By Scott Gordon, The Chief Revenue Officer
The ‘gig economy’ has been declared a modern wonder of convenience and efficiency. Whether it’s Uber, Lyft, AirBNB, Turo, ParkingPanda, Postmates, TaskRabbit, Amazon Flex, Grubhub, or a thousand others like them, job seekers today have myriad options to make money where and when they want, even across multiple platforms simultaneously!
While this is a boon for anyone seeking to earn a living, or supplement their existing income, it’s increasingly a challenge for more traditional employers. This blog will focus specifically on sales people and how the gig economy can affect their productivity and your profits.
Sales professionals are generally compensated in two ways:
The commission only model is obviously the less risky of the two options if you’re the employer. In the old days (think four years ago), the motto of most sales managers was “keep ‘em hungry”. This simply referred to the correlation many managers made between a salesperson’s productivity and the existence (or lack) of a base salary.
The thinking went like this – The hungrier the salesperson, the more motivated she was to find deals. After all, she had to eat, pay her rent, make her car payment, etc.
Commission only sales jobs are typically those offering products that by their inherent nature have short sales cycles. Think – solar leasing. You get a lead, book an appointment, close the deal, get paid – hopefully all within a couple of days if you’re good.
Salaries, then, are often reserved for sales cycles that are longer by nature. Large commercial transactions can take 12-18 months. Expecting a salesman to wait 18 months to get paid his first dollar is unrealistic, so these folks are typically offered a salary to cover their living costs until their first deal(s) come in.
Now let’s get back to the gig economy. What if you called an Uber after dinner and the driver was an employee of yours? What if it was your lowest performing salesperson? Chances are you now know why they are performing at such low levels – they are moonlighting until God knows when every night only to arrive at your place of business on subsequent mornings sleep deprived and unmotivated. Worse, they’re not hungry at all – the bare necessities are covered.
What do you do?
I once had a salesman who went from earning $200,000 annually with my company to just over $50,000. When I investigated (I really wanted to help him succeed), I discovered that he was shuttling people around ‘til the wee hours of the morning most nights. Sure, he still closed deals when I gave him leads, but all the time he previously spent prospecting, networking, and developing deals was quickly consumed by the small dollar doses Uber shelled out after each ride. Short term pleasure won out over long term success that required planning, persistence, and effort.
His case was particularly painful, because I was paying him a salary on top of commission! I was essentially paying him a salary to drive Uber. Ouch! Worse, I soon discovered, he was not alone on the team.
Unfortunately, as time has gone on, the gig economy has enabled salespeople to feel less hungry and to view their ‘full time’ sales job as less of a vocation and more of a hobby. This is the result of the easy, fast, and frequent money they can earn performing gig jobs that require very little skill or effort but provide ample instant gratification.
Increasingly, I’m encountering sales organizations that have become revolving doors of low performers bouncing from salary job to salary job in order to supplement their Grubhub and AirBNB gigs rather than the other way around.
Often these workers view the job with your company as a gig with benefits (salary, healthcare, 401k, etc) and their goal is to perform the minimal amount of work required to fly under your radar while milking as many streams of income as they possibly can on your dime. This new paradigm makes the use of sales metrics and forecasting more urgent than ever before.
Even if they lose their job with your company, it’s rarely a fatal financial blow as their other gigs are far less picky about how and where they spend their time and will continue to remunerate them regardless.
Outside salespeople are particularly vulnerable to gig jobs as they tend to work remotely with little oversight. Worse, if they aren’t hitting their numbers and earnings targets with your company, they can always supplement by driving a few more Lyft shifts and AirBnb’ing their spare bedroom.
While salaried salespeople obviously impact your bottom-line more severely than their commission only counterparts when they are underperforming, the latter are more likely to ‘gig’ out since you’re not paying them anything and they feel very little loyalty toward you or your company. As a result, their commissions (if they earn any) are viewed as upside.
In other words, if they close something, great, it’s a bonus, but they aren’t necessarily focused on becoming a highly productive member of your organization. Growth as a sales professional is hard work rife with rejection, follow-up, meetings, role playing, accountability, and schedules. Driving home drunks after an epic night of binge drinking – not so much.
As a sales manager or VP, you’d be best served to weed out potential moonlighters during the interview process. Ask them what they think of Uber or Grubhub. If they answer that they enjoy the convenience these services provide, no problem. If they answer that they enjoy picking up a few extra dollars on the weekends, caveat emptor! (and, by the way, it’s never ‘only weekends’). This latter interviewee has red flags all over him and is not likely to provide long term value to your organization.
Take notice when an employee becomes less responsive to calls, texts, and emails, has higher absenteeism, or generally comes into the office looking exhausted. Put metrics in place to measure not only sales performance, but engagement and use of tools and protocols related to their jobs. A decrease in tool use (like logging into your CRM less frequently) could be an early indication of a near term drop in performance.
Create training, contests, and programs to help your sales team(s) become more engaged, see their relationship with your company as more valuable (since you’re investing in their success), and cause them to realize they are far better served with a focused approach to work than a scattershot one.
Your challenge as an employer in today’s gig economy is to become your employee’s exclusive gig, and this only works if they can make more money, receive better benefits and training, and have a more flexible schedule (like weekends off) than what the thousands of gig alternatives offer. Otherwise, sooner or later, you’ll lose them to the gig-a-sphere in whole or in part.