Loading...
Answers
MenuHow to compensate a sales person?
Answers
Hi!
I would be careful in compensating only by commission. This will give you the kind of sales reps you might not want. If you were to invest your time, would you not want to receive some kind of fixed fee for the invested time?
Also, by paying commission based, you are telling the sales guy that you don't know if the product will sell, but that you don't want to be the one risking the time invested.
I'd go for a mix.
Yes, it makes sense, the 5% is for lead generation, the 15% is for lead generation and closing the sale. The issue is that when strictly on commission you may get some very pushy sales people, unless your product is just part of an array of products they offer.
Have you researched your competitors to see how they compensate? And what level of sales pro are you seeking, seasoned or newbie?
If you get sales pros with clients at their fingertips they may be able to make faster sales and deserve to be paid a base + commission. Alternatively you can do a draw against commission, whereby they are paid a salary but that is paid back by their early commissions. It does ensure they don't go hungry.
I've worked draw against commission in the past, was uncomfortable with straight commission until I was an expert in the industry.
You may also want to do something obvious and ask them how they want to be compensated and see what you hear. I am an advocate of asking the market instead of guessing.
Hello there
As someone who has his own business development agency and also advises on Business Development, I will only share how I would feel towards such a proposal.
If we are partners, than it is 15%; and at the start, yes, I expect you to close the sale, as I am learning your product and your closing techniques regarding this product.
I believe your biggest problem is finding the right people; I don't believe you should spend much time on figuring out the perfect compensation plan.
My advice, go with 15% and spend the time in getting the right people and invest in helping them succeed by remaining motivated.
I know, a lot tougher and time consuming than a few percentiles.
I'd make sure you have a process in place in Salesforce to ensure there is a line in the sand regarding the difference between a lead and sale. I've seen issues come about if there is no set process in place, resulting in a grey area.
Also, I'd consider having a variable commission structure.
i.e.
$0-$50K = 10%
$50k-$100K = 12%
$100K - $200K = 14%
$200K - $300K = 16%
etc...
The more a sales a salesperson brings in, the more commission they should make.
Salespeople receive a salary, but also a bonus if target quotas are met. There is more incentive with this approach, but once again, good salespeople may prefer being paid a commission for each sale. Salespeople receive a fixed annual salary, so they have a predictable cash flow, but also receive a commission on sales. Under this plan, there is no base salary, so salespeople are compensated only on sales. Pay is not tied to hours worked, so some salespeople may have to work more hours to generate enough income. Although this plan is based on commission, salespeople receive a draw each pay period to help with their personal cash flow. Under this plan, salespeople may receive an initial commission for a first sale and perhaps a smaller commission if the customer continues to order.
You can read more here: https://www.thehartford.com/business-insurance/strategy/sales-team/sales-compensation
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
Related Questions
-
What is the best sales material to use to support a B2B outbound strategy. And what should be the order of outreach? I.E email, phone call, mail?
People hate calls. People hate emails. People hate mail. Do you really want your first impression to be that of an interloper and a pusher? Then again, most recipients aren't event going to look at what you send them. What is your niche? Office managers for private family healthcare providers in Peoria? Athletics department directors for NAIA schools? Sales managers at wholesale car dealers that make over $180 million per year in gross revenue? Know your niche and define your buyer (and it better be the CIO or VP). Is your buyer female or male? Older, middle age, or younger? What about her or his college education? What does he drive? Where does he live? Where does he eat his lunch and get his coffee in the morning? What does he read? Etc. Go to your buyer. Find congregations of your buyer. Professional associations. Conferences. Meet-ups. Trade shows. Offer to do free presentations--not on your product but on best practices or trends you observe in the industry. Make your presentation about solving problems your buyers deal with every day. Write blogs or columns for media they read. Again, focus on what they need/want to read. You will have a hard time keeping enough business cards in stock and click-throughs from your byline. This is a true "targeted outreach campaign." Don't waste your money and time with anything less than this. You're going to do great. Please let me know if you'd like to talk about it more!BI
-
How do you build a structured sales process for a digital agency that works with Enterprise Ecommerce Clients?
Yes, a consistent sales process is vital so that you know where you are. You also want to know why you lost some orders and won others--I was over a decade into my career before I realized I had no idea why. And that's what lead to the change. You need to understand your numbers. You need to know what the process steps are, and how to proceed to the next one--or let the opportunity die if it should (hint: if you're trying to turn every prospect into a client, you're doing it wrong.) And you must have your fulfillment process dialed in, which at present with the description of murky data-gathering and pricing it sounds like you do not. Loads of info my my blog at http://www.salestactics.org Let's discuss specifics on a call.JK
-
Should we hire hire a contracted outside sales force for our company rokform.com? If so who do you recommend? We need visibility in larger channels.
Do you have any internal sales professionals? You should at LEAST have an internal sales director who sets the strategy for a sales force. Then you determine if the proper path is a contracted sales force. I've known companies that have used outside sales teams however NONE that have seen the type of success that outweighs having an internal team.MM
-
Startup Looking To Hire First Sales Employee - And completely lost. Any advice on compensation structure (benefits?), items that need to be in place?
Instead of repeating the wisdom of others, I'll link to it below. Here is a great blog post on hiring your first salesperson: http://tomtunguz.com/when-to-hire-a-salesperson Also, Mark Suster has written a ton of great post on his blog about startup sales. http://www.bothsidesofthetable.com/on-selling/CH
-
Looking for help determining ideal marketing automation -> CRM workflow.
It sounds like you're off to a good start with your lead generation. While it is important to keep lead volume strong, it's even more important to have a way to follow up with these leads and continue pushing them through your sales funnel until you can convert them into revenue. Without that follow-up, especially if you're generating leads through PPC, you're likely wasting the budget and energy you're putting toward your marketing efforts in the first place. The first thing I'd recommend you do is create an automatic "kick-back" email that triggers as soon as a lead downloads your ebook. Be sure to thank them for downloading, give them a link to access the ebook, and then (most importantly) include your call-to-action for the next step you want them to take. Second, figure out how you're going to handle these leads from a sales perspective. If you're stretched for bandwidth, I'd recommend a system where you assign dollar values to different types of leads, and only have a sales rep follow up with your highest value leads. How much is an ebook lead worth to your business? How much is a demo lead? What about someone who actively requests to be contacted? You'll find that as you get these systems and processes underway, it'll be extremely useful to have a CRM system both for integrating with your marketing efforts and for helping your sales team to be able to sort and prioritize the leads they're reaching out to. Lead conversion is a daily focus of mine in my role at HubSpot, and I'd be happy to chat further about how to get a strong marketing/sales funnel set up so you're better equipped to manage the leads you generate and better able to convert them into dollars. Let me know if there's anything I can do to help!SB
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.