High Commission, Low Return

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Fact:  I once worked as a telemarketer.  Related fact:  I used to know a lot of shady people.

Telemarketing is the epitome of a sales job.  With no pictures, no demonstrations, no relationship, you make your pitch.  Like so many of these types of sales jobs, you work on pure commission.

Pure commission usually attracts a certain kind of person, a person interested in making the most money in the least amount of time.  Short-term gain is the name of the game.  It doesn’t matter how you make the buck, just that you make it.  This is one reason why so many people hate telemarketers.  Much like the stereotypical used-car salesman, they’ll say anything to get your money.

I had been working there for about a year when the company did something utterly surprising.  Overnight, they scrapped commission and put everyone on a salary of 9 dollars an hour with opportunities for raises based on performance.  Everything changed.

Over the next few months, the “scam and make a quick buck” employees started to disappear.  In their place came a lot of high school and college kids who needed a job with a flexible schedule.  Even better for the company, profits went up by 30% in 6 months across the board.  This was despite the fact that only half as many pledge packets were being mailed (my firm raised donations for police organizations, so we needed the donor to mail the money in before we could take the fee for providing the infrastructure and call service).

What was happening?  We were mailing out far fewer pledges and were paying sales reps regardless of whether or not they closed.  How did profits increase?  Well, before, sales reps would lie, guilt, or badger people into making a pledge.  Once the pledge went out, they got commission on it regardless of whether or not it was returned.  However, once the commission was gone, the people interested in doing anything to make a quick buck disappeared.  In addition, there was no motivation to close as many pledges as possible.

Instead, the people taking their place were sincerely interested in raising donations for a good cause.  They actually connected with the people they called and made people feel good about donating.  This resulted in less pledges being sent to people who didn’t really want to mail them back and more people happy about the pledge they were making.

Bottom line:  if you want a team that truly cares about your customers and is more focused on doing the job right rather than just getting it done, put them on a salary. Forget the commission, incentives, and bonuses.  Instead, find the people that care about your mission and show them how they are making a difference.  Your customers will see the difference immediately.

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