By Jim Cory
At a home improvement company, no position turns faster than sales. Turnover rates of 50 percent or more are not uncommon at some big companies. Imagine replacing your production manager or your office manager every other year?
Selling home improvement is, salespeople say, a hard way to make an easy living. The pay is almost always commission only but the commissions—anywhere from 7 to 12 percent, depending on job size—are good. If you sell a million dollars worth of roofing, siding or windows, you’re sitting pretty. But it’s also risky. If you as a rookie can’t get up to speed quickly, you’re cut. Sales veteran who hits a slump? You may linger till the owner’s patience is exhausted, but that won’t be forever.
A good reason for this is that it costs a lot of money to create sales appointments. Home improvement companies spend five or six times as much as the average business on marketing. So the person you want to send to the house is someone with the confidence to convince prospects to buy. Confidence comes from training, and then from succeeding, so many companies pay an initial salary, which reps are typically weaned off of when they come into their own.
“We train people for 90 days,” says Ger Ronan, president of Yankee Home Improvement in Chicopee, MA. In those three months, sales candidates at Yankee are paid $500 weekly. After 90 days, it’s commission only. At Hullco in Chattanooga, TN, sales candidates spend six weeks training. They start running leads after two and for the next four weeks their compensation is a combination of salary plus five percent commission on what they sell. When training ends, they’re offered the option of continuing with that. Most, says general manager Brian Brock, elect to go commission-only, because at that point they know how to sell.
This has been the way it is for a long time. Meanwhile the larger world of selling has moved more and more to a mixed base-plus-commission system (typically 30 percent base, 70 percent commission). Some home improvement company owners have experimented with different compensation plans, but lead costs and the need for solid motivation to close make a salary system untenable in the minds of most. “Why should I pay a base when we’re giving them ten leads a week at $300 a lead?” says Miles Wilkins, owner and CEO at The Board Store Home Improvement, in La Crosse, WI.
Do the math and you may see his point. At ten leads a week, you’re spending $3000. In 50 weeks a year, $150,000.
Wilkins says salespeople at his company—there are six—are compensated at steadily elevated commission levels. Write a million or more, you’re at ten percent. Like many owners, he provides a draw against future commissions. That way, every other Friday there’s a check, even if someone’s numbers are off.
Two things could shake all this up. The first is that some homeowners won’t put up with the close-at-all-costs behavior which commission only sales inspires in certain people. Jeff Brooks, co-owner of Solid State Construction in Shirley, MA, found this out a few years ago. Until 2014, Brooks, who comes from a home improvement sales background, did all the selling for the company. Then volume reached the point where he had to hire salespeople. The salespeople came from companies where the one call close reigned supreme. In time, he became aware of a clash between the company’s commitment to a great customer experience and the manner in which sales appointments were being conducted. Reps blew off appointments they didn’t find promising, and high-pressured customers into buying. It was, Brooks says, “a Me First mentality.” People impressed by the company’s reputation were far less impressed by what went on in a sales appointment. Brooks had to rehash the messes. Negative comments began appearing in reviews.
Last year he changed his sales compensation plan to a three-tiered salary system. The first thing he noticed was a “night and day” difference in the quality of job applicant. “We saw people with college degrees and management backgrounds applying for these jobs,” he says.
He completely replaced the sales force, but even with a rookie team of five, close rates in 2018 are six percent higher than they were in 2017.
The other thing working against commission only pay plans is the generational shift underway. Last year in LinkedIn Roberta Chinsky Matuson pointed out that “today, it’s much harder to sell young people on a career in sales…”. Twenty-somethings often see salespeople as untrustworthy or buffoonish, the cultural stereotype. Throw in commission-only compensation and a job selling windows is less appealing still.
Brock says the millennials he’s recruited want two things: flexibility and appreciation. “Sometimes we have to sell them on it,” he says. And what still sells is money. Someone who masters the art of home improvement sales can take home “a quarter million dollars a year.” Though obviously not everyone will.
Beyond recruiting there’s the retention issue. The longest-serving salesperson at The Board Store has been there 25 years, but La Crosse is not a major metro market and millennials tend to job hop.
You have to wonder if, at big companies with high turnover, it isn’t inconvenient to have the sales manager spend half his time recruiting, hiring and training. What’s left for coaching and team building? The high turn model of sales management also presupposes an inexhaustible supply of candidates for sales positions. Which might be true—there are always people looking—but not if you want the right ones.