It’s been a busy few months here at Membership180. We’ve hired a new consultant in Pete Havel, IOM and a new salesperson in Jarek Swerkoski. I’ve personally traveled to Pickerington, Ohio to work with Theresa Byers and her team on an Engagement Workshop, to Wilsonville, Oregon to visit with Kevin O’Malley and his peers from the Washington County Chamber of Commerce Presidents where I did a half-day training and then drove up to Moses Lake, Washington to facilitate a general session and a couple of breakouts for Bob Greene and the Washington Chamber of Commerce Professionals’ annual conference. While all of these hires and speaking and consulting opportunities may SOUND very dissimilar in nature, I have to tell you that one theme continued to bubble up to the surface in nearly every one of these discussions, and it’s a conversation that’s going to DRAMATICALLY change the way your organization operates. It’s the question of INCENTIVES.
See, here’s the thing: Everyone KNOWS that we should incentivize people for doing what we want them to do. It’s the very basis of Pavlov’s theory. Ring a bell just before feeding the dogs, and the dogs learn that one is associated with the other. Once they have THAT down, it’s a simple matter of removing the food (the incentive) from the equation to find that the simple act of ringing the bell causes an automatic biological response (the salivating over the food they expect is coming right along). But I have a question for you.
ARE YOU INCENTIVIZING YOUR PEOPLE INTELLIGENTLY?
I’m going to guess that there’s a broken system inside of your organization. Frankly, it doesn’t matter if you’re a Chamber of Commerce, a Trade Association or an independent business…you’re incentivizing your staff to fail. Don’t believe me? Read on!
Again, let’s remove the idea that this is JUST about membership organizations for a moment. In fact, for just that reason, you’re going to be a HERO when you share this idea to your members! If you have someone in your office who receives a commission for bringing in sales, this example is for YOU! I want you to print out a copy of your commission structure. Go ahead…I’ll wait.
Got it? GOOD! Now…if it’s like EVERY other commission structure I’ve ever seen, it says “Go make sales and we’ll pay you a commission.” Something like that? But think about what that SAYS. That tells your commissioned salesperson or sales PEOPLE that what you’re looking for is SALES, when in fact I believe you’re looking for something else. Care to take a guess? You’re looking for LONG-TERM, SUSTAINABLE GROWTH, aren’t you? When you offer a commission for SALES, your sales professionals will go out and get SALES. But they’re not worried about the LONG-TERM VALUE of that sale, because they’re not typically COMMISSIONED against the long-term, at least not very WELL. In other words, we’re asking them to go out and create CHURN. We’ve built a structure whereby it’s in THEIR best interest to just go out and close, close, close. That leads US to lower retention rates with less engaged members who weren’t properly vetted prior to becoming a prospect, weren’t properly on-boarded because our sales pros don’t have an incentive to initiate a new member correctly, and weren’t sold on the real value proposition of the organization.
INSTEAD, what I coach MY clients to do is to invert the commission structure. We’ll pay a larger base salary for the first year, plus a small commission on new sales, but a HEALTHY commission on the RENEWALS for the next TWO YEARS. Why pay for two renewals? Because we know that when a member STAYS a member for 3 years, we have a long-term member on our hands, AND we cut off the commission at that point because the seller has now done what we’ve asked her to do, and it’s now up to the entire organization to continue delivering value to keep that member engaged in the future. We’re incentivizing SUCCESS when we incentivize long-term membership development over renting members for a year.
Take that commission structure you printed out before and let’s make some notes. Could you afford to pay MORE in base salary for a year in exchange for a significantly reduced 1st year commission? If you currently pay ANY commission on retention, GREAT! I’m going to ask you to bump it up BIG TIME to encourage membership DEVELOPMENT instead of membership SALES. If you don’t already offer commission for retention…well…WHY NOT?!?! If a member doesn’t retain, you don’t pay the commission, but it’s much more efficient to keep the members we have than to go out and try to replace them.
Boost your retention numbers, develop lasting relationships with long-term members, and keep your sales professionals happy by paying them for doing GREAT work, not BUSY work.