Itai Boublil

Sales Rivalry

I read a very insightful article today by Daniel Pink that discusses the effectiveness of sales commission on salespeople performance, and whether they really increase the motivation to sell more. I thought about it, and concluded that even though it might create a motivation to sell more, it doesn’t necessary lead to an increase in sales. I base my conclusion on my past experience as a salesman in a Startup company named Mondex in Israel back in 1998.

The position was very simple, offer the service  to people to use, and sign as many people as you can. The company believed in its innovative service, and had a “no commission” policy to its sales-force. We all earned the same salary, and we all helped each other closing sales. It was weird at first, but we believed in our goal, and believed in our product.

The policy of “no commission” changed about 8 months into the existence of the company, which led to the following consequences:

1. we were all fighting for customers
2. we stopped helping each other
3. we were so concerned about getting a salary that we even started lying about what the product actually did.
4. sales dropped

Anyone who worked in sales received a lower salary, which demotivated everyone in the group, and led to a massive lay offs by the company.

The company closed its business by the end of that year.

Back to the article, A sales commission might create more motivation to sell, true, but the question that one should ask him/herself is at what cost? Is it at the cost of lying to the customers just so you can make a sale? Is it at the cost of creating a rivalry among employees? Is it at the cost of demotivating some of your sale-force?  The answers are yes, yes, yes and yes…respectively :)

Squareup.com

I am very excited about the “arrival” of the Square. It was announced today on both Mashable and Techcrunch, and I truly see it changing the way we do business, and more importantly how convenient the process of online purchasing will turn into.

Ironically, in the past week I processed a few thoughts about the possibility of having a similar product that it is Mac/PC based Payment System (note: the square is a mobile based payment system). In fact, it happens every time I try to purchase online, and asked to fill in my credit card information. I always thought it was too long of a process.

The idea for an internet based payment system is not new. 12 years ago I held a marketing position in a company named Mondex, which used a somewhat similar concept. I will not go into too much details, but basically Mondex provided an electronic device that is connected to a phone landline (at the customer’s house), and can withdrawal electronic “cash” directly from the client’s checking account, and place it on a special chip that was embedded in the card (similar to a debit card, but with control of how much money one can put on his/her personal card). Customers could then go and shop around local businesses until they used all the money on their card.

Remember, it is 1998 so please do not attempt to draw a direct link between the square and Mondex.

Back to the square. I think it is a welcomed addition to the Internet world. I wonder, however, if having a device that is so simple to use will have any impact on our purchasing behavior. If you think about, what is easier than swiping your card using your iPhone to purchase?

There are still some security questions I have in mind, but I am sure they will be answered once the product is fully launched.

What is your thought about this device? Do you think it is good, bad? Will it make you purchase more?