Hate the Salesman?

Just for fun call a good friend and tell them you want to come over and share information about a network marking company … the old “MLM ponzi scheme”. Knock on someone’s door and ask if you can come in to demonstrate the latest time saving widget. Stand on a street corner hocking a one-of-a-kind doohickey, these scenarios will get you treated like the scum of the earth, why?

Today, with our 9.2% unemployment, over $14 trillion dollar debts and social programs like Medicare and Social Security are in trouble … that same opinion of salespeople is now projected on millionaires. Is there a correlation?

Not to over simplify, but I contend in the business world there are three categories I define as; [administrators], [workers] and [sales people]. [Workers] are the secretaries, tellers, fry cook, tire changers, accounts, clerks, brick layers, assembly lineman in other words those people that punch a time clock for an hourly wage and do a job. [Administrators] are the managers, supervisors, company owners, and the boss; most often on salaries with sometimes a percentage of income through stock options, bonuses and the net profits. They are typically credited for the success or failure, of the business or organization. [Salespeople] I define as those that generate and are responsible for the growth of the company. Don’t confuse these with the “order takers” which I do not consider salespeople. To be a sales person, your lively hood is over 80% dependent on your personal efforts and success; no sales no paycheck. You take the risks, work the hours and make the sacrifices necessary to be successful. Most often a startup owner is all three or remains the administrator and salesperson through at least, the initial period. Sorry for the long description, but necessary.

Having been in all three positions, I wish to share some insights. As a former fry cook and teller, a bank officer and hospital comptroller, two startup companies and then into sales and marketing. Not only have I flipped burgers, but also been a senior VP for a NASDAQ publicly traded company, worked as a full-time MLM’er and sales person hocking pots and pans at county fairs. I have worked for nothing as a missionary; I have earned $1.50 an hour which at the time, I thought that was great, been on salary and more than once earned commission sales of mid-six figures biased on my efforts. So maybe I’m experienced enough to offer some observations.

What has been enlightening to me, are the amazing variances to my own self-esteem and the opinion I see reflected back to me from others … as I have simply answered the question “and what do you do for a living”? As a Bank Officer or Corporate VP the response is usually very nice … but as a salesman or network marketer… you fill in the blanks.

That’s not really the topic for this blog but it leads into the discussion. I think there is a direct corollary to our current US financial crisis and how the public and political administration perceives and treats millionaires that is affecting the non-recovery to our country.
I have a good friend who once worked as a car salesman. On more than one occasion he would express enraged frustration about his commissions being cut, changed or adjusted because, according to the “boss”, he was making too much! The contention was it wasn’t fair to the other “workers”, the guys in the shop who fixed the cars and the secretaries who did the paperwork and/or to the dealership who provided the foundation for his success. My friend was very successful and this occurred at more than one dealership, always with the same result.

The dealership had perceived expectations and biased his performance and compensation on those goals. And be assured, they always assumed that the top rewards could never be reached, but when they did he was punished. Even though, at no time were the structures put forth where the dealership didn’t also receive huge benefits as well. He was so successful often his commission structure would literally be cut in half before it was paid to him, he left the car industry… so who lost?

Another acquaintance, who I also partnered up with therefore I have an in-depth knowledge of the forthcoming experiences, has a similar story. He started in the unsavory industry of network marketing selling vitamin supplements. It was with a new start-up MLM company. It was so new they didn’t even have an annual convention, training seminars, newsletter or any literature, just a good product.

The owners [Administration] had developed a good non-unique product, had a few employees [workers], some of them their own kids to start their business. They decided that an MLM structure would give them the distributors [Salespeople] to market the product and make the company grow. We both saw an opportunity, but realized we didn’t get paid one cent unless we made a sale. We put together training materials, held conventions, and developed a newsletter all at our own time and expense. Sometimes we would drive all night to meetings and crash with friends to save a buck. Within months we were making thousands and latter hundreds of thousands, as did the company.

Management was weak but growth had been good, so after three years I found solid investors and introduced them to this company. The investor company offered to invest and help manage and grow it to the next level, with an offer of several million dollars. However, the owners had determined that they had built an amazing company that was on the verge of exploding. They asked for double the valued price of the company, required total control and did not want any other management intervention. The deal fell through. The owners, mostly one family, didn’t blink an eye at how great their success was and where it emanated from, it was their management skills that made it all successful.

In truth the sales and the growth of the company were solid and the owners proceeded to hire people left and right. I could walk into offices and warehouse and see hordes of people on breaks standing around doing nothing but the money still rolled in. The family bought fancy new homes and cars and took amazing vacations. Soon a whole new mega structure building was up and functioning with even more people. New computer systems and gadgets and gizmos were abundant. They even started giving money away to causes and having company sponsored charity events. There is nothing better than a little ego boosting by giving hard earned money away in your own name.
The infrastructure exploded and some of this new growth was debt financed. But who cared, the sales were strong and more distributors [salespeople] were being brought on every month. Who should be concerned about a little debt?

About this same time the owners [Administration] started to notice that some of the distributors were making too much money. In one of my conversations with the owner he expressed outrage that a “salesman” would earn more than the CEO and owner of the company and that was going to come to an end. Not long after the distributor commission structure was changed and everyone started making less. It didn’t have an immediate effect, but within a year sales and growth had declined.

The sales didn’t rebound but the company didn’t let go of staff or cut infrastructure, they decided to “outsource” products to companies who could make it cheaper with inferior formulations.

All of a sudden the sales people were finding that customers were complaining that products didn’t work and sales declined faster. This information was brought to the attention of the owners, but they had a better idea how to grow the business.

They sent an email to all the distributors announcing a totally new marketing plan to sell direct to people on the internet. They proclaimed it was a huge benefit to the “distributors” because they could now purchase their wonderful products at 10% below retail. However, distributors [salespeople] would no longer be receiving a sales commission.

The company was bankrupt within a year and the building is standing vacant to this day. My associate, who was possibly their top distributor at that time, went on to become a multi-millionaire in another business.

SUMMORY - THE CONNECTION

Salespeople drive growth. The greatest salespeople today, for the most part are the ones that end up becoming millionaires. They are the ones that take the risk, do the things that others won’t do so they can have the things that others won’t have. There is nothing wrong with that. Workers choose not to take the risks and would rather receive a guaranteed sum for the time required for the job. We have a saying about workers… “JOB” stands for Just Over Broke, and a lot of people are content with that position in life, nothing wrong with it.

The battle today is with administration’s who believe the risk takers get more than their fair share. That some of that wealth should go to people that can’t or won’t work and that an “Administrator” can manage that responsibility better than anyone else, especially the salesperson or “millionaires”. But administrators add staff, secretaries, more desks, buildings and infrastructures that consumes a majority of that wealth.
I contend that the individual making the wealth should be able to dispense the charity and become a philanthropists like a Bill Gates, Oprah, Warren Buffett or Jon Huntsman. That way more of the funds would go directly to individuals or worthy causes, and not into administration or dead infrastructure. We need only look at the deplorable example of Katrina or other natural disasters to see how ineffective government run programs can be. We have decades of abuse, greed and corruption with social security and welfare programs for Americans to see how ineffective governmental agencies function.

Billionaires are not the bad guys; they typically pay a lot of tax but still give away huge sums of money to charities, the arts and worthy causes. I have never seen a successful philanthropic government program. Most end up using 90% of the funds on administration and bigger infrastructure.

We have the worst economy in the history of America today and I believe it is the causation of both Democratic and Republican administrations who feel they can spend our money better than the wage earner. How can politicians produce jobs and equalize standards of living for those not willing to work? Without substantial incentives we are stifling America and might soon end up like that little vitamin company. If we over tax the wealthy or remove incentives we will never have growth or a thriving economy.