Best Way to Manage Commission Only Salesperson

An increasing number of companies are using commission only representatives to promote and sell their products. The obvious benefits to the companies are that they only pay on results, they do not need to provide a car or pay associated expenses and they are not concerned with National Insurance, pension schemes and so on. The disadvantage is that such salespeople are self-employed and thus independent and more difficult to manage and control.

To help you to manage commission only salespeople correctly, it is useful to know why they have chosen the commission based route rather than being employed: a question to ask at the recruitment stage. The responses may include:

• the prospect of unlimited earnings
• dislike of ‘restrictions’ of being employed
• able to take time off when they wish
• like being in control of their affairs such as taxation and pensions
• prefer to be independent.

This should give you an indication of what motivates the individual. Although some of these answers, such as taking time off, may not suit your requirements.

Controlling

This is the most difficult part of managing the self-employed sales­person. Some companies attempt to exercise control by imposing stipulations such as demanding weekly attendance at their head office or paying 50 per cent commission on order and the balance when the customer pays. This can be very demotivating especially to the more experienced salespeople.

Motivating

Naturally, being self-employed, they are motivated by money to a large extent. If they don’t sell they don’t earn. Nevertheless this does not mean they have no other needs. Show respect for their experience by asking for their ideas and opinions. Offer help and guidance, do not impose it. Keep paperwork to a minimum; the less you require the more likely you are to get it. Offer individual incentives rather than team ones. Salespeople working on commis­sion are less likely to be team players than those employed. Make sure that the systems and environment are as motivating as possible. Nothing demotivates a commission only salesperson more than late payment of their earnings.

Case study

A company selling energy saving services to industry had six commission only representatives. The sales manager met up with each one in a hotel every two weeks. They would discuss sales figures, prospective customers, product developments and company news. The manager would list any problems or complaints that could not be dealt with on the spot. As soon as answers were available they would be communicated to the salesperson concerned. Once every quarter, the manager would arrange a team meeting, again in a hotel. These meetings would include a short training session and the attendance of a company director who would give a brief talk on the company’s progress. Whilst retaining their independence, the salespeople felt valuable and part of the company.

To get the best from commission only sales representatives, you should manage them as you would any other sales force. It can help, when it comes to control, if you pay them a small retainer to help cover their expenses. Remember to consider the following points:

• always pay commissions promptly and in full
• provide and pay for adequate training
• offer achievable incentives
• encourage suggestions, ideas and opinions
• never impose unacceptable restrictions or penalties
• show respect by treating them as intelligent, experienced individuals
• encourage regular communication.