If you’ve been paying attention over the last several years, you’ve probably noticed that more and more businesses are advertising that they don’t pay sales commissions to their salespeople. Sometimes, they will use advertising to tout the policy, citing a more relaxed buying experience as a benefit to the customer. More often, they’ll simply state that they don’t pay commissions in a way that suggests the benefits of not doing so are self-explanitory.
In fact, the most successful operation in the history of retailing — the Apple Store — made the calculated decision to not pay commissions before the doors of the first store ever opened:
At Apple, the decision not to offer commissions was made, Ms. Bruno said, before a store had opened. The idea was that such incentives would work against the company’s primary goals — finding customers the right products, rather than the most expensive ones, and establishing long-term rapport with the brand. Commissions, it was also thought, would foster employee competition, which would undermine camaraderie.
In other words, Apple came to the conclusion that sales commissions act as a structural barrier between a company and its customers.
Traditionalists might argue that sales commissions are an integral part of the culture of sales, that they provide the motivation that salespeople need in order to do their jobs… but Apple’s unprecedented sales success certainly calls that argument into question.
Eliminating sales commissions is a strategy that we’ll be examining in detail on this blog over time. (As you know, it’s one of the five fundamental axioms in the Teamwork Selling Manifesto.) For right now, though, just consider this: Paying sales commissions is simply a business convention. It’s not required by law, it’s not universally practiced, and it’s by no means been proven as the best way to compensate a sales organization.
Just let the thought marinate for a while: There are other ways to compensate professional salespeople besides paying commissions. Once you wrap your head around that idea, you might find that the other pieces of the sales management puzzle suddenly get a lot easier.