Wonder what other companies are paying their salespeople? Some of the largest, most successful firms in the home improvement industry share their numbers.
Source: REPLACEMENT CONTRACTOR Magazine
Publication date: 2005-05-01
| By John Caulfield |
During his first decade with Garden State Brickface, Windows & Siding, in Roselle, N.J., Doug Jimmink sold under seven different compensation plans. Jimmink, a 21-year company veteran who now heads marketing and sales, adds that when he joined Garden State, commissions were all over the map, ranging from 5% to 18%, which left some salespeople confused and skeptical about the system's fairness. “The more complicated you make a program, the more time salespeople will spend trying to manipulate it in their favor,” says Jimmink, whose company currently manages a more straightforward compensation plan where commissions average 10% per sale.
Fairness and simplicity are what home improvement company owners say they strive for in their sales compensation programs. But other factors regularly come into play. A market's competitiveness, escalating operating expenses, and even an owner's generosity can affect such choices as whether salespeople get compensated on volume or profit. The incentive packages that contractors bundle to motivate their sales staff, build teamwork, and boost morale can include everything from quota-based trips and contributory retirement plans to bonuses and sales contests that offer immediate gratification.
Contractors lament, however, that no incentives seem large enough to inspire salespeople to generate more business on their own (see “Lead Me There,” page 76). Consequently, some home improvement companies are tying compensation to mandated follow-up calls with past customers that produce add-on business or referrals.
Eye of the BeholderSalespeople, say contractors, are driven by money and motivated by opportunity. That said, many companies can't resist the temptation to tamper with what, in the salesman's mind, is that most sacred of talismans: the commission check.
“Too many contractors try to save money by reducing what their salespeople can make,” observes Wayne Winn, owner of Hometown Restyling in Hiawatha, Iowa, whose seven salespeople selling windows, siding, and sunrooms work on straight commission, and in addition are entitled to medical and dental coverage for themselves and their families, a 401(k) plan, and company-paid trips when they close more than $750,000.
What's fair, though, is always in the eye of the beholder, and company owners interviewed for this article insist that their salespeople have plenty of ways to earn as much as they're able. Salespeople for these companies were paid anywhere from $40,000 to $200,000 last year, with many falling on the flusher side of that spectrum.
“Our guys are pretty spoiled,” says Tom Hayes, sales manager for Dalco Home Remodeling in Bridgeton, Mo., where referrals produce two-fifths of sales. Four of Dalco's seven salespeople earned at least $100,000 in 2004.
Windowizards' marketing attracts 200 leads per week, and the company's 14 salespeople close 54% of their first-time sits with homeowners, says Jay Felkoff, VP and sales manager for this Levittown, Pa.-based contractor. Four of Windowizards' salespeople earned more than $100,000 last year.
With so much hurricane-related damage to fix in Florida, Invincible Associates in Largo is raking in $1 million in revenue per week. Several of its 23 salespeople earned more than $200,000 last year, working on commissions and bonuses based on the profitability of what's sold. “Our guys are paid handsomely, but it's easy to ignore the sacrifices they make,” says director of sales and marketing Jason Avery. Like Windowizards, Invincible's salespeople are 1099 workers, meaning that most, if not all, of their business-related expenses are paid for out of pocket.
