- Doing everything by the book wasn't the problem; the problem was how much was lost between what the company set aside for each commission and what reached the salesperson.
- A commission paid like a salary carries the same additional costs a salary does; that is why the promised plan becomes unsustainable precisely in the good months.
- Proper management of sales talent: real services, clear contracts and documentation in order. Higher net income for the team and significant savings for the company.
A homebuilder in the State of Mexico had its sales force — 23 people — hired in the most traditional way possible: base salary plus commissions, everything registered, with every charge that comes with it. It did everything by the book. And still, every good sales month was the most expensive one, and when it tried to adjust commissions, it started losing its best salespeople.
Why it was a reasonable decision
The company had chosen order: an in-house sales team, registered, with salary and commissions the traditional way. For a builder selling homes, it made sense: control over the process, continuity with the customer and no surprises. It was a reasonable decision. And for years nobody questioned it: the talent cost looked like the price of doing things right.
Where the money was “lost”
The problem wasn’t the order. It was how much it cost to sustain it.
When a commission is paid the same way a salary is, it carries the same additional costs a salary does, and that burden grows with income. The salesperson’s best month was the month when the most was “lost” between what the company set aside and what reached their account. Over time, the commission plan the company had promised stopped adding up: in the good months, the cost of commissions grew faster than the company had planned for. It did what many do: it adjusted the plan downward. And that is when it started losing the people who sold the most. Replacing each one costs between half and two years’ salary, according to Gallup.
If your company compensates its sales force the traditional way, this will sound familiar: you aren’t losing salespeople for complying. You’re losing them for what it costs to comply this way.
What Umbral did
Umbral took on the talent management of the sales force. It started with a diagnostic of how the sales team was compensated and retained, and continued with what proper talent management involves: real services, clear contracts, verifiable deliverables and the documentation the rules call for. The company kept what matters to it: its team, its targets, its commissions and its way of selling. What changed was how efficiently every peso set aside for sales reaches the person who sells.
For the salespeople, no extra paperwork. Their questions were answered in a live session before launch.
The salesperson’s best month was the month when the most was “lost” between what the company set aside and what reached their account.
What changed for the company and for its team
The team first. Higher net income from the first month, on the same commissions. The company was able to go back to the plan it had promised, and sustain it.
Then cost. Significant savings on the cost of sales talent. Not at the salesperson’s expense; in favor of both.
And order. Everything by the book, as always. Now, also efficient.
What your company can do today
Take your best salesperson’s commission in their best month and compare two numbers: what it cost the company and what reached their account. The distance between the two is what it costs you to sustain the plan you promised.
Doing things by the book was never the problem. Doing them by the book and overpaying for it was — that’s why Umbral exists.
The question isn’t whether the current formula complies. The question is what it costs, every month, to keep complying this way.
Frequently asked questions
Did anything change for the salespeople?
No extra paperwork and the same way of selling. What changed is their net income, which went up from the first month on the same commissions.
Did the company lose control over its sales team?
No. Targets, supervision, commissions and the way of selling remain the company's decisions. Umbral makes sure talent management is in good standing and efficient.
Does this only apply to sales forces?
No. It applies to any team with variable income and to any sector where the variable part outweighs the fixed one. In sales, the effect simply shows faster.
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