Should We Pay Our Customer Service Reps on Commission?

Last Updated Nov 30, 2010 9:06 PM EST

You're probably already giving your sales people commissions, bonuses, or some other sort of performance-based incentives. But what about your customer service employees?

They're every bit as important as the sales team because after all, they sell, too. They sell solutions to issues that might arise after the sale. And how those customers are treated makes all the difference as to whether or not they come back again, refer friends and family, or instead complain to everyone they know and thousands they don't know through Twitter, Facebook, online complaint sites, and so forth.

If performing well, your customer service team is your best sales weapon because it's far less expensive to sell more to existing customers than paying for new ones. So, shouldn't you pay these employees the same way you pay your sales reps?

Lately I've been thinking about whether or not to do this and I can think of one very good reason not to pay customer service reps on commission: What they do is hard to measure. With sales people you can tell objectively when a sale has been made. Yes, you can measure customer satisfaction with an array of surveys, but it's hard to determine the effect of a particular person interacting with a particular customer and be sure that the satisfaction rating is attributable to the representative.

Then there's the fact that employees learn how to game almost any compensation plan. Have you ever bought a car, only to be told by the salesperson, "Be sure to give me a five when our Quality Assurance Department calls you? It MUST be a five!" That's gaming.

Further, when you pay employees based on the actual score itself, then the behavior might not be aligned with the best interests of the company, but instead with the rep. So some companies instead use the percentage of people who respond rather than the actual score. It eliminates gaming.

Here's something we've just begun, and I'll let you know how well it works once we have more data. We're asking a modified Net Promoter Score question -- and just this one question -- after each call to customer service. NPS asks, "On a scale of 1 to 10 (10 being the best), how likely is it that you will refer us to friends and family?" We're asking callers, "Based solely on how you were treated, how likely is it that you will refer us?" We think that by focusing on how someone was treated rather than the outcome of the call, we'll find out how well each rep performs. We're also going to watch the percentage of responses that each rep gets. Based on the results, we may tie part of their pay to their NPS score. But we'll see.

While speaking recently at a customer loyalty conference, I asked some of the attendees, many of whom came from very large companies with thousands in their call centers, how they measured individual persons. I wasn't interested in whether they were able to check off items in a quality assurance list, such as "Did you mention the customer by name at least three times?" I wanted to know about the correlation between how customers felt and how they were treated. But no one was able to provide a suitable answer.

With so little being done to measure real behavior and how it affects customers, no wonder most people dread calling a customer service call center.

What about your company? Do you have an effective compensation plan that helps raise your level of service? What tips can you recommend?

Photo courtesy of Fickr.com, by Mary-Lynn

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    Jay Steinfeld is the founder and CEO of Blinds.com, the industry leader in online window blinds sales. He is an Ernst and Young Entrepreneur of the Year. His company was named Best Place to Work in Houston, won the American Marketing Association's Marketer of the Year, and Steinfeld was named by the Houston Chronicle as Houston's top CEO in the under-150 employee category for the last 2 years.