Unintended Consequences of Salespeople Accepting Receipts

In the corporate world, managers often instruct salespeople to collect payments.

Sales collecting from delinquent customerOn its face the idea seems sound.  A rep makes the sale so why not have her collect the payment?

Having a rep accept receipts also provides a reason for the rep to stay connected.  However, the policy has unintended consequences and can result in huge customer service fallout.

Your reps act as client advocates.  By contrast, debt collectors are bearers of bad news.  By putting a rep in the roll of debt collector, the company has removed a valuable buffer.  A rep can play mediator to quickly resolve misunderstandings and settle frazzled nerves to make sure the business relationship endures.  If the rep must also act as bill collector, he cannot feign detachment; he must include delinquencies in the sphere of the relationship.

People want to keep their dignity so they’ll often ignore sales calls if they think a salesperson might be calling as debt collector.  The effect?  Reps focused on billing divide their sales efforts and customers duck their calls.  This lowers sales department productivity and sales commissions.  It also increases bad debt which leads to even lower commissions.  And this can cause a drop in staff morale, crippling the company’s profitability.

Case Study: Advertising Agency

threesome_biz_laptop_discussionOne of our portfolio companies paid commissions out upon receipt.  They had no receivables support and management had their reps collect payments.

We suggested our customer hire receivables clerks to encourage their reps to focus on selling.  Billing clerks could then handle receivables and note in the system any customers that were in default.   On average, a sales rep is better compensated than a billing agent.  So, we suggested it makes sense to delegate these tasks to a lower paid employee.  In a later column I’ll explain an easy way to optimize each employee’s duties throughout the organizatio throughout the organization to get maximum efficiency.

The result?  Because the reps ignored billing issues they had more time to sell.  More customers reordered.  The extra revenue on sales reps made more than compensated the company for the salaries of the new billing staff.

When a rep happened upon a client delinquency,  he ignored it until the credit department restricted the client’s credit line.  If the client mentioned it to the rep, the salesperson redirected the client to billing to resolve it as a prerequisite to reordering.  The rep feigned ignorance rather than addressing it with the customer.  In this way, he stayed the advocate and preserved the client’s dignity.

Managers and organizations need to realize: the best sales reps are not mere order takers.  They’re client advocates, subject matter experts, and executive advisers.

printing_pressPreviously I explained how to end those nasty typos from expensive commercial printing jobs and save on your printing cost.  The next article begins a series of articles on a novel step-by-step approach to developing an integrated marketing strategy.  You can use this as a basis to plan your most cost-effective advertising methods.

This will take a bit of time but you’ll find it’s worth it.  Upon completing the process, you’ll calculate your ideal cost-effective advertising and know exactly how to spend your budget.  You’ll never question whether you should spend money on a particular newspaper, coupon, flyer, or yellow page ad again.  Stay tuned.  Until then,

profitable business All!

One thought on “Unintended Consequences of Salespeople Accepting Receipts

  1. Patton

    This can kind of relate to not answering your telephone because someone might be trying to talk you into something you really do not want to say NO to but at the same time want to avoid.

    Reply

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