5 Things to Consider When Paying Technicians Commission

If you have encouraged your technicians to promote your services, you may be considering ways to recognize their efforts.  Perhaps one of the most obvious approaches is to pay them a commission based on the number of opportunities identified or on the value of the resulting order.  If you are thinking of paying your technicians a commission for new business consider these 5 key points.

Like all initiatives, there are pros and cons to paying technicians a commission.  On the positive side, commission programs can be relatively easy to set up and awarding payments based on sales certainly demonstrates that we value their efforts and provides a “thank you” for their initiative.  However, my experience in speaking with managers, technicians and their customers, has led me to the conclusion that directly paying technicians a commission for new business generated on a percentage of sales or on a pay per opportunity basis has many more negatives than positives.  Here are five reasons why you might consider a different form of recognition.

1. Commission programs are difficult to maintain. Although easy to set up, commission programs can be difficult to manage and maintain.  It is important that commission programs be:

• Clear in terms of which activities generate which rewards.
• Consistently applied.
• Perceived as being transparent.

All of this takes time and focus on the part of service management and, since service management frequently have other demands on their time, these programs usually do not get the attention they require.  Poorly managed systems rarely live up to these basic requirements and often have the opposite impact than the one they were designed to achieve.  I have spoken with many technicians who are frustrated with the program that is in place because management has not taken the time to properly administer it.  Some are so frustrated that they simply don’t bother to participate.

2. Commission programs might not be perceived as fair. Under a program where a technician is rewarded a commission directly for new business development, there is a possibility that some techs can and will benefit disproportionately compared to others.  For example, those technicians who maintain full coverage or comprehensive contracts may have less of an opportunity to benefit from new business development than those technicians who are mainly engaged in inspection-only contracts or who respond to emergency service calls.

3. Commission programs can confuse the message of business development as a sale rather than a service. This is a big one for me.  As a reader of my blogs you know that I see the business development efforts of technicians as an added service to the customer.  Any time the technician can advise the customer on actions that they can take that will improve their business in some way is a service and not a sale.  If we have encouraged our technicians to embrace this concept of business development as a service, then why are we compensating the activity as if it were a sale?  The more skeptical techs on our team may be put off by this apparent contradiction.

4. Commission programs can drive the wrong type of behaviour. This is related to the last point.  As a service, business development by our technicians by definition must be selective.  We simply want our technicians to keep their eyes and ears open for opportunities to help the customer.  Only when they see that a customer can benefit from a particular product or service do we want them to speak to the customer about it.  We want to discourage our technicians from “pushing” every product and service that we have in the hopes of making a sale because, when technicians act in this way, they look like salespeople to the customer and they lose the customer’s trust and confidence.  However, by rewarding all business development efforts, we may be encouraging exactly this type of indiscriminate business promotion that we want to avoid.

5. Commission programs may cause concern for your customer. How do you think your customers would feel if they knew that the technician who made the recommendation to replace the existing equipment was getting a commission for that recommendation over and above his/her normal compensation?  If you are not sure of your answer, ask yourself how you would feel if the auto mechanic where you get your car serviced is paid a commission for extra parts sold?   I suspect that you would feel a bit uncomfortable about the situation and may even be wondering if the latest repair was necessary.

You might conclude from this blog that I am against paying any form of compensation as recognition for the effort of technicians to promote products or services.  I am not.  I am simply saying that one of the more common means of compensation – paying sales commissions – can have a negative impact on your efforts and you may wish to consider other forms of compensation and recognition.  I will look at introducing some other forms of recognition in a future blog.  If you still plan to go the commission route, ensure that you consider and address the concerns I have identified above.

As always, I welcome your comments and questions. You can connect with me via telephone or email or leave a comment right here on the site. And as always, please feel free to leave a link back to your own blog if you have one via the commentluv feature here on the site. If you are reading this blog post via email, you will need to locate this post on my website by clicking here. Scroll down to the bottom of the page where you will find the comment section.

Jim Baston

“If people like you, they’ll listen to you, but if they trust you, they’ll do business with you.”

– Zig Ziglar