When sales reps at Tri-State Home Improvement in Branford, Conn., turn in their paperwork, it's not the office manager who checks it. It's co-owner Brad Pompilli. And if there are mistakes, those mistakes cost the reps money.
“In order for us to have a contract, I need everything,” Pompilli says. “In Connecticut, you have no collection unless your contract and paperwork are complete.” What's most often missing, he says, are dates. Or, more specifically, correct dates, such as for rescission. Incomplete credit applications are another frequent lapse. For each infraction, sales reps at the company are charged $250 against commission.
Tri-State Home Improvement instituted the paperwork fines a year ago. Pompilli estimates that at that time roughly 10% of the company's contracts came in with errors.
MISTAKES COST MONEY Fred Finn, co-owner of Euro-Tech, a siding and window company in Bensenville, Ill., estimates that of the 115 contracts that pass through the company in a month's time, 10% have errors. At Euro-Tech, such errors typically involve inaccuracies in the work order — wrong color window specified, for instance — or dates.
Credit applications are a particular source of error for companies. At Euro-Tech, where 70% of deals are sold with financing, reps often fail to return proof of income, such as pay stubs or a copy of the customer's Social Security Administration award letter. At Melani Bros., a sunroom and window company in York, Va., sales manager Bill Sherwood says failure to obtain a signature on credit applications is a typical paperwork headache. He sends reps right back to get that signature.
Failure to fully and accurately describe the scope of work in a proposal is the biggest paperwork problem at Burr Roofing in Darien, Conn. “Lack of a final decision on product and color,” says owner Bob Priest, can hold up a job for weeks. The problem? Reps are in a hurry to turn in signed contracts, even if incomplete. That mistake can cost companies in other ways.
“Sales guys aren't engineers,” Sherwood, of Melani Bros., points out, but they do need to bring special conditions that will affect installation to the attention of the production department, lest these become an issue that results in cancellation or failure to pay. “We once lost a $60,000 [sunroom job] due to a roofline issue that should have been addressed right off,” he says.
MANAGE FOR IT Sherwood says it's best to manage for mistakes from the get-go. His practice is to review a new rep's first five deals “with a fine-toothed comb,” then quickly bring errors to the rep's attention. “I like to catch it before it becomes a problem,” he says. With serial offenders, Sherwood holds back commissions. In addition, the occasional paperwork mistake can become a topic to take up during sales meetings. “That way, instead of just chastising one guy, I have the whole team listening.”
At Burr Roofing, “we don't pay commission [on a job] until the paperwork is clean,” Priest says.
Sales reps at Euro-Tech get “some oral abuse,” Finn says, for their paperwork mistakes. But he says he's prone to be forgiving. Sales reps are “not detail-oriented people; they're gung-ho right-brain types. Do I want to send them into a no-sale slump by charging them when their paperwork is wrong?”
Mike Watson, sales manager at Renewal by Andersen of Boston, points out that “serial offenders are usually the reps who write the most amount of business. We continue to explain to them the importance of communication and its relationship to customer service.” Paperwork infractions are “a pain in the butt,” Finn agrees, “but it's one of those things you have to deal with.” However, repeat offenders, he says, “are not here anymore.”
Pompilli says that since he began fining salespeople for paperwork infractions, the number of contracts with such errors has dropped to 3%. “If I have to do their job,” Pompilli asks, “shouldn't I get some of their commission?”