December 2, 2016 — Someone please check my math because believe it or not there have been times I get it all wrong. For my example today I’m using the following factors: Two closers working for the same developer go front to back and earn a 10% commission on their individual sales volume. To keep it simple, each closer will ‘meet/greet’ 100 sales guests, our developer has a fixed marketing cost of $400 per-tour and only sells one type of timeshare plan with a price tag of $22,000. Bob, the first closer, nets a 15% closing ratio (CR) from his 100 sales guests and the other closer, Mary, nets a 25% CR from her 100 ‘tours’.
So Here’s The Scoop: Bob knocks down 15 deals with a sales volume of $330,000 and Mary generates 25 deals from the same number of sales guests (100) giving her a sales volume of $550,000. Now remember, check my numbers as we go along because I sure don’t need more nasty e-mails than I sometimes get.
Steady Bob earns his slice of the pie and is paid $33,000; right? And Mary the Hitter earns herself $55,000 and as the clock ticks away both are happy campers and go about their daily lives, business and routines fully satisfied with the status quo.
However, in this example, from the 100 sales guests Mary ‘toured’ she generated Ted the developer an additional gross sales volume of $220,000 and because Mary wrote more business than Bob she was paid on those sales an additional $22,000 leaving good old Ted an additional net gain (contract value) of $198,000.00 over Bob’s ‘deals’.
And that brings a couple questions to my mind, the first being since Mary generated Ted an extra $198,000.00 in sales volume over Bob’s production and did so from the same number of sales guests as Bob, does not Mary warrant a SPIF?
That question is important because in my example Bob and Mary’s deals are clean and pressed (I.E. no heat and they stick) and at the same time Mary also generated Ted additional annual maintenance fees from the same number of ‘tours’ as Bob and if the deals were financed that would equate to even more moo-la in Ted’s coffers via interest rates from Mary’s expertise at closing more deals than Bob.
The second question I have is simply this: If Ted is willing to pay $40,000 to provide Bob with 100 sales guests and $40,000 for Mary to ‘meet/greet’ 100 sales guests why would Ted not move mountains to recruit more hitters like Mary so that his direct marketing costs are substantially reduced?
I ask that seemingly simple question because if the value of one, meaning Mary, generates Ted so much more revenue at a lower marketing cost than Bob does why aren’t Ted’s sales centers seeking more hitters like Mary?
Over the many years I’ve been around, expressing thoughts like those have gotten me tossed out of more developers’ meetings than I care to remember so I’ll just conclude with my final thoughts this week for all those in sales (and marketing) still working around the world on a “commission only” basis in the Land of Time.
Unless the percentages paid on those “commission only” deals is a lot more than most of those developers currently pay, “commission only” gigs are often for pipe dreamers. That is especially true for sales reps as on an annual basis a yuuge chunk of their sales guests should have never been inside the sales centers in the first place because the reps never had a chance in hell of earning a commission due to those ‘tours’ lifestyle or being financially challenged, etc.
Sadly the reality and unavoidable day will arrive for many working without protection (aka: perks/benefits) when the curse of the “commission only” deal rears its ugly head and comes home to roost because when that happens it isn’t a very pretty financial picture.
So stop being played for fools! If your developer offers no perks/ benefits, etc. and if you can’t negotiate a significant and an immediate increase in your ‘cut’ of the action then go to work, asap, for those developers who do offer benefits because guess what – they usually pay the same if not more points (%) than their counterparts.
With uncertainty & a sometimes bumpy road ahead the best developers offer benefits and are investing in their reps’ futures, unlike those other developers playing that old con job based, in part, on their belief that a sucker (you) is born every minute and that a fool (you) and his money are soon parted — meaning that without so much as a second thought those developers are wasting away the “commission only” reps’ lives, their expertise, their earning potential and their financial futures.
So if the shoe fits I remind any rep/closer that time is money, that money talks & BS walks, that their prime directive must always be, as it is for those very developers, all about the reps and their families’ short and long term financial security – PERIOD.
And if anyone can’t be bothered with such time consuming details then have them contact me immediately because I’ll hook ‘em up with a sweet & easy peasy money making deal out of Nigeria that’s 100% guaranteed to make them a fortune so they can live the lifestyle befitting their desires and that they so richly deserve for just a little bit of their effortless time – oh, and some upfront money too!
Good Luck Out There
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