Exactly HOW much $$$ for a commission sales rep

Profile picture of the author MaxwellB by MaxwellB Posted: 05/17/2012
There's a lot of talk about sales reps here and how to get them, how to pay them etc etc.

I feel that there are a lot of unrealistic expectations about how much one needs to make per sale to be properly motivated to take on the full sales process from cold call to close.

For clarification I am talking about sales of web services...so SEO, web design, facebook fan pages, mobile sites whatever.

So I want to give the question to the forum...

How much actual commission, not percentages, how much actual cash per sale should someone be offered to properly motivated them to sell seo, web design etc in your opinion?

I'll hold my opinion for now.
#$$$ #commission #rep #sales

  • Profile picture of the author vndnbrgj
    vndnbrgj
    That all depends on the person.
    Money isn't always the motivation... It is, but it isn't.

    Maybe they need to pay their rent.
    Maybe they need to get a new car.
    Maybe they .....

    Find out why they are looking to work with you.

    Then, worry about payment.
    For example.... I need to pay my mortgage.. $1,000
    Your tell them, "Great! I can help you with that. Just contact xxx prospects, and you will generate xx appointments. From those xx appts. you will close x deals."
    I will pay you xxx per deal closed, and take you to go pay your xxxxxx

    Hope that makes sense.
  • Profile picture of the author MonteMichaels
    MonteMichaels
    There is no way that you will ever be able to attract top talent with that type of thinking.

    People that are looking for a commission sales job do it because they know that they can make more money than working at a normal hourly job. They know that there is not the "security" of a wage or salary, but they are after the money.

    If it was not about the money, then they would go work for a lousy wage. Telling a potential employee that they could make their rent, if they perform, is not going to light their fire. Most likely they will never even start.

    A good salesperson is the most important part of almost any business. If they are producing, then you are not making money.

    Originally Posted by vndnbrgj View Post
    That all depends on the person.
    Money isn't always the motivation... It is, but it isn't.

    Maybe they need to pay their rent.
    Maybe they need to get a new car.
    Maybe they .....

    Find out why they are looking to work with you.

    Then, worry about payment.
    For example.... I need to pay my mortgage.. $1,000
    Your tell them, "Great! I can help you with that. Just contact xxx prospects, and you will generate xx appointments. From those xx appts. you will close x deals."
    I will pay you xxx per deal closed, and take you to go pay your xxxxxx

    Hope that makes sense.
  • Profile picture of the author af7850
    af7850
    Monte is exactly right. Think about the mindset of a great salesperson:

    ***

    I've made a life of working commissioned sales, and done so for one reason:

    I am very effective.

    I prefer performance-based pay because I know I can perform! I've grown quite comfortable giving up "wage security" in exchange for the opportunity to earn as much as a Harvard Law School graduate. I know by experience that this is what I'm worth, and anyone paying me can feel great about that because they're making a small fortune from my efforts.

    Moreover, my employer takes on virtually zero risk in hiring me, even though he doesn't have to babysit me, manage me or double check my work. Why? Because I'm always paid exactly what I'm worth, and if I'm not effective it costs him nothing.

    ***

    Now think about it, how would you properly entice this person to work for you? How would you virtually guarantee that he (or she) will stick around?

    Remember, you will always catch what you bait your hook for... so don't try to catch a shark with goldfish food.

    ***


    Posted from Warrior Forum Reader for Android
  • Profile picture of the author af7850
    af7850
    Originally Posted by MaxwellB

    How much actual commission, not percentages, how much actual cash per sale should someone be offered to properly motivated them to sell seo, web design etc in your opinion?

    I'll hold my opinion for now.
    It depends on how easy the sale is and how quickly the sales cycle completes. These factors, in turn, are dictated in large part by you:

    Where is your company positioned in the marketplace? How strong is your brand? How high is the perceived value of your company's services (in relation to both your competition and your clients expected derived benefit)? How am I getting leads? How many leads how often? Are they hot, warm, cold or dead?

    I'd work for $1 per sale if I could close 1,000-1500 sales per day.

    Hope that this helps...


    Posted from Warrior Forum Reader for Android
  • Profile picture of the author midasman09
    midasman09
    Here's been my experience after having MANY sales people sell for me;

    You better PAY the GOOD salespeople a GOOD amount...or....you'll be "Trainging Your Competition"!

    Mediocre of Poor sales people will only put a DRAIN on your operation.

    So....here's the Commission System that worked for me;

    Sales people have to report to me...either in person or via phone or email
    ...... EVERY FRIDAY at 2pm! At which time they I pay them....

    ...30% of 5 Sales (1 Sale a Day)
    ...40" of ALL sales if 6 or more Sales in the week
    ...50% of ALL Sales if 10 or more Sales for the week

    Hey...if a salesperson (I've had some GREAT...FEMALE Salespeople) just does the minimum of ONE SALE A DAY....hey!....PAY THEM! And, ALWAYS REMEMBER....NOTHING MOVES UNLESS SOMETHING IS SOLD!

    And....if a salesperson does 10 Sales a week (averaging 2 a week)....HEY....PAY EM! Otherwise they'll be looking to go into competition with you!

    A "Commission System" that has helped me build many programs!

    Don Alm....long-time Sales Guy
  • Profile picture of the author shockwave
    shockwave
    I have to agree with everyone else. I think you will probably end up having to convince a sales person of this caliber why they should even consider working for you in the first place.

    A hardcore sales PRODUCER working on commission only knows EXACTLY what he/she is worth. This type of person is going to be the kind of person that says "What's in it for me?" - and it will certainly be all about the money.

    Then you have the next logical step in the salesperson's mind: "Why should I sell web-services, when I can go sell yachts, exotic pets, a timeshare in tahiti, enterprise software?" ...etc...etc. The payoff would be much bigger for those even if the volume was lower.

    There are a thousand different companies that would LOVE to have a proven PRODUCER working for free until a sale is made. Take a look on any job board, Craigslist, or your local newspaper sometime and see for yourself. You'll can easily pic these out because it's always the same story: "uncapped commissions", "unlimited earning potential".

    The real problem is that most "companies" that want a commission salesperson want to:

    a) Control the Salesperson as if they are an employee. Usually this is some sort of ridiculous micro-managment.

    b) Want to only give a commission that is chump-change for the amount of work done.

    c) all the above.

    I think the reality is that you would either have to basically do like a 75/25 split (and the salesperson makes the 75%) or price your offering so high (in order to make up for what you are paying in commissions) that it would price your whole service out of the market.

    ...just my $0.02
  • Profile picture of the author MonteMichaels
    MonteMichaels
    Those guys are going to continue to keep hiring all of the time, and there have been many of those same thoughts on the board here.

    For some reason its assumed that sales people are a dime a dozen, and if you can put up a website these salespeople are going to flock to make you tons of money while they throw you a few scraps here and there!

    You can almost always tell who is the producer by the way that they interview. It won't really be a "why should I hire you?' kind of interview either. It will be a "why should I work for you?" interview. But you won't get to those people by offering to pay their rent for the month.

    Reality is that the web guys need the salesperson more than they need the web guy.

    Look at the forum and tell me its not true. If I was full of it we would not have post like this, or the post on how to do anything but cold call.

    Originally Posted by shockwave View Post
    The real problem is that most "companies" that want a commission salesperson want to:

    a) Control the Salesperson as if they are an employee. Usually this is some sort of ridiculous micro-managment.

    b) Want to only give a commission that is chump-change for the amount of work done.

    c) all the above.
  • Profile picture of the author MonteMichaels
    MonteMichaels
    Originally Posted by midasman09 View Post
    You better PAY the GOOD salespeople a GOOD amount...or....you'll be "Trainging Your Competition"!
    [/B]
    Completely sums up the tread in one sentence. That is if the salesperson is even going to start.
  • Profile picture of the author Michael Bucker
    Michael Bucker
    I am usually not this forward about a subject and play nice. However in this one case let me be very clear. Companies pay me up to $3,000 to find them one sales person that will actually make them money. I have a recruiting and hiring service and it works my clients are very satisfied. I am a sales trainer and recruit and hire sales people as well.

    No offense to you MaxwellB and you may not have quite meant it when you said you will hold your "opinion". But my friend that is the problem with this subject as well as many others, they are not opinion based. A lot of subjects are this simply is not one.

    I have worked with literally thousands of sales people and the facts are clear. You get what you pay for. I can understand a person wanting to give an amount instead of a percentage especially if one sale is twice the profit and you still only have to pay the amount you paid on the sale that was half the profit.

    If that is your mindset or any other person’s mindset on here let me help you out now. That is lack thinking. The salesman worth their weight in gold will not work with that mindset.

    If you want someone that you can pay only a certain dollar amount and not have to go any higher regardless of amount made, you can do that and it will work, however you will be hiring order takers with a salesman costume on.

    My fellow warrior, change your mindset or be ok with mediocre results. If a mediocre result is all you want then you don’t need our advice there is always someone that will take a job for little pay. You can set whatever you think is fair.

    The sales person that can help a company grow properly is going to work off percentages. They know their value and potential and will not work otherwise.

    Midasman09 has a pretty close structure that most businesses pay good salespeople.

    Real sales people don’t have an opinion on what you should pay them; they know exactly what they will accept and will produce accordingly. Order takers will pay whatever you will give them and will under produce and be twice to work to maintain.
  • Profile picture of the author midasman09
    midasman09
    Waaay B4 "CraigsList" I found a way to reach TOP NOTCH sales people. (STILL works for me)

    Go where Salespeople are. I 've found that Newspaper DISPLAY and RADIO salespeople are GOOD. They've been trained, somewhat
    ...and....don't make much money for the effort involved.

    I phone the newpaper or radio station and ask to speak to a Sales Person. I tell them I'm starting a business and wondering what Ads cost.

    I meet with the salesperson...usually a coffee shop....get their Rate Sheet and then....ask if they'd consider a different product to sell.

    I found MANY....GOOD salespeople this way. I always bring MY program stuff to the meet.

    One of my projects had to do with Selling Car Dealers on Buying my "Fridge Mags" program. This had to do with someone at the Dealership taking a Photo of the New Car Buyer....at time of Delivery (when they received the keys to their new vehicle) The Dealership would email me the photos and I'd make up the Fridge Magnets and send them back to the Dealership.

    Got $28 per Mag (X 80 Mags a mon = $2,240 per Dealership) (See Photo)

    And....guess who I recruited to Sell these for me? Yup....the Radio or Newspaper Salesperson who was ALREADY CALLING ON THE DEALERSHIP!

    I would recruit these people on the basis of a "Part-Time" position. When they were finished with their "regular" business....they'd say; "Oh...by the way...I'm also handling a program...ON THE SIDE!....I'd like to show you!

    I discovered that the phrase, "ON THE SIDE" was a phrase that worked for me to recruit existing sales people.

    Don Alm....STILL selling
  • Profile picture of the author vndnbrgj
    vndnbrgj
    As far as the people critiquing my post about rent money...

    When backed into a corner.. People do two things. Fight or Flight
    So, when they have no money, but have bills they have to pay....
    They will either end up homeless, or work their tail off to get the money.

    People will work harder when they have their backs against the wall. They will be motivated. They will get the job done. Period.

    Ask yourself, if you had to make $1,000 by tomorrow.. and I walked you through how to do it....Would you?
  • Profile picture of the author Joel
    Joel
    You all may be overlooking the basics:

    1. You first have to determine the average lifetime value of your customers ... and, you may have to make an educated guess in the beginning. If you don't know this, you have no way to how much you can afford to pay.

    2. You then can set up a commission rate.

    3. You then have to load the front end of any commission structure.

    4. You have to have a way for quick gratification ... you can't make commission only salespeople waits months to get paid.

    5. If what you sell is a longer cycle, think about a small incentive, maybe $10 or $20 or ?, if they accomplish a specific goal, like generate a proposal or something else .... as long as it advances the sale.

    6. Then, take an honest look at your compensation structure and ask yourself, "If I were a good salesperson looking for a job, would this REALLY be of interest to me"?

    Joel
  • Profile picture of the author MonteMichaels
    MonteMichaels
    That may very well be the case. But quite frankly if you are interviewing a salesperson that is not making their rent, then they are not going to be a good performer.

    I've done sales and sales management for almost 20 years now, and have worked with hundreds of salespeople and telemarketers. I'm not coming from a theory on salespeople.

    People that start in sales as telemarketers for a low hourly wage either quit and find something else, like a factory job, or they quit and move on to a better paying sales job. It happens pretty quickly too.

    Same thing with any of the other sales jobs that I have done. The salespeople are constantly on the lookout for the next big thing that they can sell to make more money. Even if they are doing great already. Commission salespeople are greedy, which is what makes a super performer worth tons.

    And on the off chance that you do find the down on his luck salesperson that is a performer, once you throw him his scraps, he will be looking for the next job that pays more and will make them much more money.

    That is why so many here complain about not being able to outsource their sales.

    Don't plan your business around them, they wont be there that long.

    Originally Posted by vndnbrgj View Post
    As far as the people critiquing my post about rent money...

    When backed into a corner.. People do two things. Fight or Flight
    So, when they have no money, but have bills they have to pay....
    They will either end up homeless, or work their tail off to get the money.

    People will work harder when they have their backs against the wall. They will be motivated. They will get the job done. Period.

    Ask yourself, if you had to make $1,000 by tomorrow.. and I walked you through how to do it....Would you?
  • Profile picture of the author MaxwellB
    MaxwellB
    Originally Posted by Michael Bucker View Post
    I am usually not this forward about a subject and play nice. However in this one case let me be very clear. Companies pay me up to $3,000 to find them one sales person that will actually make them money. I have a recruiting and hiring service and it works my clients are very satisfied. I am a sales trainer and recruit and hire sales people as well.

    No offense to you MaxwellB and you may not have quite meant it when you said you will hold your "opinion". But my friend that is the problem with this subject as well as many others, they are not opinion based. A lot of subjects are this simply is not one.

    I have worked with literally thousands of sales people and the facts are clear. You get what you pay for. I can understand a person wanting to give an amount instead of a percentage especially if one sale is twice the profit and you still only have to pay the amount you paid on the sale that was half the profit.

    If that is your mindset or any other person’s mindset on here let me help you out now. That is lack thinking. The salesman worth their weight in gold will not work with that mindset.

    If you want someone that you can pay only a certain dollar amount and not have to go any higher regardless of amount made, you can do that and it will work, however you will be hiring order takers with a salesman costume on.

    My fellow warrior, change your mindset or be ok with mediocre results. If a mediocre result is all you want then you don’t need our advice there is always someone that will take a job for little pay. You can set whatever you think is fair.

    The sales person that can help a company grow properly is going to work off percentages. They know their value and potential and will not work otherwise.

    Midasman09 has a pretty close structure that most businesses pay good salespeople.

    Real sales people don’t have an opinion on what you should pay them; they know exactly what they will accept and will produce accordingly. Order takers will pay whatever you will give them and will under produce and be twice to work to maintain.
    You do NOT understand what my thread is about or what I am asking. You jumped to conclusions just like EVERY SINGLE PERSON THAT RESPONDED TO THIS THREAD

    You ALL are way off base and nobody understands what I'm asking.

    Let me make it very very very very very very very very VERY simple....because it seems nobody knows how to read.

    HOW much money, per sale, makes it worth a commission reps time to sell web design and/or seo....


    I don't care what percentage of the sale it is....how much should they get, at a MINIMUM...to make them motivated to sell your web design or seo services to small businesses.

    It's such a simple question and NOT ONE person has given me the type of response I am asking....I'll say it one more time.

    How much per sale should you pay a web design/seo sales rep to make it worth their time...and motivate them to work for you....

    Nothing else matters, it doesn't matter how long you've been in business, it doesn't matter how many clients you have...and nobody should be talking about sales cycles because I specified the product is SEO/web design we know the sales cycle....so don't try to act like a consultant...i'm giving you everything you need to answer the question.

    Closers care about one thing and that is how much can they make....so how much should you offer?

    Here I'll make it easy and I'll give a sample response:

    If a rep is going to go from cold call to close I believe they need to have the opportunity to make at LEAST $500 per sale, or $350 per sale if your going to FULLY supply them with appointments or warm leads.
  • Profile picture of the author vndnbrgj
    vndnbrgj
    My point was:
    To think outside the box...
    To find out why they are looking for a new position

    @Maxwell
    Look into the Local Pricing Professor
    What I can pay per sale and what you can pay per sale will be different.
    We each have different situations.

    You need to figure out your costs, and how much profit you would like to make.
    Anything over and above, can then go to the sales rep.
    Also, web design and seo should have different pricing.

    You can give 75% of the upfront SEO costs to the rep, because you will make your money on the monthly payments. Although, I would give the rep 25% of that as well.
    Now they are making immediate, and residual cash.
  • Profile picture of the author MonteMichaels
    MonteMichaels
    I think Don's post on percentages was about as perfect as a response as you can get without knowing what your price structure is.

    Percentages of the sale is much more effective than just a set amount, because then they have the incentive to upsell them. If you don't give them extra for that upsale, they won't sell it.

    Also, just like Don said, give them a larger percentage when they sell more than their quota that you set. That way they have a reason to push harder yet.

    Originally Posted by MaxwellB View Post
    If a rep is going to go from cold call to close I believe they need to have the opportunity to make at LEAST $500 per sale, or $350 per sale if your going to FULLY supply them with appointments or warm leads.
  • Profile picture of the author MaxwellB
    MaxwellB
    Originally Posted by vndnbrgj View Post
    My point was:
    To think outside the box...
    To find out why they are looking for a new position

    @Maxwell
    Look into the Local Pricing Professor
    What I can pay per sale and what you can pay per sale will be different.
    We each have different situations.

    You need to figure out your costs, and how much profit you would like to make.
    Anything over and above, can then go to the sales rep.
    Also, web design and seo should have different pricing.

    You can give 75% of the upfront SEO costs to the rep, because you will make your money on the monthly payments. Although, I would give the rep 25% of that as well.
    Now they are making immediate, and residual cash.
    Again...not the answer I am looking for even though I asked for a SECOND time, the question.

    Give me a number...It doesn't matter how much your product is priced at...if you have a $200 product and give the rep 90% that's not enough...even if you give them 100% it's not enough.

    What you CAN pay per sale may be different from me...but if what you CAN give as a per sale commission is not a certain number then you are doomed to never grow your business with commission reps.

    I am asking for what people think that number per sale for web design or SEO sales needs to be....you want to add residuals fine whatever just give me numbers.

    I think it's at least $500 per sale they have to come out with that or it's not worth their time.
  • Profile picture of the author MaxwellB
    MaxwellB
    Originally Posted by MonteMichaels View Post
    I think Don's post on percentages was about as perfect as a response as you can get without knowing what your price structure is.

    Percentages of the sale is much more effective than just a set amount, because then they have the incentive to upsell them. If you don't give them extra for that upsale, they won't sell it.

    Also, just like Don said, give them a larger percentage when they sell more than their quota that you set. That way they have a reason to push harder yet.
    Dude your still not getting the question.

    OF COURSE you give a percentage of the sale...that's how commissions work...but I'm saying if you sell a 400 dollar website it doesn't matter what percentage you give because no percentage is enough to motivate them to work for you.

    My question is regardless of what percentage they get...what should be the cash value of that percentage to motivate them and make it worth their time.
  • Profile picture of the author MonteMichaels
    MonteMichaels
    How much is the cost of your services? It's hard to give you a specific number to give out when I don't know what the starting number is.

    Originally Posted by MaxwellB View Post
    Dude your still not getting the question.

    OF COURSE you give a percentage of the sale...that's how commissions work...but I'm saying if you sell a 400 dollar website it doesn't matter what percentage you give because no percentage is enough to motivate them to work for you.

    My question is regardless of what percentage they get...what should be the cash value of that percentage to motivate them and make it worth their time.
  • Profile picture of the author Michael Bucker
    Michael Bucker
    At this point all one can say is good luck, seems you already know exactly what you really want and may not need any real help or others opinions professional or pretend professional as you might have been indicating earlier. But honestly good luck either way warrior.



    Originally Posted by MaxwellB View Post
    You do NOT understand what my thread is about or what I am asking. You jumped to conclusions just like EVERY SINGLE PERSON THAT RESPONDED TO THIS THREAD

    You ALL are way off base and nobody understands what I'm asking.

    Let me make it very very very very very very very very VERY simple....because it seems nobody knows how to read.

    HOW much money, per sale, makes it worth a commission reps time to sell web design and/or seo....


    I don't care what percentage of the sale it is....how much should they get, at a MINIMUM...to make them motivated to sell your web design or seo services to small businesses.

    It's such a simple question and NOT ONE person has given me the type of response I am asking....I'll say it one more time.

    How much per sale should you pay a web design/seo sales rep to make it worth their time...and motivate them to work for you....

    Nothing else matters, it doesn't matter how long you've been in business, it doesn't matter how many clients you have...and nobody should be talking about sales cycles because I specified the product is SEO/web design we know the sales cycle....so don't try to act like a consultant...i'm giving you everything you need to answer the question.

    Closers care about one thing and that is how much can they make....so how much should you offer?

    Here I'll make it easy and I'll give a sample response:

    If a rep is going to go from cold call to close I believe they need to have the opportunity to make at LEAST $500 per sale, or $350 per sale if your going to FULLY supply them with appointments or warm leads.

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