Most agencies have a difficult time arriving at a fair and effective compensation model for their business development personnel. If you grapple with how and how much to pay your revenue builders, then this issue of the Win Without Pitching Newsletter is for you.
Sustained, bankable business development success comes to the well-positioned agency that has the right people driving a clearly defined business development process. There are three variables in that statement and their order of importance and priority is this: Positioning, Process, and People. When an agency that is lacking in the first two areas (suffering from a poor positioning and a lack of defined business development processes) looks to hire a dedicated business development employee, that employee is often expected to bring with him the first two missing elements, or he is expected to compensate for those missing elements through sheer rainmaking talent. Let’s examine how these expectations are tied to compensation plans and business development success.
MYTH: SALESPEOPLE ARE DIFFERENT
There is this misconception that sales people are anomalies in the widely accepted models of human behavior; that they are motivated by forces different from what motivates everyone else; specifically, that sales people are more motivated by money than the rest of the population.
Do you really believe that a top performing creative director or client services director is less motivated by money than a top performing business development director? The belief among leading recruiters of sales professionals, and a belief that I share, is that they are not, and therefore their compensation structure should be similar to that of your other employees.
An agency principal hiring dedicated business development staff for the first time is likely to be troubled by this idea. He's troubled by it because he has no idea what he can reasonably expect in the way of results, and therefore wants to share the risk with his new employee. His new employee is conditioned like most sales people to accept the commission-weighted plan because he wants to demonstrate that money is his primary motivation, when it is not.
If you do choose a highly leveraged compensation structure, heavily weighted to commissions, it is absolutely imperative that you provide a base salary. The base is the commitment you make to the salesperson from day one, for which you extract a commensurate commitment: that he will follow the rules and place the interests of the agency ahead of his own.
A full-commission sales person is a true independent focused on nothing but the end goal, who will pursue, out of necessity, the goal at substantial costs. Successful, highly leveraged salespeople in any industry leave a wake of carnage in their paths in the form of alienated prospects (who are still future clients even if they are not buying today), angry and jealous coworkers, and bosses who, at the end of the day, contrary to what they may have previously said and thought, cannot live with the fact that their employee is out-earning them. Your employees should not out-earn you.
One of the most poignant and enjoyable books worth reading on the subjects of employee compensation, motivation, and client retention is a book titled, You Will Be Satisfied, by Bob Taska. Bob Taska took a small Lincoln Mercury dealership in Rhode Island and turned it into the largest Ford dealership in the country, primarily by changing the comp plan for his sales and service people. After he made his store #1, he then sold it, and bought another small struggling New England dealership. His goal was to see if he could do it again without firing a single person. He took the small run down store, kept all the people, applied his system and turned his new store into the largest in the country, bankrupting his old store in the process. Taska did many things differently, but the key was and still is something that is somewhat sacrilegious in the automotive industry: He quit paying his people a commission based on gross profit, and he began paying them a strong base with bonuses and rewards for volume targets and customer satisfaction.
Taska recognized that the bad rap car salespeople get is driven by nothing more than the way they are paid.
Look at any uncomfortable buying situation, where you have a low view of the seller and an unease about or distaste for the buying process, and behind it you will find a salesperson with a highly leveraged compensation plan. Full-commission salespeople chase marginal opportunities and alienate valuable prospects by pushing too hard. They try to create need where none exists, and they are quick to cut price to get the deal.
WHAT COMP PLANS SAY ABOUT THE AGENCY
Your tendency toward a commission-based compensation structure for your business development staff says everything about your confidence in your business development processes. Once you implement proven processes for your agency, you will gladly put someone into any of your business development roles and pay them a strong base salary with bonuses.
I am not suggesting that all agency principals should immediately pay their business development people a full salary or salary plus bonuses, but I am saying that you should strive toward a compensation plan that is in line with the way you pay your other employees, complete with the same level of risk and reward. With proper positioning and proven processes there is little reason to avoid paying your business development personnel on the same level and in the same manner as other employees with a similar depth of experience.