When the Dinosaurs Devour Their Own
Fortune magazine in December 2007 listed the “101 Dumbest Moments” of the year. Number 70 “Good job. You’re all fired” reported that in a cost cutting move, Circuit City laid off all sales reps paid 51 cents or more per hour above an “established pay range,” essentially firing 3,400 of its top performers. Over the next eight months Circuit City’s share price dropped by almost 70%.
Our profession has many managers, owners and corporate leaders who narrowly view the value of their commissioned sales force. When limitations are set on the earning ability of commissioned sales reps problems are sure to follow. It is strange that many believe limiting the income of others would be a benefit to the bottom line.
Recently I was speaking with a General Manager of a cemetery who insisted that commissioned sales reps must have limitations on their potential income. This Manager believes that it is unfair for commissioned reps to take advantage of opportunities thereby earning as much as they can. Though he acknowledged that commissioned sales reps have no guarantee of any income and are subject to the vagaries of the market, the economy and the sales policies of the cemetery their financial success must have limitations.
The Manager runs a not for profit cemetery causing him to believe that profit is not the goal of the organization. The limitations imposed on not for profits are the restriction against declaring or dispensing of dividends. Nothing is intended to deny profits to the organization. In the absence of profits any organization would fail to exist or serve the purpose of their creation.
A competently run business considers the cost of goods prior to determining a sales price. When commissioned sales are relied upon to achieve income the commissions are included within the sales price. Therefore limiting the income of commissioned reps must be based upon entirely different reasons than preservation of funds for the benefit of the organization.
The Manager who engaged in this conversation backed up his point by asserting that the advertising, direct mailings and marketing conducted by the cemetery provided the Clients. The reps reaped the benefit of the cemeteries proactive campaigns. In this analysis the reps are discounted for their ability of achieving the highest return possible for the investment of bringing the Client to the door. What could not be determined was how many Clients were educated to alter their initial preference to upscale or purchased property that best served the interest of the cemetery.
Good sales reps build relationships. They do this as a course of their nature for most are peoples people. They become confidants and counselors to individuals and hopefully to families. By doing so referrals are achieved which insure additional sales for the organization. The sales that result from referrals reduce the cost of the first contact by spreading the expense over an ever larger, and hopefully, expanding number of potential Clients. Sales reps that build a book of referrals are assets that continually reward their employers. Their involvement with their Clients reduces the cost of goods.
Cemeteries with land restrictions have come to rely upon verticality. Community mausoleums extend the lifetime of cemeteries through the reality of using the land many times over rather than selling it once. Community mausoleums reward cemeteries by permitting the same piece of land to be sold many times. The economics for land strapped cemeteries are therefore evident.
Though community mausoleums are common they are not universally accepted. Ethnic groups, religious concepts, educational backgrounds, myths and legends all play a significant role in the selection of memorial property. The obligation of a sales rep is to serve three different interests that may be in conflict. They must serve their Client, the cemetery and their own needs.
Ships do not turn on a dime and neither will long held beliefs or prejudices. If cemeteries must rely upon vertical sales in a community that is uneducated or hostile to the concept the only hope is a sale force that has the power to communicate with the concerns of their Clients. All the advertising, marketing and event planning will not inspire a change of long held beliefs. Only trust and respect earned through direct contact with Clients can achieve consideration of alternative possibilities.
By having a sliding commission scale a cemetery that relies upon a commissioned sales force insures their ardent support to realize the reasons for building a community mausoleum. Nothing motivates sales reps more than the opportunity to make more. The enthusiasm conveyed by a sales rep will result in sales and a change, over time for the acceptance by Clients of what in the past would have been rejected.
It requires a conscientious Sales Manager to constantly recruit, train and find the basis for motivating a sales force. Morale and camaraderie is part of the mix but it is foolish to believe that sales reps become teams. Commissioned sales reps are sharks on the hunt to earn not only an income but also a basis for internal and external respect. The great ones are performers with the soul of entertainers who remain dedicated to all three conflicts exerting influence on them: the needs of the Clients, the expectations of their employer and their own financial requirements. They may be extremely difficult to deal with but the rewards for having one with you appears monthly on the bottom line. They are the lifeblood any business that depends upon sales for its existence. Without them revenue flow that permits a business to flourish dries up threatening the future.
In the past cemeteries were controlled by gravediggers who climbed the ladder becoming Superintendents through seniority. It was not uncommon to have a Superintendent point at a grave providing a family no other option. Today the world is full of alternatives built upon competition. Not realizing the change for cemeteries means one of several things. One is that the trust funds are ample to cover any operating deficiency. Another would be that nothing is left to sell but isolated graves, or revenues are not sufficient to support the cemeteries operation.
In the case of a richly endowed cemetery the Boards of Directors interest is return on investments. They become stifling self-serving members of a group who believe they serve the interests of the institution by reaping the benefits of compounding interest. The problem is they turn away from the reason the cemetery was created in the first place. The needs of the community become secondary to financial reports that show an increasing bottom line. Unfortunately the cemetery and their staff become alienated from the community. Employee relations become strained as a result of a Board reluctant to increase expenditures.
For a cemetery nearing the end of its useful life with limitations of land and revenue the possibility of it becoming a local albatross is great. These are the cases that become abandoned cemeteries and a curse for the community. They represent a Board that was remiss in planning for the inevitability of being sold out.
Success is predicated upon numerous and various factors. It is rarely science and truly an art form. Sales are not just one part of the ingredients in the mix. It is the chemistry that insures vitality and a future. When the sales force is viewed as anything other than an asset the overall health of the organization will suffer. Perhaps our profession fails to believe this truth due to superiors on the organizational chart being salaried. When there is no trickle up, controversy and rationalizations that in the end will burn an organization are given credence.
When I informed the General Manager of a friend who owns his business celebrating the ever-increasing income of his commissioned sales force, he was in disbelief. The General Manager could not conceive of this as anything other than fantasy. He insisted that I was mistaken or lying.
When I spoke with my entrepreneurial friend and expressed the GM’s contention that commissioned sales reps must have limitations on their income the response was, “This has to be a joke!” Unfortunately many in our profession do not get the joke.