What you need is a sales rock star

10 years ago

Nice article Joe!

This is very true. Either you need to be very proficient in closing the sales, or you need someone on your team that can. However everyone should note that a "top gun" salesman costs. Paying them on commission alone won't be enough. I interviewed a guy who had a VERY impressive resume, having sold for some of the counties largest companies.

After the interview I asked him what he was looking to be paid. Obviously to my surprise, I was floored when he said $45K PLUS commissions. I definitely did NOT have that in my budget at the time. I brought him back in a couple days later and offered him $20K plus commissions and he turned it down as "not paying enough".

It should be noted that a lot of great salesmen are going to need a good base pay to interest them and keep them around. And if they're good, they know it too. Anyhow, thanks for the article Joe.

Thanks
1 reply

{{ DiscussionBoard.errors[7652602].message }}

Aaron Doud

10 years ago

Originally Posted by dnjoseph1

Nice article Joe!

This is very true. Either you need to be very proficient in closing the sales, or you need someone on your team that can. However everyone should note that a "top gun" salesman costs. Paying them on commission alone won't be enough. I interviewed a guy who had a VERY impressive resume, having sold for some of the counties largest companies.

After the interview I asked him what he was looking to be paid. Obviously to my surprise, I was floored when he said $45K PLUS commissions. I definitely did NOT have that in my budget at the time. I brought him back in a couple days later and offered him $20K plus commissions and he turned it down as "not paying enough".

It should be noted that a lot of great salesmen are going to need a good base pay to interest them and keep them around. And if they're good, they know it too. Anyhow, thanks for the article Joe.

What was the commission rate and how much would average guy make?

Myself I would rather be majority comission since the base is based on an average person. Think about it this way. Let's say you want the average sales person to sell 100 of your product and make an income of $60,000.

You could pay $20k and $400 per sale.
You could pay no base and $600 per sale.

For the average guy it will be $60k
But the below average guy will make more per sale for example with 80 sales the $20k base will make $52k but with no base would make $48k.
So with a base you are paying people more per sale the less they sell.

Now let's look at a high performer who makes 150 sales.
With base he makes $80k or $534 per sale
With no base he makes $90k which is $600 per sale.

Notice how the high performer will get mad because if he doubles his sales he doesn't double his income?

If someone isn't sure about your company offer a Guarantee. As a sales manager in training I had that. Also had that my first six months at my current job. Basically you tell them for blank period of time you will make sure they make at least blank per pay period (which would be blank a year). If they make more great. If they make less you cover it. That way they get on their feet but their long term potential is not reduced by the reduction in commission to cover a base salary.

In the long run a good commission only pay structure will always pay more for high perfomers. So who do you want to reward? The high or low performer?

Thanks

Signature

Aaron Doud - Sales & Success

{{ DiscussionBoard.errors[7652828].message }}

Sherry Han

10 years ago

Excellent article and ensuing discussion. I am looking to hire some salesmen myself to set appointments and meet with clients. Believe it or not I'm going to try to hire one on Craigslist. I may not get any worthwhile candidates, but for only a $25 listing fee I can at least get a feel for what is out there.

I'm definitely not willing to pay a salesman too high of a base salary. I can start that way for a couple of months, but if they are worth their salt they will be totally fine with 100% commission as soon as they get the hang of my company and products. I also don't want to get deadbeats in the door who are only there to get paid the base salary and do nothing all day.

Thanks

Signature

WSO - The EASIEST Way to Land High-Paying Clients by the TruckLoad.

{{ DiscussionBoard.errors[7653240].message }}

Jason Kanigan

10 years ago

Basic IT sales execs make $60K base plus commission.

If you are in startup mode, you cannot attract someone at that level. Start budgeting to turn an inside salesperson on salary into a salary+commission salesperson, then use their revenue to build up to having enough in the bank to get a star.

I spent some time working with these kinds of strategies with Value-Added Resellers. These were typically smaller companies, accounting practices that sold software on the side, that kind of thing. They were not in the position to afford top talent, so we had to get there another way.

[ 1 ] Thanks

Signature

>> NEW Free Biz Training [On YT, No Opt-In, from 10+ Year Vet]: How To Grow Your Online Business

>> BLACK FRIDAY SALE THRU NOV 28: The Entire Sales Tactics videos library, reg $297 now JUST $37

{{ DiscussionBoard.errors[7653389].message }}

betterwtveter

10 years ago

Well written, thanks, very excited to read the rest later.

Thanks
1 reply

{{ DiscussionBoard.errors[7653625].message }}

Claude Whitacre 10 years ago

Guys; I wrote this a few years ago talking about salespeople asking about Salary VS Commission. Enjoy.

Salary or Commission - Which is Better?
Years ago, I had a conversation with a friend who was thinking of getting a job in sales. He asked me which I thought was better, Salary or Commission. This was my answer.

"Here's what a salary is: an agreement between you & your employer that they will pay you a certain sum per hour. Let's say $10 an hour. Your work will make your employer much more than $10 an hour, or you'll lose your job. So the agreement is; Your employer will pay you the first $10 an hour that you earn for him, and he keeps the rest."
Friend- What do you mean 'The rest'?"
Me- "If you get paid $10 an hour, but you generate less than $10 an hour in profits to your employer, how long do you keep your job?"
Friend- "Not long, I guess"
Me- "Right, in fact most employers make a multiple of your salary off of your results. They have to, if they want the business to grow"
Friend "That almost seems unfair"
Me-" Actually, it's completely fair. If you agree to work for a specific amount & they give it to you, how can it be 'unfair'?".
Friend- "So what's so great about commission?"
Me- " This, You know the employer that pays you $10 an hour? He's on commission. Every CEO of a company, every self-employed person, every farmer, every landlord, almost every wealthy person in the world works on the profits of their work, we call it a commission"
Friend-"You make commission sound better".
Me-"It is better. You ever hear of someone getting promoted to 'Partner' in a business?"
Friend-"Sure".
Me-" The person was making a salary. When they become a partner, they now get a share of the company's profits; A 'Commission'. Commission is a Promotion. Commission is more".

That ended the conversation. It would make a better story if I knew what happened to my friend. I really don't know. We lost touch after that. But years later my Brother-in-Law asked me where I was employed. I said "I'm not employed". He said "You don't have a job?" Me-"No, I have eight employees. They have jobs. I have a Company". That felt pretty good.
_____________End____________

Guys; I always make commissions sound like an advancement. After all Business Partners are getting a share of the profits, why not the rep?

I know sales reps get a salary plus commission. But for me? A salary is a set of training wheels. a set of leg braces. Except for the bottom feeders, commission is always more (as long as you are fair on the commissions)
If I was paying a salary for a sales job, I would have to see very fast results. It's a mindset I have. And they would have to have the same mindset.

Just a thought.
- [ 2 ] Thanks
Signature
One Call Closing book https://www.amazon.com/One-Call-Clos...=1527788418&sr

What if they're not stars? What if they are holes poked in the top of a container so we can breath?
{{ DiscussionBoard.errors[7654053].message }}

Sherry Han

10 years ago

Very well said Claude. That's the same sentiment I have and your way to explain it was the best. I'm actually surprised to hear from other members that top salesmen want salary + commission. It seems obvious to me that a high performer would rather negotiate no salary in exchange for a higher commission for the exact reasons you stated.

[ 1 ] Thanks
1 reply

Signature

WSO - The EASIEST Way to Land High-Paying Clients by the TruckLoad.

{{ DiscussionBoard.errors[7654115].message }}

kenmichaels 10 years ago

Originally Posted by Sherry Han

I'm actually surprised to hear from other members that top salesmen want salary + commission.

Here is one reason why. Or at least one reason I have noticed through the years.

A LOT of the top performers, have issues, serious issues. What makes them
good at sales, also makes them HORRIBLE at money management.

For instance, a lot of my reps blow their commission on a weekend of fun.

They use the base pay to live off of. BTW that is only MIN wage, ever try
to live off of MIN wage? its not pretty.

So asking for the hourly / salary isn't always about performance,
sometimes its about mismanaged security.

Other times the rep sucks and they know it, so its a mooch tactic.
- [ 2 ] Thanks
Signature

Selling Ain't for Sissies!
{{ DiscussionBoard.errors[7654184].message }}

max5ty

10 years ago

A lot of companies will call their salary a "draw".

They'll pay you a draw every week, then take it back out of your monthly commission check.

Example: They give you a check for $500.00 a week, then deduct $2000.00 from your monthly commissions. Guess it goes along with what kenmichaels was saying about salesmen not knowing how to handle their money.

Salesmen that make a habit of not covering their "draw" aren't around long.

The above example is almost always the model car dealers use (from my past experience).

Thanks

{{ DiscussionBoard.errors[7654294].message }}

What you need is a sales rock star

Trending Topics

Dead Man Mailing

Getting started with long-form content

I'm so frustrated .. CTR 0% !!!!!

How Do Marketing Agencies Get Client's

Checking your competitors' social pages