- Do Salespeople Make Too Much Money? NY Times asks and gives us this story:
“A successful company had four salespeople who sold contract furniture. The contract furniture business is relationship-driven, and it requires a steady flow of new customers because most sales come from companies that are moving or expanding. Having a well-connected professional sales force is critical.
Things were going well. The four salespeople were bringing in millions of dollars in sales, and everyone was making money. The salespeople were working on a commission basis that was tied to the percentage of gross profit on each sale. The top sales guy had a particularly good year and bought a new house. He threw a big party and invited the owner of the company. The boss and the boss’s spouse came and ended up touring the beautiful new home, on the lake, with all of the accoutrements. Guess what they talked about on the way home.
“Why is he living in a house that’s nicer than ours?” asked the spouse. I wasn’t there, but I am confident that when the spouse asserted that the salesman was being paid too much, the boss did a lackluster job of explaining how the business works.
A few days later, the top sales guy walked into the boss’s office and suggested that they upgrade the cars they were providing the salespeople who were performing so well. No doubt still thinking about the house and the spouse, the boss promptly started screaming, “I’m already paying for too many Mercedeses around here!” The fallout began quickly. The top sales guy quit and started his own company. The other salespeople followed him. Before long, the boss was out of business.”
The Morals? – Go to the full story here.