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Business Tips - Performance Based Payment Schemes and 1 Customer = Unlimited Potential Customers

Nov 16, 2007
Another misconception about business operating practices is the stigma associated with performance based payment schemes. There are two schools of thought in the retail sector about performance based schemes.

In the first instance, some businesses are based on a commission system, where the salesperson collects a commission (sometimes on top of a wage/salary) for each sale. The perception that people attach to this type of salesperson is that they are more interested in generating the sale, and will therefore put the service before the product. Stock brokers are notorious for this, because they make money on the brokerage fees, regardless whether they believe the stock is worth buying/selling. Real estate agents, on the other hand, are seen to be constantly pushing the prices of properties up, because the higher the price, the greater total amount they generate from the flat commission they are paid per sale.

On the other hand, other businesses work on a bonus system, where if a sales target/objective is reached (i.e. a certain number of sales, or a total value of sales generated), then a pre-determined or percentage based bonus is paid to all the staff involved. In this case, it is a winner-takes-all situation, but perhaps workers are more motivated because the difference between reaching the goal and just falling short is rather substantial. Then of course, there are also scaled/tiered commission and bonus systems depending on the type of business involved.

There is no doubt that performance based payment schemes exist to reward those who work hard and have earned themselves the privilege of sharing the company's success. The problem about performance based payment schemes is that it doesn't seem to be uniformly applied across the organization, and it does nothing about those people who don't contribute or perform to their standard. We are used to hearing about CEOs getting bonuses for increased profit, without hearing about how the employees are also rewarded. It goes without saying that when companies lose money, it is the employees that `strategically restructured', but the CEO doesn't take a pay cut. Maybe it's time to look at a uniform performance based payment schemes for all our managers and workers.

Be aware that 1 customer = ? potential customers

Another common problem or misconception in the retail/service industry is that one customer is equivalent to one product/service. Therefore, the common belief is that if someone doesn't want it, another person will come along and get it instead. This assumption works perfectly if we all lived isolated lives, but the fact is that the world is becoming a much smaller place thanks to the remarkable advances in technology. Social networks are not just confined to a small geographic location. It isn't even confined by geographical, political, religious or cultural boundaries anymore, thanks to the advent of communication technologies that have helped to breach many of the barriers that isolated us before.

So the reality is this - a person who is unhappy with your service or product doesn't just complain about it. Their friends will soon become aware of the complaint, and their friend's friends will also know about it. Before long, there may be a big group of your potential customers ignoring your business just because one person was not happy about the service or product, and you chose to think of them as `just another customer'.

Let's turn the tables around, and put yourself in the customers shoes. If you as a business owner think of your customers as `just another customer', what do you think the customers think of your business? Would you rather that they think of your business as `just another business' or would you rather treat every individual customer as the window to an unlimited number of potential customers?
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