photo courtesy Pixabay.com
Selling makes home improvement happen, but here’s the problem: Sales people turn at more than double the rate of other types of jobs. Among all types of sales, turnover is twice as high—27 percent—as that of the overall labor force, according to the Harvard Business Review, in spite of the fact that “U.S. firms spend $15 billion a year training salespeople….” In home improvement sales it’s called “churn and burn,” so sales managers often have to periodically drop everything and start looking for a new salesperson.
That’s harder than it used to be. Candidates, especially young people, are harder to come by. Owners who’ve been in business awhile might daydream about that 25-year-old guy or gal who’s writing $100,000 a month in sales three months out of the gate, or the 30-year old so burning with ambition he leaves the chair singed. So where are they?
Simply put, for millennials, a career in sales is probably not even something they’ve thought about. That doesn’t mean they’re not open to opportunities or can’t be recruited. It means you need to make the job appealing.
And though job appeal is about way more than money, let’s start with commission, which at home improvement companies typically ranges from 6 percent to 12 percent, depending on company, product, lead quality, and levels of sales support. For many years the mantra among home improvement sales trainers has been that the only way to pay salespeople is straight commission. Consultant and blogger Michael Stone sums it up: “If you have sales people working for you, their job is to bring in as much good, profitable work as they can sell. If you are paying them anything other than straight commission, where is the motivation to sell?” Straight commission, Stone insists, “removes all the stories, excuses, rationalizations, B.S. and hoorah that salespeople can generate for reasons they are not selling.”
That idea has served home improvement company owners well for a long time, and resulted in many salespeople with six-figure incomes. A recent scan of www.indeed.com for home improvement sales shows one company offering $200,000 a year, another $138,000 a year, a third $70,000 to $140,000 a year.
Straight commission is a strong argument, rooted in experience. Still, for the job-seeking millennial, it turns a potential sales job into a do-or-die proposition. It also, in effect, makes sales essentially well-rewarded piecework.
Risk and Reward
But does straight commission work when recruiting millennials? The auto dealership industry—a long-time source of home improvement sales recruits—has already come to terms with the fact that it doesn’t. Millennials “are not drawn to a job where all the risk is on them and not on the employer,” writes Adam Robinson, co-founder and CEO of Hireology, an integrated hiring and retention platform for the retail automotive industry. More than that, he says, it’s the hours, a problem the home improvement industry also has, since sales appointments are often set for evenings and on weekends. Toyota senior vice president/operations Bob Carter says that auto dealers need to change working hours and move away from commission-based compensation plans to make jobs more appealing to this age group. “To attract Millennials, you can’t expect to work them 16-hour days,” he told a group at the 2015 National Automobile Dealers Association Convention & Exposition. According to Ted Kraybill, president of ESI Trends, a Largo, Fla. consulting firm that conducted a workforce study for NADA, millennials are more interested in a steady, predictable salary than the upside potential of a commission-based wage, and that’s driving more auto dealers toward salaried-based compensation plans. “Many prospective employees, especially the millennials who now account for 60 percent of new dealership hires, dislike the high-risk, commission-based compensation plans common at dealerships,” he says.
The Work/Life Thing
Pay is only part of it. Beyond that, there’s the fact that millennials favor diversity, but the auto industry is almost entirely white and male (sound familiar?). Plus, tot his generation, cars do not represent the status symbol they did to prior generations, an observation that might also apply to a house.
Then there’s the schedule strain. It’s a biggie. “Commission-based salary systems may pay off big time for skilled salespeople,” writes Rebecca Koenig, at US News & World Report in an article titled “Careers Millennials Should Avoid.” However, she points out, “they may also cause a lot of stress. People who work on commission may find that the amount of money they take home rises in direct proportion to the number of hours they work. Because of this, sales representatives may feel pressure to work constantly to boost their numbers, so their jobs may cut into the work-life balance that many millennials seek. And in fickle markets, the salary of someone who works in sales may be determined more by luck than labor, which can put salesmen and saleswomen on edge.”
According to human resources consultant Jennifer McFarlane, one further difficulty in recruiting millennials to sell is the media-driven stereotype of salespeople as greedy buffoons, and the notion that the increasing prevalence of technology makes sales a dying profession (see, “How to Recruit Millennials for B2B Sales: The Ultimate Guide”). But the idea that millennials disdain sales jobs, home improvement or otherwise, is contradicted by the experience of large, growing companies in the industry, such as Power Home Remodeling, in Chester, Pa., and Tundraland, in Kaukauna, Wis., both of which have proved to be millennial magnets in their recruiting.
Here are steps you can take to make your company more successful in hiring millennials:
- Re-think compensation packages. “Young people want a financial safety net. They favor a higher base pay with a lower proportion of riskier commission pay,” notes Eliot Burdett, CEO of Peak Sales Recruiting, in a guest post for Forbes.
- Sell your company and the job. At companies such as Power or Tundraland, the culture both attracts jobseekers and contributes to retention. Is yours a diverse workforce? What level of opportunity exists? How involved is your company with giving back to the community? In an article at Inc.com, Melissa Thompson, founder of health and lifestyle publication HarcourtHealth, says 80 percent of millennials “examine culture fit with potential employwers before applying to and accepting jobs.” Once there, they want purpose, guidance, feedback, and flexible work schedules.
- Build a talent pipeline. If you’re scrambling to fill a sales slot every time someone leaves, you’re not only wasting time and energy, you’re multiplying the chances of a hiring mistake. Create a steady inflow of talent by systematizing your hiring approach. Lee Colan, leadership advisor and founder of The L Group, suggests you start by evaluating your growth goals and the strength of your employer brand, i.e., how attractive your company is to jobseekers (see “5 Steps to Building a Successful Talent Pipeline”). Then assess your HR needs, and create a development plan for all positions. Encourage employees to refer people. Build a database of interns, former employees, and candidates who reached the final stages of your hiring process, advises Nikoletta Bika, a researcher and writer at workable.com. Network at in-person events and use social media recruiting. Do all this and the next time you need someone, you won’t have far to look.
It’s Still About People
As important as it is to account for generational differences in your sales recruiting, it still gets down to the quality of the people you attract and hire. In his “The Strategic Sell” column, sales consultant Jim Peduto presents data on more than 43,000 millennials in sales, and compares that with data on veteran salespeople. Comparing the two groups overall shows millennials weak on Sales Ability and Ability to Execute the Sales Process (strategies, skills, and tactics). Sales vets, by contrast, are “Serviceable” or “Good” in those disciplines. When it comes to Commitment (“willingness to do what it takes to achieve greater success in sales”) and Figure It Out Factor (how quickly they get up to speed), millennial salespeople are Low, while sales vets are High and Medium, respectively.
But then, when he compares the top 10 percent of millennial salespeople to the top ten percent of vets, he finds them scoring high on all four factors and concludes that “both are good choices. You need to hire the top 10 percent, regardless of whether they are a Millennial or not.”