Commissions for Memberships? – DSP 317

Any sales related business knows that commissions are the gold-standard incentive program for drumming up business, but how does it work in a float center for memberships?

Derek and Ashkahn talk about the mixed success they’ve experienced at Float On each time it’s been tried.

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Transcription of this episode… (in case you prefer reading)

Ashkahn: Yeah. Okay. Hi. Welcome everyone.

Derek: Hello there.

Ashkahn: Please, take a seat. If you’re already sitting-

Derek: Stand up.

Ashkahn: Yeah, stand up.

Derek: Unless you’re in a car.

Ashkahn: Then kind of, I guess, keep driving, is probably the best advice we can give.

Derek: Keep doing what you’re doing.

Ashkahn: This is Ashkahn.

Derek: This is Derek.

Ashkahn: That’s why that might have sounded a little unrecognizable to you at first, because that is in fact not Graham.

Derek: I’ve been on the show enough to be recognizable.

Ashkahn: Yeah, we all know Derek.

Derek: Yeah. Most people.

Ashkahn: Most people know Derek. If you don’t, just come on over to Portland anytime and you can meet him.

Derek: That’s not true.

Ashkahn: He’s happy. We’ll put his address in the show notes so everybody can-

Derek: I just moved.

Ashkahn: Go and say hi. We got a question.

Derek: Oh, okay. Go for it.

Ashkahn: I read the questions now.

Derek: You’ve moved up to top question reader.

Ashkahn: That’s right. Get used to it. So, here we go. Boom. I’ve gotten pretty good at it, if I don’t mind complimenting myself for a question.

Derek: I’m just gonna let you.

Ashkahn: For a second here. Our question for today, “do you give your staff any commissions for selling memberships or packages? “

Derek: That was a good question.

Ashkahn: Thanks.

Derek: Not the delivery.

Ashkahn: I don’t really care about the question specifically. I think the delivery is really what’s important here.

Derek: Do we give commission to our staff?

Ashkahn: No one’s asking you to do it  too. Okay?

Derek: Oh. I guess that was better.

We’ve tried.

Ashkahn: We have tried.

Derek: Yeah.

Ashkahn: Yes.

Derek: Try is the operative word.

Ashkahn: We’ve tried a couple of different things.

Derek: We’ve tried group commission. We’ve tried individual commissions.

Ashkahn: Yeah. Yeah. So, memberships specifically are the things we’ve done the most experimentation with because our minds are really focused on bumping memberships. If there’s one thing we’re trying to put marketing effort into, it’s getting more members and getting that conversion rate up.

So, when we thought about the idea of maybe trying to incentivize it or seeing if that helped with staff getting better at pitching memberships, that was definitely where our mind went, was putting it on memberships, and yeah. It’s a tricky one.

If you’re going for it, a few of the logistics right off the bat. So, what we’ve never done is given individual commission to someone selling a membership, just because it seemed hard or it just seemed like it was gonna lead to conflict. Hey, I talked that guy up, and then-

Derek: Somebody else closed it.

Ashkahn: They called on the phone six hours later and all they did was call and buy a membership, and now the person they called is the one who gets the commission, or it was a little less fair for the people on our night shift who just don’t get as many people. They just don’t see as many customers as other people do.

Derek: Some people are more naturally inclined to sell than others.

Ashkahn: Yeah. Well, the goal is to get everyone to few, especially to encourage the people who are less inclined to-

Derek: Right.

Ashkahn: Sell. But for us, we asked the staff, too. We’re like, hey, what do you guys think? Would you prefer individual commissions or group commissions? Pretty much everyone wanted group commissions for all these reasons, and it just sounded way simpler. So, we’ve never tried individual ones. We’ve just tried group ones.

One of the reasons why I think commissions make most sense for memberships also is that it’s recurring money.

Derek: Right.

Ashkahn: So, if you’re giving a commission even on the first sale, it’s still beneficial to you as a business because that’s hopefully a member that’s staying on for some period of time, and you’re getting all of those extra months of them being members.

Derek: Right. So, how did it go? Well, so they all were on the same page that of the payout. They were all kind of on the same page with selling memberships is important. Then what happened?

Ashkahn: It didn’t really work. We’ve tried this a couple times, and to be honest, it’s never really, we’ve never really gotten to work.

Derek: Usually we hit these little pushes to increase memberships, especially incentivize them, we’ve kind of hit a plateau. In this last round, we’ve tried to do it, and it was we were trying to get from one number to the next, and we just couldn’t really break through that number.

Ashkahn: Yeah, and I don’t know. Despite, I have some theories. One is that we’ve tried doing commission on other things, too, even as far as selling a certain retail product.

Derek: Right.

Ashkahn: Like, hey, we’re doing commission on this retail product for the month. Same thing, kind of group commissions. So, anything that’s above our average sales for the month we’ll split up profit wise, or we’ve done little things like that, and I think part of the difficulty is just that all in all, even if things are going well, it just doesn’t really end up being that much money per person.

Derek: Right.

Ashkahn: When we went through this, even if we did boost the retail for that month, for that item, or we got a couple more members, the amount of money we’re talking about bringing in here for a float center or for that retail item or for that first month of membership, divided by we have 12 people on our staff, it ended up being $15 a person.

Derek: Yeah.

Ashkahn: It just wasn’t significant enough to, I think, I feel like people did try to change their behavior at the beginning. At the very least, to just feel like they were part of the team and understood that we had a goal as a company in trying to hit it, but we’re not a company. We’re not selling a car or something where all of a sudden a couple different sales can mean thousands of dollars in someone’s pocket.

Derek: Right. I even was trying to notice, I’m not trying to make excuses for why we didn’t hit previous sales goals for memberships, but I kind of harken back to we hit kind of a capacity of members when we were on the three tiered plan of two, four, and eight, and we would get to 100, 120 members and then people would start dropping off. We couldn’t really, again, get to that plateau and I think where we’re currently standing, and we’re kind of at that plateau where capacity plays an issue, right?

So, if you have 250 members and six tanks open 24 hours a day, there’s only so many people who could float if you try to push it to 300 members. There might be availability issues where members churn and drop off and you’re kind of treading water instead of increasing.

Ashkahn: Yeah. Even across a couple months where we’ve had, when one month’s been a lot lighter than another month, though, it’s not like that has led to an increase in memberships. With our current members, I don’t feel like … I feel like our schedule has enough open space, unless we’re really talking about they can’t get in on Friday nights.

Derek: Right.

Ashkahn: Specifically and that’s what’s driving them crazy. I don’t know. At the very least, whatever the idea is with the plateau, trying to add on a sales commission for our staff for memberships did not seem to overcome it.

Derek: No.

Ashkahn: That wasn’t something that pushed us past this plateau, I guess is something we can say.

Derek: So, the question is if it’s not commissions, what is it?

Ashkahn: Yeah.

Derek: We haven’t figured it out.

Ashkahn: Nor did commissions last time we tried this on memberships with our old membership structure some years ago. Nor did really commissions on any retail product. That’s pretty much all we’ve done. We briefly did a small referral program thing, many years ago.

Derek: Didn’t we do a 7:00 AM, like if you can fill 7:00 AM slots?

Ashkahn: That wasn’t a commission, that was just a-

Derek: Special membership.

Ashkahn: Discount for people.

Derek: Yeah.

Ashkahn: I don’t know. Part of it is that we’re limited in, we’re not gonna give a commission on just normal floats because that’s the base of our entire business and all of our marketing is going to that, and there’s not a lot of sales that are happening for people.

Derek: Right.

Ashkahn: We don’t really sell a lot of packages, or really bring up packages at all because we want people to focus on memberships. Other than that, retail items, there’s just only so many things we sell in our shop.

So, we’ve tried commissions on all the things that made sense, and I don’t know. For one reason or another, my guess is at least partially because even if things go well, the grand sum of money is really nothing that’s too exciting.

Derek: I know people’s feelings and intentions versus reality sets in. I know everybody wants a group commission, nobody wants to feel singled out and some people have better shifts and work more hours. Do you think maybe if we tried a test of individualized commissions those who would sell would get a taste of that money, maybe sell even more, and maybe we’d break through that plateau?

Ashkahn: Yeah, it’d be interesting. We did do it, I will say, proportionally to how many hours people worked.

Derek: Right.

Ashkahn: So, it wasn’t just a straight split. So, that helped equalize things a little bit for people who were like, one shift a week versus full-time. I don’t know. We’d have to deal with that whole thing of someone selling a membership, someone doing all the work to make a sale, and then that person just happens to do-

Derek: To ring them up, yeah.

Ashkahn: It with somebody else.

Derek: The traditional sales territory, yeah.

Ashkahn: Right. Mostly no one in our shop, it was pretty unanimous that everyone-

Derek: Yeah.

Ashkahn: That nobody wanted to do it like that, and so that to me was enough to kind of knock it off the table of consideration.

Derek: I’m just wired differently. You give me a little extra money for every action, and I’m gonna sell the hell out of it.

Ashkahn: Yeah. It’s interesting. We could try, but even still … I don’t know. I guess we could try both upping the amount and changing it to be individually. The other thing is I feel like the proper incentive is for a member that stays on for any period of time, right? If you’re signing up members but what you’re doing is you’ve figured out a way to get members to sign up for a month and then cancel-

Derek: Right.

Ashkahn: That’s not really what we want to be incentivizing. It’s almost like, we’ll give you a commission of members that sign up for three months or longer.

Derek: Right. Thankfully for our memberships, we have the three month minimum now.

Ashkahn: Yeah, they have to. So, I guess for us it’d be four months or longer.

Derek: Right.

Ashkahn: Something to make it so that we’re actually optimizing for those members who are really gonna be members and stick with us, but I don’t know. How much does that become the employee’s fault who sold the thing versus just the fact that we should maybe be working more on member retention?

Derek: We could do something along the lines of that first month of sales goes towards the employee.

Ashkahn: Yeah, it’s interesting. Profit sharing is kind of along these lines, too.

Derek: Right.

Ashkahn: It gets kind of equally complicated with how many people are, and what the profits actually are-

Derek: Percent of hours contributed to the shop.

Ashkahn: Yeah.

Derek: yeah.

Ashkahn: Just what you’re taking home as a salary then comes out of profits. I don’t know. There’s something about, I feel like, the scale of business we are that makes some of these things that are more functional in bigger businesses just not quite as easy to implement. That’s my hunch. I bet if we were, if all these numbers were 10 times bigger than they were, and we had 10 times as many customers and 10 times as much income and 10 times all this sort of stuff, these things would make sense a little bit more.

Derek: So, we’re in a unique situation and I’m often reminded that we’ve been around for a long time. Our struggle is getting from 250 to 300 members. What about the people who have 20 members trying to get to 50 members?

Ashkahn: Yeah.

Derek: Do you think an incentivized program would help somebody like that?

Ashkahn: At the very least, I think it would help encourage people to think about bringing up memberships.

Derek: Right.

Ashkahn: So, even if the result is that only a couple more members come in, maybe you did just get your staff for a month to be more conscious and practice pitching memberships to people and there’s some long term benefits from that.

Derek: If you had 20 members and you got two more this month, you’ve increased your memberships by 10%.

Ashkahn: Yeah. Definitely.

Derek: Do that month over month.

Ashkahn: So, I don’t know. Despite the fact that it hasn’t worked well for us, we’re just about to finish the current one that we have-

Derek: True. They didn’t hit their goal.

Ashkahn: Yeah, unfortunately we didn’t hit our goal.

Derek: Yeah.

Ashkahn: It’s kind of hard to not do anything at that point, but it is, I think, also important to if you don’t hit your goal, not just pay people out anyway-

Derek: Right.

Ashkahn: Because then it really makes the whole thing seem like a sham, or really kind of deflates the motivation behind it next time you do it.

Derek: To make it perfectly clear, everybody tried this time around.

Ashkahn: Yeah.

Derek: People were trying, and people were coming up with ways to help their coworkers and their teammates out and coming up with better pitches and different pitches and so everybody really banded together. So, if there was an incentivize or a benefit even though this round of incentivization failed, everybody’s more aware of memberships.

Ashkahn: Yeah. Our staff is great.

Derek: Right.

Ashkahn: I really do feel like people, even without the financial incentive, had we just posed this as hey, we’re really gonna try to boost memberships this month, they would’ve been willing to contribute and put in a bigger effort anyway, so I don’t know. Maybe it has something to do more with our retention rates, because it’s not like we’re not selling memberships. We’re selling them, we’re just losing people as fast as we’re selling them.

Derek: Not as fast.

Ashkahn: Well, that’s what’s kind of keeping us at this plateau.

Derek: Sure, sure, yeah.

Ashkahn: It’s not that no one’s buying or leaving in a month. It’s that we sell 15 memberships in a month, but 15 people cancel their memberships-

Derek: Right.

Ashkahn: The end result is we’re at the same number, so I don’t know. Despite the fact that it hasn’t worked for us yet, I don’t want to write off the concept entirely because there’s also something nice about the people in your shop feeling like they contribute and they get to see the benefits of that contribution as well, you know?

Derek: Right. I like it. So, I think we’ll just try round three of this testing and see where we go.

Ashkahn: Yeah. Or if someone out there has very successfully ran some sort of sales commission program with your staff, let us know because I’m very interested to hear.

Derek: With continued growth, right? So, going from zero to 50 members, that’s great, but maybe you would’ve done that if you would’ve tried regardless of the incentivization plan. But if you were able to break through a plateau, I’m interested in hearing that.

Ashkahn: Yeah. You can reach out to us to let us know about these things we’re asking you.

Derek: You can email us your results at info@floattanksolutions.com.

Ashkahn: That’s not our usual sign off, Derek.

Derek: But it’s not the sign off.

Ashkahn: People get used to routine.

Derek: Oh, sir-

Ashkahn: You gotta leave them in our comfort place.

Derek: You gotta break the routine. Now they’re listening, see? Now that we’ve got their attention-

Ashkahn: They’ve been pretty much ignoring us this entire episode.

Derek: Right. They’re like, oh, here’s the sign off, and all of a sudden we get in this argument live on air and now they’re tuned back in with popcorn, so-

Ashkahn: It’s okay. Let me make you guys all comfortable.

Derek: Okay.

Ashkahn: You can head over to floattanksolutions.com/podcast. Send us in your questions, and we’ll be here tomorrow, like always.

Derek: If you want to email us, it’s info@floattanksolutions.com.

Ashkahn: Yeah. Or you can just go to Derek’s house, like I said.

Derek: 1812-

Ashkahn: Tell him your questions in person.

Derek: All right. Take care everybody.

Ashkahn: Bye.

Derek: Bye.

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