Anybody have a hired sales rep?

[Master's Touch]

If you do....what's the pay scale like? Commission only? If so, percentages? How much? Off the top? Gonna hire somebody, but I'd sure like to know if there is a standard for the industry. Thanks in advance for any help.

 

[JTurner]

I've kicked around the idea as well. This will be interesting to follow. My thinking was 100% commission based salary. You'd need a rep that knew the industry, materials and how to quote jobs the same way you do to make it right for your business. Keeping them on 100% commission based keeps them busy selling. It would be up to you and your new hire as to the percentage of sales that they would get. What I would do is give them a full year to gauge the impact on your bottom line then revisit the terms of employment. Employees need security or they'll run somewhere else, however, if they've done their homework, they'll be willing to take the risk and set you and them up to rake in some serious cash. Let me know what you think/decide. Good Luck!

 

[neil_se]

I've had a number over the past few years. Currently my 2 project managers/consultants/salesman/reps are paid decent wages, then bonuses based on company net profit. Negatives I've found with commission-based salaries include:

1. They can make a sale at any price (even a loss) and still get their commission.
2. They want to win a job and pass it along then line as quickly as possible, rather than make sure all the details and specs are correct, and assist the customer along the way.
3. Less willing to work as a team towards company goals
4. Arguments about "their" customers vs others. Ie. Trying to claim commission for a job where they happened to take a call but didn't have to make any sales effort, on a job where another rep took a call for one of their previous customers, etc

While you may think that a rep with no commission may be lazy, it's up to you as the owner to hire the person with the right attitude, who shares your vision, and then monitor their activity. I've hired reps from sales backgrounds and signwriting backgrounds, there's positives and negatives to each.

 

[Glennw]

sales rep

We have a guy on a salary no commission, for us looking after past clients is as big a part of the job as is chasing new work, if it was 100% commission based there would be no incentive to follow up on old or lapsed customers

 

[Master's Touch]

We have a guy on a salary no commission, for us looking after past clients is as big a part of the job as is chasing new work, if it was 100% commission based there would be no incentive to follow up on old or lapsed customers

I guess my concern with that is twofold: ONE: where is the incentive to be driven to generate higher sales numbers? TWO: What if the guy sucks at sales? If he is a salaried employee, presumably his pay would have to be significant....and that's a lot of money to waste on a 60 day experiment....

 

[Andy D]

We have a guy on a salary no commission, for us looking after past clients is as big a part of the job as is chasing new work, if it was 100% commission based there would be no incentive to follow up on old or lapsed customers

I'm not sure I understand this, so if you were paying commission it would only be on the initial sale?

We have three sales people right now, usually four though. I'm not going to list numbers but
sales people are guaranteed a minimum per week while they build up their clientele, and are paid a percentage of their gross sales minus their base pay.
Of course the problem with paying a % of the gross is the sales person may become more interested in making the sell than the profit margin......
A good sales person can make a nice six figure income.

 

[Master's Touch]

I'm not sure I understand this, so if you were paying commission it would only be on the initial sale?

We have three sales people right now, usually four though. I'm not going to list numbers but
sales people are guaranteed a minimum per week while they build up their clientele, and are paid a percentage of their gross sales minus their base pay.
Of course the problem with paying a % of the gross is the sales person may become more interested in making the sell than the profit margin......
A good sales person can make a nice six figure income.

I'm kinda looking for an idea on percentages.....and I am pretty sure you and I aren't in competition....can you elaborate a little on what you consider reasonable? 10%, 15% what?

 

[Andy D]

You and I aren't, but you have to be careful about specifics you put out there
for anyone to read. I might PM you with more specifics in a bit.

 

[Fred Weiss]

You and I aren't, but you have to be careful about specifics you put out there
for anyone to read. I might PM you with more specifics in a bit.

Or the OP could simply ask for this thread to be moved to a members only forum such as Business Management or Sales, Marketing & Pricing. Members only forums are not readable by visitors or search engine bots.

 

[Fred Weiss]

I'm kinda looking for an idea on percentages.....and I am pretty sure you and I aren't in competition....can you elaborate a little on what you consider reasonable? 10%, 15% what?

It seems to me that if you can identify reasonable sales goals and what sales expense you are willing to put forward to achieve them then you should be able to reach an acceptable set of numbers. You then have to weigh them against your shop's capabilities and what prices your market will bear while keeping your margins acceptable to you.

For example and hypothetically:

• It is reasonable to expect a sales rep to write $fill-in-the-blank in sales annually in your business setup.
• For achieving that goal, you would be willing to pay $fill-in-the-blank in commission annually.

• Sales = $1,000,000
• Commission = $150,000 = 15%
• Or Commission = $100,000 = 10%

 

[Andy D]

I sent you a PM, but I will copy and paste the non-specific info I had in it:

A % number will change according if it's gross or net of course but
another consideration is what the profit margin is.
For example, most of the signs we produce are huge electrical signs that are
$10,000 - $40,000 typically, but the mark up isn't nearly as large as it is on smaller signs
and print jobs, so the percentage would be less.

As I said in the forum earlier, paying from gross sales is problematic,
but to pay accurately from net requires in-depth accounting of per job costs.

 

[mark galoob]

i cant see the advantage of this. first, all you are doing is training your future competition. second, if you can manage to get a sales person to actually work hard, its going to take them several months if not years to get enough business built up to make it worth their while, meanwhile you have to carry them till they get up and running.

put your money into something more productive like seo

 

[CanuckSigns]

Just make sure you can handle the workload, A good sales rep is not going to like it if he brings you all this work and you can't meet his client's deadlines.

Another caution against straight commission, there was a shop around here that had a sales rep on straight commission, turns out he would sell a job, then approach a bunch of sign shops and see who would pay him the most for it.

 

[TimToad]

Just make sure you can handle the workload, A good sales rep is not going to like it if he brings you all this work and you can't meet his client's deadlines.

Another caution against straight commission, there was a shop around here that had a sales rep on straight commission, turns out he would sell a job, then approach a bunch of sign shops and see who would pay him the most for it.

I think you bring up a couple really key points. We're having this discussion right now. We recently hired a new employee mostly for production work and to groom him into eventually helping with some of the design work.

Well, he's great on the production, installation and has the good qualities we need like reliability, punctuality, attention to detail, etc. but has nearly no design sense, skills, software experience, training, etc. He works about 2/3rds to 3/4 full-time now, but we're trying to think of how we can increase his value and hours and it turns out, he has considerable outside sales experience in other industries.

He also is from this town and knows nearly everybody, so his familiarity alone could pay dividends.

The rub is that he is close friends with our primary competitor and they "talk" and socialize often. We're friends with this competitor also and have respect and have built some trust with him, but not his partner, who we don't trust as far as we can spit.

As we develop this plan and essentially create this multi-faceted position for our employee, we are being really careful on making sure its perfectly clear on who works for who, and that the arrangement is exclusive.

My advice to anyone seriously considering an outside sales person is to make sure everything is spelled out. Be clear on the fact that these are ultimately your clients they are procuring and carve out clearly defined boundaries on sales territory, respect for your company's client list, contacts, sales materials, pricing, etc. and what happens when they inevitably leave. You don't want somebody with that kind of knowledge working your territory. Non compete clauses with a good length of time attached to them are not unreasonable. Especially if you provide a base salary or draw.

 

[Andy D]

i cant see the advantage of this. first, all you are doing is training your future competition. second, if you can manage to get a sales person to actually work hard, its going to take them several months if not years to get enough business built up to make it worth their while, meanwhile you have to carry them till they get up and running.

put your money into something more productive like seo

You always have sales sign a non-compete.
Personally I think the better way to go is with account managers. The difference being is a account manager
typically has more hands on production experience and know's the correct questions to ask. Also they will
do mechanical setup and basic designing. You're average sales person thinks they only have to write up the order
and everyone else down the line will figure out the details...

 

[BIG EASY DOES IT]

I guess my concern with that is twofold: ONE: where is the incentive to be driven to generate higher sales numbers? TWO: What if the guy sucks at sales? If he is a salaried employee, presumably his pay would have to be significant....and that's a lot of money to waste on a 60 day experiment....

Where is the incentive to generate more sales? How about your job. Don't generate sales then your not a salesman sorry your fired. Three months is long enough to bring something in.

Why does a salaried salesman have to have a high salary? He doesn't.

YOu have all the power when you hire. Why not start out at a commission only rate. Then setup upon hire a salary that if you guys decide to keep him after 60 days his salary will be xyz.

 

[neil_se]

i cant see the advantage of this. first, all you are doing is training your future competition. second, if you can manage to get a sales person to actually work hard, its going to take them several months if not years to get enough business built up to make it worth their while, meanwhile you have to carry them till they get up and running.

put your money into something more productive like seo

Isn't that the same for any employee you hire? If you want to grow, that's the risk you take. But if you select the right person, they'll be bringing in business from week 1.

 

[Andy D]

Why does a salaried salesman have to have a high salary? He doesn't.

YOu have all the power when you hire. Why not start out at a commission only rate. Then setup upon hire a salary that if you guys decide to keep him after 60 days his salary will be xyz.

I see this as a hard sale (sorry, bad pun), especially if you're trying to lure a good salesperson away from someone else.
They almost never are allowed to bring their customers with them, or even contact them.

Unless one of your sales people quit and you hand all of their clients over to the new person... Who can live on next to nothing for 3-6 months?
It doesn't need to be a high salary, just a reasonable base pay...