Last week I spoke at the Ritz-Carlton in Phoenix and at Barton Creek Country Club in Austin, TX.  I don't recall whether it was Phoenix or Austin where I was asked this question but the question is a good one.

Most who wrestle with this issue are asking the wrong question.  The correct question should be, "How can I get good salespeople to work in a straight commission environment?"

And the issue is not straight commission as much as it is how does the strong, new salesperson earn a living while waiting for the checks to begin showing up?  To address this issue you must know what your ideal ramp-up time is.  My formula for calculating ramp-up time is:

length of your sales cycle + length of your learning curve + 30 days

So if it requires 90 days to teach the new salesperson your business and your sale cycle is another six months, your ramp-up time would be 10 months.  That means that for a straight commission plan to work, you must subsidize the new salesperson for the first ten months prior to transitioning that individual over to straight commission.

© Copyright 2007 Objective Management Group, Inc.