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A typical major remodeling project by Stebnitz Builders Inc.
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By Deborah L. O'Mara
Compensating salespeople to produce more must be a well-thought-out process that relies on an upfront and honest attitude with personnel. You have to have a sales plan, and everyone in the company has to know what it is. That plan has to echo the culture and philosophy of the company.
Christopher Stebnitz, CAPS, is sales and brand manager for Stebnitz Builders Inc., Delavan, Wis., a family-owned design-build firm that specializes in kitchen and bathroom renovations, additions, whole-house remodeling and custom-home building., Chris oversees a staff of five salespeople, who make the first contact with the customers and also do all the estimating for remodeling jobs. Chris says his company doesn't pull any punches with the sales staff and is upfront about their compensation—so they can go about the business of selling more and providing top service to customers.
"All the sales staff is strictly commission—and that number is 25 percent of the gross profit of the job," Chris says. "When they know what they are going to get from a job, it's also a good way for them to strive harder to sell more and estimate more accurately, too."
On average, Stebnitz remodeling jobs range from $25,000 to $50,000. Salespeople follow a mark-up schedule based on all the components of the job, including overhead and expenses. They know they will earn more from a larger job, of course," Chris says. "There's definitely an incentive to sell more."
If they sell the job at the prescribed markup, the salespeople receive the first half of their commission schedule. If the project does not close out at the prescribed markup, they are ineligible for the second half of the commission schedule. This is the rule, but there are always a few situations that are taken on a case-by-case scenario, says Chris.
Each sales person must reach a certain level in annual sales. "We have determined that a full-time salesperson should be able to sell $600,000 in total value in a year," Chris explains. "If they don't achieve that, their performance will be evaluated at the end of the year, [when] we look at many things, but specifically their volume, their close ratio and the various mark-up levels for different job size categories."
Chris says the company has always used the straight commission formula with great success with their sales personnel. "They enjoy closing a sale. They enjoy completing a first-class project that the client is wild about. They also enjoy flexible time and the autonomy that comes with scheduling their work. Money is a nice benefit, but without the other factors present, they probably would not be in this business."
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