Paying your staff more is a good thing. It’s good for hiring, for morale, for retention, and when your employees’ compensation is based primarily on commission, it’s definitely good for your sales.

With a well-strategized commission program, staff members are not only motivated but empowered. They’ll be inspired to learn more, educate clients better, and be more friendly and outgoing because those efforts will lead to better sales and more income. Then they’ll have thousands of dollars worth of reasons to stay with your company. You’ll earn a reputation as a place where people can make a real living, thus attracting more suitable employees in the future. And the cycle continues…

“Our goal is for our people to continue to make more. If you have that out there in front of them, they’ll buy in, and you don’t have to worry about losing them,” says Sundays Sun Spa owner Dennis Ligon.

“I think commission is the lifeblood of our sales. To attract a top-tier management and sales team, we have to give them a pathway to continually increase their paycheck. Many years ago, a management position might be a $35,000 to $40,000 per year position. Nowadays people can see themselves building an income over $70,000 to $80,000 a year or more.”

While this is the final article of our series on building a superstar sales team, the subject of incentivization relates significantly to the previous discussion on hiring and training. The best potential hires are going to be the ones who are highly motivated to sell, and a strong commission program will help you appeal to the right candidates. Down the line, it will also be crucial in helping retain your best salespeople. Paying commission and setting your team members up to succeed in sales is the only cost-effective way for you to compete with higher-paying job opportunities. Everyone wins and nothing is lost when you’re rewarding employees for generating more revenue for your business.

As it relates to training, your efforts to convey that succeeding at sales is a vital part of their role are never going to mean half as much as telling them how they can make the most money for themselves. With a commission program that emphasizes the sales priorities of your business, your training can evolve from “Here’s what you need to do” to “This is how you’re going to achieve success in this role and increase your income.”

“We put a bonus on the sales that make us successful. It’s not packages. It’s not sessions. We put a bonus on the things that make our company healthy. We want to direct them into selling the things we want sold, and reward them with a bonus on memberships. They can make a $35 bonus selling the right EFT. Plus, if they sell a $120 bottle of lotion they make $12. Those are the things that we want sold,” says SunSeekers by Rosie co-owner and GM Scott Nichols.

Skin in the Game

 In the “olden days” of tanning, the topic of sales training tended to center mostly on product sales. Back in the ‘90s and early 2000s, most salons were booming with customers, and selling tanning was a given. If customers are coming in to buy tanning, why would you compensate your staff for selling it to them? With that perspective, the main sales staff members had to work for involved products. Incentivizing them to sell more products and more expensive ones made perfect sense, and it still does. Today, that’s a given. In a Smart Tan survey, almost 95 percent of respondents said they pay commission for product sales.

These days, most customers are still coming in for tanning, but it’s become more imperative for businesses to sell it in the right way. Memberships have become the lifeblood of the majority of tanning businesses, and locking in and retaining that recurring revenue should always be the central focus. So, if you’re still not utilizing a membership-focused approach or structuring your commission program to prioritize membership sales, it’s time to rethink your priorities. In the survey, 70 percent of respondents said they pay commission for membership sign-ups.

“Our commissions have come a long way. We started with just a five percent commission on product and then services,” Ligon says. “Now we still have the five percent commission on products, but that can be doubled at the end of the month if they hit a higher per client average. We have our EFT bonus where we pay them 10 percent on the EFT sign-up, and then they continue to be paid 10 percent on the monthly EFTs. So over time, this can grow to over $1,000/month residual income or more. It really shows them that the value of that new EFT is not a $7 commission but may be worth hundreds of dollars over the lifetime of the membership.”

As Ligon references with his approach, some of the more progressive salons out there are now not only heavily incentivizing memberships sales, but also membership retention. Paying recurring commission on EFTs keeps employees focused on service and managing relationships. In a broader sense, it’s the most practical way you can make your staff members more like partners in your business. Remember, commission is not just your best sales tool but also your best employee retention tool.

“I got the idea from the insurance industry. If I sold you an insurance policy, when you renew it, they keep paying me forever. They know if they sell it the right way and stay excited about it, every month it’s another seven bucks for them. Several girls this month are over $1000 per month on commission for recurring EFTs. They know if they leave Sundays, they lose that $1000 per month they get before even coming to work,” Ligon says.

As with most well-strategized commission programs, Ohio salon Fierce Tanning’s residual membership bonuses also create a win-win situation. Staff members are paid a bonus for the initial signup, and then $2 every month the membership is retained.  Giving them a stake in every client interaction enhances membership retention as well as overall customer service.

“A couple of my girls are raking in several hundred dollars for membership bonuses on top of sales bonuses. They’ve really focused on building relationships with customers and increasing our membership retention,” Williams says.

“I wanted to involve my staff as much as I could when growing our membership base. With the residual bonus, they ultimately feel more involved because they feel like they have a stake in the store. They’re constantly looking at their numbers, how many memberships they have, and if they’re approved on the first of the month. It creates a reason to keep them involved and engaged with each member and pushes them to reach out and rectify any issues when a membership doesn’t come back as approved.”

Driving Growth

While it’s pragmatic to provide more incentives for membership sales and other priority items, placing too many limits on opportunities for staff to earn on other sales could also limit the impact of your efforts. If you’re paying commission on “Sale A” and not “Sale B,” it stands to reason that staff members aren’t going to push Sale B at all, even if it’s a good option for many clients and a good sale for the business. By making Sale B rather than pushing for Sale A, the employee is essentially taking money out of their own pocket.

In 2020, Tara Sanders, owner of Touchable Tans in Louisiana, instituted a comprehensive, strategic commission program based largely on suggestions and feedback from her industry peers. She went from only incentivizing the highest-dollar sales to paying commission on almost everything, including sessions and packages. From 2019 to 2022, Touchable Tans’ revenue increased nearly 50 percent. While a number of factors could be in play, Sanders says the only other significant change was upgrading Level 1 units. “I attribute that increase to commission,” Sanders says.

Touchable Tans now pays five percent commission on virtually every sale – anything over $5 – and membership sign-ups pay 10 percent. Sanders has also adopted the strategy of paying five percent on recurring EFT drafts, similar to Ligon and Williams’ approach.

“It made a huge difference with overall sales. Before, we were strictly hourly pay with tips and the girls got $10 commission for airbrush spray tans and lotions over $100. Once we switched to commissions across the board, getting a little something off everything $5 or more, they saw the benefits of promoting products and knowing their products better so they can sell them to customers,” Sanders says. “Now every customer is a potential boost to their paycheck. They started focusing on everything we sold. They got excited about every new product we got in and started engaging with our clients a lot more.”

Some owners may scoff at the idea of paying for virtually every sale: Why would you compensate them for doing the bare minimum? They may have a point, but there is a method behind the madness. As Sanders references, paying commission for every sale has motivated her staff to care about every product and service and every customer interaction. Commission isn’t something they hope they’ll earn when a client walks in, but something they know they’re going to earn. The only question is how much? At the same time, the 10 percent bonus on memberships sign-ups as well as the recurring commission on EFT draft still makes the priorities clear.

The rationale also goes back to the big-picture implications on hiring, employee satisfaction and retention. Commission isn’t just a sales tool but also simply a part of the way you compensate your employees. Better compensation will more than likely lead to better hiring prospects, increased job satisfaction, and better employee retention. Even if paying more commission ate up all the extra profit from additional sales, creating additional income for your team would have a net benefit for the business.

“Since implementing commissions, the employees I’ve had have stayed with me longer than any employee since 2012. It’s the first time the majority of people I hired stayed for at least an entire year or more,” Sanders says.

On the other hand, Nichols and SunSeekers maintain a baseline staff members must reach before being paid full commission for a given period. While the best salespeople will always be motivated by money and clearly see that more effort equals more sales and more money, others might not be as financially motivated. If someone is satisfied by their base pay and minimal commission, a baseline will motivate them to meet the standard, and hopefully encourage them to start going above and beyond once they get a taste of the earning potential.

Some salons base the standard on Per Customer Average, while others use total sales or benchmarks for certain types of sales, and Nichols utilizes a points system to encompass everything.

“We do have restrictions they have to meet before they can get their bonus. Part of that average is lotion. If they miss it, they can still get half their bonus. We have with EFTs, Level 1 they get one point, Level 2 they get two points, and so on. They have to reach 10 to 20 points depending no the time of year,” Nichols says.

“The reason we do this is, it’s about winning. They have to get to that level, then they’re like, I can do this again and again. Our goal is to have a staff that wants to win.”

Endless Possibilities

Of course, the better your staff gets at selling memberships, the more of your visitors will already be on a membership, When members come in, your staff needs to be motivated to keep their eyes on the prize and find ways to better serve those customers and make additional sales, which most predominantly means product sales. In turn, enhanced focus on selling more products will lead to better education, better service and becoming better at matching clients with the right products for them.

Touchable Tans employee Bella Gonzalez has most notably noticed the effect of commission on her performance when it comes to products. “Especially with lotions, it helps push me to learn the lotions more because it helps me sell more, and to recognize what somebody is looking for and what specific lotions to recommend to them. The more lotions I learned, the more I’ve been able to sell, and that definitely increases my commission a lot,” she says.

It takes a dedicated effort for employees to continually convey to customers why they should purchase their products from you, use better, more expensive tanning products, and explore a wider variety of tanning and skin care products. But, when you look at it that way, the opportunities for product commission are virtually limitless. By arming your team with a healthy supply of tanning, sunless, skin care, and specialty products, you open the doors to sell more and make more without paying a higher percentage.

The same concept applies to your equipment and service mix. In the respect that commission is important not just as a sales tool but as an important part of hiring and retaining a successful sales team, setting your employees up for success with the right products, equipment and services is just as important as the commission rate you’re paying.

“If we’re going to have restrictions on sales averages, for them to reach their bonus, we better have a product out there that’s higher priced and one that customers might come back and buy again. They make 10 percent off lotion. Make sure the customer is getting the products that work well,” Nichols says. “There’s an obligation to make sure you have the best products, tanning, sunless and red light.”

 Cornerstone of Success

As we conclude our exploration into building a superstar sales team, it’s evident that a well-crafted commission program is not just a perk; it’s a cornerstone of success.

By aligning incentives with business priorities, you can foster a culture of engagement, enthusiasm, and customer-centricity. Moreover, you can attract better talent, enhance employee satisfaction, and improve retention rates. Whether it’s through residual bonuses, tiered systems, or comprehensive commission models, the message is clear: when employees thrive, businesses flourish.

So, as you chart the course for your sales team’s journey, remember the power of commission as more than just a sales tool. It’s an investment in your team’s potential, a testament to your commitment to their success, and ultimately, a pathway to building not just a sales team, but a sales dynasty.