When it comes to compensation, Bob Dillon, owner of Unique Home Solutions, in Indianapolis, has tried several ways to attract a more stable, educated sales applicant.
At the moment, Unique Home Solutions offers a combination of base salary, commission, and production bonuses. “A lot of people are scared of straight commission,” Dillon says, acknowledging that “many successful companies I know would disagree with me completely.”
IN THE SALES LOUNGE Besides commission, many companies include salary and/or additional perks (cars, cell phones, gas cards) as well as benefits such as health insurance. But it's the commission checks that confer status.
One reason why, Dillon maintains, is that to last in this business, salespeople need to make at least $80,000 or above. Many agree. “These are the people who generate the money,” says consultant Vaughan McCourt, who has managed several large home improvement companies. “The key,” he believes, “is getting money back into their pockets” — regularly.
Which is why companies often adjust or change their compensation strategy. Prince William Home Improvement, in Virginia, for instance, tried partial salary, in addition to commission, before settling on straight commission with a production bonus system that keeps salespeople hungry for the next deal. Reps who sell $125,000 in a month get a $1,000 bonus. That number rises in increments of $250 for each additional $25,000 sold.
Current figures are posted on a whiteboard in the company's “sales lounge” and are discussed at twice-weekly sales meetings. “We bring up who is close to the bonus and what they have to do to get to that level,” owner Scott Holtzhauer says.
MORE THAN A PAYCHECK Nathan Richmond, sales manager at Mad City Roofing, Siding and Windows, in Madison, Wis., recalls when he was “the first guy that went over a million” for a previous employer. “I have four kids, and the [company] wouldn't even offer benefits.” He left.
Mad City pays a percentage of reps' health and dental benefits and has a number of reps who last year topped $1 million in sales.
McCourt says that the compensation system, no matter how good, won't work without coaching and support. “A lot of people throw out these programs and think it's the compensation” that makes for success and longevity, he says. “[But] the success of a new guy depends on the support he's getting from the office.”