Jack Kostak gives his salespeople a package with everything but a bow on it. Compensation at Kostak's All-Seal Home Improvement, in Dayton, Ohio, includes not only commission but a salary, 401(k) plan, health insurance, life insurance, short-term disability insurance, two weeks of paid vacation, six paid holidays, car allowance, gas card, and a cell phone.
Depending on experience level, each salesperson gets a base salary of between $18,000 and $25,000, plus commission of 3% to 4%. Bonuses are available too. And the 401(k) plan includes a match of up to 4%.
Kostak regards the package as both a recruitment and retention tool. “We attract and retain people with more orientation toward business and not just instant gratification [of big commissions].
“We're always looking for people with a career choice in mind as opposed to just a job,” he explains. “And it's proven over the years to be a way to retain salespeople.”
Lessons Learned Kostak came to the replacement business from Pitney Bowes, a Fortune 500 company, and brought with him an appreciation for the power of a benefits package. He started out offering a salary and added benefits over the years. “The cost per salesperson is about 10% of [their] volume,” he says, “and that's not out of line compared to a total-commission package.”
All-Seal's owner says doubting colleagues ask him whether his salespeople tend to become complacent. Hardly. The company has monthly targets, quotas, rewards, and incentives. Plus, the salary and benefits alone aren't enough to live on.
Another question Kostak often gets hit with is whether he thinks All-Seal salespeople will leave, thinking they might earn more elsewhere on a total commission package. On that count, the numbers speak for themselves: Of his nine salespeople, not one has left in more than a year. In fact, the average tenure is eight years, and one salesperson has been there since the company was founded 24 years ago.
“Our salespeople are more thoughtful about what they're getting. They don't have to go three months without putting food on the table,“ Kostak says, and they appreciate the value of not having to pay their own self-employment taxes and gas bills. “It works for us,” he says.