Salesman Commission?

[rockits]

I'm looking at taking on a salesman on a commission only basis. We have a great client base and some really good customers to feed some leads to them. Also they should add their own new leads, clients and business.

Anyone do this or have done this or know what is a fairly industry standard rate and on what basis. Maybe xx% of the net profit on each deal?

 

[ChrisQP09]

If its net profit, commission is how much you value their contribution towards getting it over the line or not.

Personally, I would give anything between 10-25% or you can band it e.g £2,500-5k profit (10%) - £5k-10k (15%) etc. I believe the best workers need rewarding.

 

[rockits]

I think it would need more commission and happy to pay it as they would need to get deals over the line fully and almost account manage it with credit control to get it paid. Manage the deal well from end to end I guess. They don't get paid until we do so could work ok for the right person. Is 50% of net profit stupid high and unnecessary bearing in mind we are asking for more than the norm?

 

[ChrisQP09]

I think it would need more commission and happy to pay it as they would need to get deals over the line fully and almost account manage it with credit control to get it paid. Manage the deal well from end to end I guess. They don't get paid until we do so could work ok for the right person. Is 50% of net profit stupid high and unnecessary bearing in mind we are asking for more than the norm?

It really is down to your business model and how you operate. Personally, I believe giving someone 50% of something is better than 50% of nothing. At that level, expectations will be high but if they are meeting, you're making.

 

[mjheathcote]

There is no model. Is he or she selling something that would make a few pounds profit, or something that would make tens of thousands pounds profit.
Would you like to sell one a week, or one a month? Its endless!

 

[dem maser]

I txt you but it appears you did not receive it

The norm is 15% in our industry and if they are asked to do a lot more then yes 50% is right.

Let me know if there's anything I could do.....if I knew earlier I would have applied for the role!!

 

[rockits]

Would be quite broad but all IT, networks, copper/fibre cabling, IP phone systems, internet lines, hosting, local /off-site backup, BC & DR, RAS/thin client solutions. We do quite a lot.
Could be small profit on small services but can be more more on bigger deals/services. Could easily be thousands or tens of thousands if they know their stuff and they get some good deals.

 

[GeoffCapes]

Interesting this one, I've tentatively put out feelers for employing people on a commission only basis, but there seem to be be not many takers.

I'd happily give someone 50% commission. ****, I give 20% for just an introduction!

If anyone who has a few brain cells and wants to put the time in to build a client base then Id be happy to give them the training in all things energy efficiency wise.

 

[Dan!]

I have "employeed" 100's of commission only sales people over the years. They are a strange breed.

You will find that the number of applicants will be very low and the quality of the applicant will also be very low as anyone who is qualified or experienced will be able to demand a decent basic. Commission only is viewed as last chance saloon, I can't get a job anywhere else I'll do commission only.

As a result, to generate any decent business you'll need quite a few of them and continuously manage and train them. To get the most out of them you will also need to feed them with leads. Because generally, if they were any good at making their own leads they would be motivated enough to have their own firm.

At least if you pay a basic even a small one of £25k or something, you're able to tell them what you're paying them for and what you expect for the money. With commission only, unless you're feeding them with leads (which will cost more than a basic more often than not) they will call the shots and tell you what they do for you.

Good luck!

 

[rockits]

I think all the comments are good and accurate. Personally myself I would be more than happy to work for the right company with the right client base for commission only @ 50%. I know I know my stuff, work hard, research, learn, like to think I am clever/adaptable. Also I have 25 years of working experience that proves I know my stuff. Proven track record. For these reasons I am ultimately very confident in my own abilities to succeed in all that I do. I could earn good money doing it. I have been offered plenty of jobs over the years by all sorts of people in all sorts of businesses including offers from owners to run their business or get involved with them.

I haven't done this as have had this business I started from nothing back in 2002. I also started a 2nd business in 2008 again on my own from scratch that I still have that is doing oK as well. Both small businesses but doing OK.

Enough about me and this is important in the sense that it would work for the company and myself personally in a theoretical scenario. We would both do well out of it. However my issue is that the likely people coming in won't be me and probably won't be good enough. Have they also got the skills & ultimate confidence to deliver what is required. In my mind from what I know of the resources out there.....possibly & probably not. It is really a need in a haystack scenario.

It is all too easy these days for idiots that know very little if at all to make decent and often very good money especially in the IT & technology sector. I have considered selling my soul to the devil as it were & selling up to trudge into the city & milk it. It is just not me though & it is not all about the money. I do a lot of things that don't always make good financial sense for the bigger picture or for others reasons. I couldn't do that if I sold my soul. Always a nice back up option & always there if I need it if things go horribly wrong.

I have never employed sales people, never marketed or advertised as we have never needed to. All business growth has been slow & solid through word of mouth & recommends. Great way to do business & in my opinion the best way. However if we want to grow bugger & faster this isn't enough & the devil needs to be introduced!

I'm sure many of you have either been there or have always had sales teams & knowledge of operating this side of the business. I guess I am trying to tap into this knowledge. Happy to help reciprocally with any technology advice if people need help.

 

[rockits]

I have "employeed" 100's of commission only sales people over the years. They are a strange breed.

You will find that the number of applicants will be very low and the quality of the applicant will also be very low as anyone who is qualified or experienced will be able to demand a decent basic. Commission only is viewed as last chance saloon, I can't get a job anywhere else I'll do commission only.

As a result, to generate any decent business you'll need quite a few of them and continuously manage and train them. To get the most out of them you will also need to feed them with leads. Because generally, if they were any good at making their own leads they would be motivated enough to have their own firm.

At least if you pay a basic even a small one of £25k or something, you're able to tell them what you're paying them for and what you expect for the money. With commission only, unless you're feeding them with leads (which will cost more than a basic more often than not) they will call the shots and tell you what they do for you.

Good luck!

Thanks for the info. What business are you in that you had your sales guys operating in?

 

[mikeey_boiy]

I am in what sounds to be a very similar line of work. We have around 8 sales guys at the minute, all get a basic salary which ranges from around 14k upto around 35k. The lower paid tend to do lots of cold calling and typically dont do a huge amount of business.

The higer paid ones will be averaging 50-60k per order.

They all get 9% of the profit on the deal. This reflects the relatively tight margins that are involved in things like Cisco and other hardware vendors. The professional services side tends to bring the margins back up.

 

[mikeey_boiy]

Ps, if its your first sales guy I would be extremely cautious, we have ended up with some shockers who end up wasting all your time as you get rid of them before the probation is up.

 

[rockits]

Thanks all. Not looking good so far but I think I knew that. I have business long enough to know there are more poor people out there than good ones. Not a great state of affairs but has always been that way to be honest. Just maybe not getting better over the years.

I think this his why I have resisted growing the 1st business beyond a certain sweetspot as the pain & risk are quite high for the rewards until you get beyond a certain point. Then the game is different and rewards are very good but you have to keeping the big burning fire.

If it was easy.....any idiot could do it. I guess that is why we do what we do.

 

[Dan!]

Thanks for the info. What business are you in that you had your sales guys operating in?

My firms were direct sales companies selling to home owners. When it was good, was great. But when things get hard you end up spending all your energy on the marketing to remove all the excuses from the sales guys. If it was left to the sales guys to generate the work we'd have been bust within the month!

Mind you, that's pretty true whether the sales people are commission only or not. You can have the best sales person in the world, but he won't sell anything if he has no one to talk to!

 

[rockits]

I am in what sounds to be a very similar line of work. We have around 8 sales guys at the minute, all get a basic salary which ranges from around 14k upto around 35k. The lower paid tend to do lots of cold calling and typically dont do a huge amount of business.

The higer paid ones will be averaging 50-60k per order.

They all get 9% of the profit on the deal. This reflects the relatively tight margins that are involved in things like Cisco and other hardware vendors. The professional services side tends to bring the margins back up.

We need to make sure we aren't competing against each other for business then Do you do any business in and around London? Make sense we hook up and help each other if we do.

 

[rockits]

My firms were direct sales companies selling to home owners. When it was good, was great. But when things get hard you end up spending all your energy on the marketing to remove all the excuses from the sales guys. If it was left to the sales guys to generate the work we'd have been bust within the month!

Mind you, that's pretty true whether the sales people are commission only or not. You can have the best sales person in the world, but he won't sell anything if he has no one to talk to!

Thanks for the info. I don't think many businesses get it 100% right as we don't live in Utopia but I guess it is about dealing with the grief & issues while continually changing, improving and evolving. Never keeping your eye off the ball or the letting off the gas seems to be key. If you can get a nice business that runs itself then well done & I'm jealous!

 

[Maser Sod]

Would be quite broad but all IT, networks, copper/fibre cabling, IP phone systems, internet lines, hosting, local /off-site backup, BC & DR, RAS/thin client solutions. We do quite a lot.

Hi,
I've worked in the IT/telecommunications space since the 90's, I've owned two companies and worked for some big ones.
When I was an employee supporting the sales guys, they were typically on 60-100K plus commission/bonuses.
The smallest successful deals I worked on were 100K, the largest around 15M. I'm not sure what their commission was, but I would guess it would be in the range of 3-10%.
None of the guys I worked with would ever contemplate working without a basic salary. They would never need to.
Hope this helps somewhat.

 

[rockits]

Thanks & yes partly helpful. Only because we are much smaller so maybe commissions need to be higher as deal size & profit will be smaller. Growing but turnover was just over £1m last year. Deals ranged from £5k-£150k last year.

 

[Maser Sod]

Yeah, sounds like you are selling to SMB's.
Traditional telco selling is all about partnership/channel selling - fewer opportunities but bigger deals.
For your business, I think Dan has made a good point, viz. that marketing/USP's are critical.