meet with my new service manager to make him aware that his department had the opportunity to grow quickly if this sales program was successful.
Chris started interviewing service technicians to hire five more in the next 30 days. Chris said: “Bob that is not necessary!’ I asked him, “Why not?” “I could make five phone calls tonight and have five of the best technicians in the tri-county area here in two weeks. Or I could wait for my phone to ring this week like it has since I left my old employer and hire those techs who want to come work for our company immediately.” I said, “Okay, Chris, I understand. I just wanted to give you a “head’s up” because I am going to incent the sales team to sell service and I don’t want you blindsided with new service customers.” “Bob, you get the sales, I will get the service technicians to handle the work!” “Agreed, Chris, I will make it happen.”
That day, I closed my office door, did not take any calls. I developed a new sales team incentive program to generate more high-profit sales for the service department.
The initial draft of the commission plan was:
- Double the sales commissions for service contracts for the four months until the end of the year.
- Cut the commission rate in half for the month on sales of hardware and software if the salesperson does not sell a minimum of $10,000 in service contracts for the month.
- If the salesperson sells $10,000 or more in service contracts, their commission rate on computers and software sales increased by ten percent.
- Any salesman who sells more than $50,000 in service contracts in a month, wins a four day, three-night cruise. If any salesperson sells $100,000 or up in service contracts, the cruise is seven-days, six-nights.
- Any salesman who does not sell any service for the month goes on my list. The goal of everyone on the sales staff is to not be on my list twice. That was all I said; I did not have to fill in the blanks about what happens to those on my list multiple times.
The sales team understood my mission.
I wanted them to sell the company’s highest margin service. I wanted the whole sales team to be extraordinarily successful and earn huge commission checks.
The program was a great success. Sales grew in every category: hardware, software, and service. Chris hired several high-quality service techs to handle the new service sales demand. The company’s profits were now at record numbers each month, beating the prior months. I purchased several cruise certificates to reward the sales team for their monthly service contract sales. The new commission program was a “win – win – win” for everyone!
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My name is Robert Curry, and I am an Author, Business Coach, Keynote Speaker, and Turnaround Specialist. Over the past 20 years, I have worked with more than 70 companies taking their businesses from Loses to Profits.
I have recently published two books about turnarounds: “From Red to Black – A Business Turnaround” and “The Turnaround.” Both books are true stories about turnarounds of real companies that I have turned around during my career. In both books, I have shared all my Profit Improvement Recommendations (“PIR’s”). PIR’s helped to grow sales, reduce expenses, improve cash flow, and most importantly, strengthen the management teams.
If the information in this article “New Commission Program for the Sales Team!” helps you, your family or a business associate, please email me at firstname.lastname@example.org and please share the story with me.
If you would like to purchase either or both books autographed by the author, please click on the following link: Redtoblackbooks.com.