REB 134: Salary vs. Commission Sales: Who Can You Trust More?

Many companies like to advertise that their sales agents are paid a salary and NOT by a commission structure, thereby implying that the consumer can expect a better experience. I would argue the opposite is true. 

Transcript

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Our sales representatives are salary based, not commission based. You know, I see that and hear that in advertisements a lot. Um where whomever is delivering the advertisement is basically extolling the virtue of their company that their sales representatives are paid salary versus a commission. Um implying that in some way, shape, or form, I am less capable, less professional, or what the real implication is that I'm less ethical than someone who makes their money via salary versus my commission, right? You can kiss my ass. Okay, so I would argue the counterpoint. I would say that I am more capable, I am more professional, and I am more ethical because I'm a commission-based sales rep. And why would I say that? Because I have to kill what I want to eat. Okay. I have to go out and create something out of nothing every single day. All right. And I have to do so in a way and in a fashion that, in a sense, there's no guarantees, but it builds a foundation for future income. Just me, me, myself, any other commission-based sales consultant out there has to build their own foundation upon which they can work from and which will generate revenue for their business into the future. Okay. A more benign way to look at it or say it, right? We're like farmers in that we've got to plant the seeds in our network, in our marketplace. We have to take care of the crops. We've got to pick the weeds. We've got to um tend to the field while it grows and before we can harvest. And then eventually, when we do harvest, we have to harvest it ourselves and make sure it's done well and done clean, that we separate the wheat from the chaff, and that we then begin to prep the field and plant the seeds for the next harvest. And the cycle goes on and on and on until we quit. The salary guy doesn't have to do any of that. Okay. The salary guy, they don't have to worry about being the most knowledgeable. They don't have to worry about being the most professional. They don't have to worry about whether or not what you're buying meets your needs in the best way possible. They don't have to worry about presenting the best solution that they have to offer to the client because they're getting paid anyways, right? And they're not worried about your referrals. So they're also not worried about making sure that they have done their utmost to take care of you and your needs and your goals so that you can send referrals their way because they don't need referrals, they get paid a salary, right? So that whole argument, our salespeople are on salary and not commission, uh, it grills my cheese. You know, listen, the implication that a commissioned salesperson is less us less ethical, you know, I suppose that it's been earned. Otherwise, they wouldn't say that. The perception wouldn't be out there, the stereotype wouldn't be out there. But you know, there are ways as a consumer to tell whether or not you're dealing with the right kind of person. And I've said this before, I've done entire podcasts about it, I've done entire shows about it. Ultimately, it's in the quality of questions that they're asking you. If you're sitting down with a sales consultant, listen to the questions that they ask, think about them, and ask yourself are the questions that they're asking me designed to uncover my motives, my goals, my desires, so that that person understands them thoroughly and can help me to achieve them in the best way possible, right? If the questions aren't centered and focused on those things, probably not so great. If the sales rep is not even asking questions, if they're doing a whole lot of talking at you and telling you, that's a red flag, run away, right? And the thing is, people, just about every one of you out there knows when you're sitting across from a salesperson what their motivations are. Your gut tells you, are they about themselves in the commission or are they about trying to help me out? Right? And if your gut is feeling queasy and uncomfortable, get the hell out. No one's forcing you to stay and do business with that person, right? But the implication that because they are paid by salary versus commission, so they're going to take care of you better, I think that's uh a very ill-founded notion, okay? Um, the best people that I've ever dealt with when it comes to making a large purchase, they were definitely driven by commission, right? They knew that they had to compete and that if they spend any amount of time and a sale doesn't come of it, they get nothing, right? And so you're gonna come across two types of salesperson: the pressure salesperson who's trying, you know, it's all about overcoming objections, and they're trying to browbeat you and pressure you into making a decision now because you know, if you don't make a decision now, things are gonna break and you won't have the same deal that you have right now. That's all garbage, right? That's all garbage. Run away from that person, find someone different, right? Um, or you have the person who ultimately is going to be interviewing you, the customer, to try to figure out what works best for you and then proceed to take the steps to present the solution that works best for you. Okay. Now, I think of it as a small business owner. I mean, I'm a real estate broker, and so all of my people are 1099 commissioned people. Um, I would never change that. Not not just for tax incentives and blah, blah, blah. But if I'm paying somebody, you know, and in this business especially, there's a lot of turnover. A lot of people come, accomplish very little over a short amount of time, and off they go. I'll be damned if I'm going to pay them a salary while they figure that out, right? Uh, you know, also, it's those people who really are driven to create a nice life for themselves and their families, who are really driven to earn a decent living where they're comfortable, that end up being the most resourceful because a lot of times they don't have a backup plan. A lot of times their family is very dependent upon their income. Um, and so they're driven to figure out how to make it work. And they're going to seek knowledge, they're going to seek mentorship, they're going to seek the things that are going to help them develop a healthy business, right? If you're getting paid a salary, what incentive do you have to do anything more than what the boss needs tells you you need to do today? Right? If you're being paid salary, you're basically setting and waiting for direction on what to do because why? Well, you know, it's it's a rare person who goes into a sales organization that's paid salary and is a self-starter and is um someone who goes above and beyond to try to improve themselves as a professional. Uh, it's rare. And certainly they stand out in their office and amongst that space, right? Because the rest of them, not so much. You know, if you are that person who is getting paid a salary and you're a self-starter and you have committed to improving yourself as a human, as a salesperson, as a professional, uh give me a call. I got a place for you. I can show you how to do pretty well. So, at any rate, as a small business owner, I want commission-based people because they need to be hungry. They need to be get out to get out there and develop their own businesses, develop their own clientele. Um, and you know, what I hear when when I hear, hey, our people are paid salary and not commission, is our company is large enough that we've done the math and we know that we'll make more profit if we pay people salary versus commission. That our sales are not generated by the salary-based employee. Our sales are generated by our market presence. Our brand is large enough and popular enough to draw the customers in itself. And our salespeople are rather insignificant in that process. They're really just order takers who are processing paperwork. Okay. Because they've done the math and they know, well, shoot, if we got to pay commissions out to these people and they go out and they really hustle and drive, we're gonna make a lot less money. That's what I hear when I hear the advertisement. Our people are paid salary and not commission, right? Um, again, are there unethical salespeople out there? Of course there are. Salespeople have a, well, they there's a connotation to the word salesperson that I know I certainly grew up with. That's very negative. Uh, and my entry into the world of sales was delayed significantly because, well, growing up, I thought salespeople were basically thieves and crooks. Um, and it wasn't until I got into it that I realized those was completely wrong. There's a bunch of bullshit I was brought up with. Um, you know, I admire blue collar, you know, there's I've got a lot of it in my blood. I'm not afraid to get my hands dirty. But uh, you know, sales is fantastic. Anyways, I digress. So, yeah. For the big company that wants to hoodwink the consuming public, that because your people are salaried and not commission based, um go pound sand. That's all I got. Hey, as always, if you like it, scan that QR code, go to the YouTube, subscribe, check me out on Spotify, real estate bites. As always, take care of yourselves, take care of one another. I love you, people.