Recently, on the internal Society for Marketing Professional Services listserve, a well-established (and highly successful) engineering practice marketer asked this question:
Forgive me in advance if this topic has been posted before.
Would you be willing to share whether or not you have personally worked within or your company has established a commission-based sales environment? I know it’s rare in the A/E/C industry but I wonder if there is a successful example of this. The thought is that it will separate the real rainmakers from those who cannot sell at all. There are a lot of variables and models to choose from. I’m not necessarily for or against it. I just want to have all the facts and potential pitfalls.
Thanks for your feedback.
Several responses echoed my own.
Although obviously I am not in the AEC industry directly, I have worked on the commission vs salary issue for many years in the publishing business and also have studied where the different formats work and where they don’t.
In general I believe commission sales is problematic for professional AEC practices especially for business development on long cycle projects (which most ICI stuff is, of course). Where commission is the norm is within the retail/consumer marketplace — the classic “Tin Man” selling siding, driveway paving and the like. AEC practitioners, especially seller/doers will likely rebel against models where they must live on commission UNLESS they are true owner/partners and assume total responsibility for operating the business. (After all, in a start-up situation, the owner/doer essentially is working on 100 per cent commission because everything is his/her responsibility and there is no income unless sales come in.)
The publishing world where I inhabit lives in two places. Many publishers recruit and pay on a commission-only basis but I’ve moved away from that model because I believe it invites an environment where the reps focus purely on short-term sales and don’t work on developing long-term relationships. However, I do my best to set hiring criteria/standards so that the reps would only be hired if they could actually perform on a commission basis. In fact, we have two tracks, the commission and the salary, and when the sales rep achieves quota effectively he/she is working on commission. At that point, the rep is “free” to set working hours and conditions but (and this is the good thing) the commission-earning rep has the discipline and habits of a regular employee so attends meeting, follows procedures and generally contributes to the business as a team member rather than someone out for the quick buck.
This issue is debated back and forth, but I think unless you are ready to give true and total ownership, commission won’t fly in professional practices.
Related to this point, however, is a question: If commission won’t work in professional practices, and there is plenty of evidence that the most important element in repeat business is the relationship between project managers and staff and the client (in other words, the technical rather than sales staff), how do we (a) hire people with strong business development and rainmaking capacities and (b) how do we “motivate” technical staff to take charge of business development when opportnities stare in their face.
For the former, I can recommend Ford Harding‘s resources. His organization specializes in developing rainmakers and in helping companies in the recruitment a special kind of sales representative: The person with professional practice designation who is also great at selling.
Other resources include personality testing (I like salestestonline.com), an employee-ownership and open-book management business culture and possibly some staff training and internal bonuses/referral gifts for non-sales employees. (Small amounts of money can work wonders in this regard. For example, we have a line in our office for accounts receivable which is only staffed part-time. Rather than allowing the calls to go into voice mail, I bribe employees with a $5.00 phone answering bonus. I could have been “efficient” and simply routed the line to the administrative desk, but this solution engages all the employees in the office with the account collection/client service function. It has radically improved client service and our ability to pull in cash from people wanting to pay their bills by credit card over the phone.)
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