HOW DOES SALARY IMPACT RETENTION?
In a recent study, first year retention was not found to be impacted in the way one might expect with the implementation of a base salary: salespeople who did not receive a base salary had slightly higher retention rates at one year compared to salespeople with base salary + commission.
DOES SALARY IMPACT PERFORMANCE?
Another significant finding was that salespeople who did not receive a base salary outperformed those that did by 5X the amount of year‐end sales. Considering the increased investment and higher processing costs associated with base salary + commissioned salespeople, this is significant lost time and money for the employer.
Warm Source‐66% of base salary salespeople and 52% of commissioned salespeople were approached by someone from within the company.
Cold Source‐34% of base salary salespeople and 48% of commissioned salespeople heard about the opportunity from an outside source.
Quantity: 3X the amount of applications with the introduction of a base salary.
Quality: 105% drop in salespeople rated as suitable in a sales role with the implementation of base salary. 116% more salespeople were rated average or below average with the implementation of base salary.
CHARACTERISTICS OF SUCCESS
- Trends suggest that those with 5‐10 years of commission based sales experience have higher sales compared to those with less
- Results also indicated that salespeople working >50 hours in their current employment had higher annual sales
EFFECTIVENESS OF SCREENING & SELECTION TOOLS:
Salespeople without a base salary who were rated suitable using the POPTM sold DOUBLE the total sales than those rated poorly.
Paying a salary to salespeople in roles that have been commission based attracts more candidates but fewer quality candidates. Paying a salary might be attracting individuals who are conditioned to receiving a salary and less suited for commission only opportunities.