Amazing prices every job on an Excel spreadsheet, and by computerizing the process the company’s reps often find buyers more receptive — and less argumentative — about the price that’s been tallied. “It makes our prices more believable,” Birner says. “If you go into a supermarket and run all your items through the checkout, you don’t say something should cost less after you get the final price. That’s essentially what we’re doing, too.”
Amazing Siding is like a growing number of contractors that have rejiggered their compensation structures to reward sellers not only on big individual sales but also on the quantity of business they bring in over a longer stretch. For example, MWS offers its reps monthly volume bonuses of between 1% and 3%, and another 2.5% if they bring in between $150,000 and $175,000, McCrum says.
ABC Seamless’ corporate sales office in Fargo, N.D., recently adjusted its commission structure, which kicks in at different percentage levels once its eight reps reach a certain sales total for the year (see chart below). In addition, any salesperson who generates more than $50,000 in sales per month gets an extra 2% commission. “Incentives and bonuses are what keep our sellers moving,” sales manager Mike Newcomb says.
Amazing has a two-tiered incentive program in place that’s based on monthly dollar volumes: If reps hit a certain level for two consecutive months, their bonuses are doubled; if they reach another sales level for two consecutive months, their bonuses quadruple.
Turn Up the Volume Other contractors also find sales-triggered bonuses to their reps’ liking. Carolina Building Group offers volume bonuses of $500 when sellers hit $75,000 in sales, and those bonuses rise in increments of $500 for every additional $25,000 in sales closed, Ramsaur says. Morris Window & Siding in Randolph, N.J., has a similar bonus structure, but with one catch: Morris’ salespeople are not on a paid-on-profitability system, and the company doesn’t allow them to stray from its stated prices.
Mike Damore, Morris’ sales manager, says that such a system wouldn’t work for his company because it would allow its nine salespeople — who earn, on average, $150,000 per year — to drop prices and, therefore, dilute Morris’ profitability. Damore notes, however, that his company is rarely the lowest-priced contractor in the market anyway, so his salespeople must generate sales on their ability to equate price with the quality of products being installed. “We pre-screen our customers by asking them ‘What’s more important: the rate of return on your house or the lowest price?’ They can’t answer ‘both,’” Damore says.
Bob Dillon, president of Unique Window & Door in Indianapolis, isn’t a big fan of the paid-on-profitability system, either. He says it encourages reps to stop selling once they’ve hit a certain earnings level. “Say a project is $8,000, and they can sell it for 50% over par. That salesman runs into a customer who maybe isn’t sophisticated, and he sells the job for $10,000. He makes $1,800 on that deal, and for some sellers that might be enough for the month, so what’s the motivation for them to go beyond their numbers?”
Unique pays its 20 salespeople a salary plus a monthly bonus. It allows them to draw small, weekly commissions of between 1% and 3%. Last year, all of Unique’s salespeople earned at least $90,000, and two made $150,000, which Dillon says reflected their bringing in between $100,000 and $120,000 in sales per month. This year, he raised his salespeople’s monthly quotas to $100,000 (from $90,000 in 2005), and the minimum at which they start earning bonuses (of 2%) to $60,000, from $40,000. However, he also added two higher bonus tiers: when his sellers bring in $150,000, their monthly bonus is 6%, and when they hit $200,000 in monthly sales, the bonus is 7%. Through April, none of his reps had achieved that, but Dillon is optimistic that at least one will sometime this year. And in the first month after he instituted this new compensation program, Unique’s sales were up 20%. —John Caulfield is a freelance writer and editor based in New Jersey.
More Sales, More Money
ABC Seamless, the siding contractor based in Fargo, N.D., has structured its salespeople’s commissions on different sales thresholds.