When Barefoot Wine was just getting established, our accountant asked if it bothered us that our top salespeople made over $100,000 per year when we were making under $50,000. “They are paid on commission,” we said. “We hope they’ll make $200,000 so we can make $100,000!”
When we first started hiring new employees in those early days, one sales candidate in particular kept interrupting us to ask, “Are you sure that commission plan has no cap?” About the third time he asked, I said, “I’m sure! And you are so hired!” He quickly became one of our top salespeople.
Who cares if they make more than the owners when they are paid on commission?
When folks came to work for us, they were handed two infographics: the Money Map and Organization Chart.
The Money Map
The money map showed the path of the money from the end-user all the way back to our staff’s paycheck. It started with the shopper buying our product off the shelf and handing money to the retailer. The retailer pays some expenses and collects some profits, and hands a portion of the money to the wholesaler or distributor.
Next, the Money Map showed the wholesaler or distributor buying the product from us, the producer, and handing over even less of the money. We then used a large portion of what we received to pay suppliers, business services, sales commissions, taxes, and overhead until we were left with just a fraction of the original amount of the retail sale proceeds the shopper had handed to the retailer.
The small amount remaining was used to pay the staff’s salary, benefits, and bonuses. This left no question about where the money came from or how it got to their wallets.
The Organization Chart
Our organization chart was simple and didn’t look anything like a traditional corporate pyramid with a lot of boxes, lines and branches. It had only four boxes and they were stacked up neatly, one on top of the other, all in one column.
The top one was labeled “Customer”. Right under that was “Sales”. The third box down was labeled “Sales Support”. The bottom box was labeled “Not Employed Here”.
If you were employed at Barefoot Wines and you weren’t in Sales, you were in Sales Support, which included marketing, accounting, technical support, legal, logistics, and production. From the receptionist to the CEO, everyone not in Sales was in Sales Support!
Now our staff knew that all the money came from the customer as a result of sales. They knew that sales were on top and everyone else had to support sales. We then took the next step.
Calculating Sales Bonuses
Bonuses paid to our Sales Support staff were based on commissions. Bonuses were not based on how hard or how long they worked, or on how long they’d been with our company, but how effective the Sales Support team was at supporting the Sales team with timely reports, quick referrals, excellent products, compelling sales materials, and fast turn around on all requests.
With bonuses tied to sales, everybody figured it out pretty fast — and a funny thing happened. Non-producers couldn’t afford to stay and producers couldn’t afford to quit! Everybody quickly figured out how they fit into the money map and how they could support sales.
As an entrepreneur, you can’t afford to pay strictly by the hour, and you can’t afford not to share a cut your staff. By implementing a bonus plan based on the money map and the two-division company, you will save a bundle on turnover and become much more efficient.
Why not, hitch the entire team up to the sales wagon?
Isn’t teamwork what you want anyway? Pay them bonuses out of the money they help to find and they will find much, much more!
Michael Houlihan and Bonnie Harvey started the Barefoot Wine brand in their laundry room in 1985, made it a nationwide best seller, and successfully sold the brand to E&J Gallo in 2005. Starting with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles and create new markets. Their book, “The Barefoot Spirit”, chronicles the history and lessons learned building the popular Barefoot Wine brand.
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