Get Rid of Sales Commissions if You Want More Sales

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The commission-based sales model may be a thing of the past. That may be difficult for you to accept, since the majority of fitness facility operators have set up their clubs based on the idea that monetary rewards will motivate your sales people to motivate prospects to join your club.

However, consider the case that Daniel Pink has made to sway you from this type of thinking. Pink was one of the keynote speakers at last week's International Health, Racquet and Sportsclub Association conference and trade show in San Francisco. Pink is a former speechwriter for Vice President Al Gore and is now an author, speaker and business consultant with four books under his belt. His most recent book is “Drive: The Surprising Truth about What Motivates Us.”

Intuitively, you may think that when you reward behavior, you get more of that behavior and when you punish behavior, you get less of that behavior. Often, however, that is not the case, Pink said.

He described how researchers found that people who were offered a reward to solve a complex problem actually solved that problem 3 minutes, 30 seconds slower than people not offered a reward to solve the same problem. However, when the problem was less complex, the group that was promised a reward solved the problem faster.

In another study, researchers found that the greater the reward, the better the performance on tasks that involved only mechanical skills. However, once a task required even rudimentary cognitive skills, a larger reward led to poorer performance.

Many of the simple tasks are taken care of in the fitness industry, Pink said, but the more complex tasks, such as selling memberships, are not.

“Fact: Money is a motivator,” Pink said during the presentation, “but not the way you think.”

Setting up commission-based sales systems and handing people a sales script strips autonomy and mastery from your sales staff. And those two elements are necessary for people to perform well. Without autonomy and mastery, your sales people no longer need to think beyond their script except to determine what more they can sell to prospects in order to get a higher commission.

Pink shared how the customer service ratings for shoe company Zappos improved to levels equal to the Four Seasons Hotel after the company took its customer service representatives out of their little cubicles, stopped timing customer service calls and stopped requiring the reps to follow a script for problem resolution. Instead, management told the reps that they were simply to solve the caller's problem however they could. This sense of autonomy allowed the call center workers to feel more empowered and allowed them to gain more mastery over the company's products and how to resolve problems.

But beyond autonomy and mastery, Pink said that your staff needs purpose. They need to know why they are doing what they are doing and how it will help prospects. Pink explained how students working in a university call center were divided into three groups. One group was given nothing to read before their shift, one group read letters from former call center workers detailing how working at the call center had helped them in their careers, and the third group read letters from people who benefited from the donations received. The third group pulled in more donations than the other two groups because they knew how the calls they were making had helped others. They knew their purpose.

“We do better when we know why we are doing what we are doing,” Pink said. “People need a ‘why' for enduring progress.”

So if you do away with your commission-based sales system, what do you put in its place? According to Pink, you pay a fair wage, which is paying your sales staff a high enough salary to take the issue of money off the table. Instead, give them the freedom to do their job well and serve prospects as prospects need. Give your staff autonomy, mastery and purpose (you must give all three), and you'll soon be rewarded.

Do you still have a commission-based sales system or do you have a different system set up? How has that worked for you? Let us hear your thoughts about whether commissioned or noncommissioned sales work best in the fitness industry.

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