Do any sales people work on 100% commission any more?
I'm a one man show and I need to grow my business. My sales need to increase, but I'm spread out too thin in order to sell more. Any advice in finding a sales person that will work 100% commission
Chris, firstly congratulations on making the leap and getting out there to start and grow your own business. In doing so you have shown a lot of confidence in your product or service (what is it you are selling?).
In asking if sales people will work for 100% commission then in effect, initially you are asking them to work for free as any good sales person will want to invest time and effort in understanding the product or service. By understanding I mean: what it is; what outcome it delivers; the value of the outcome it delivers to the buyer; how it stacks up against the competition; what is the sales cycle - how long will it take to sell something; understanding who or what the competition is; what its key differentiators are; the value and size of the potential market; your ability to service that market; the sale price and the amount of commission - these last four will give the sales person an understanding of how big their potential market it and therefore how successful they could be.
So before spending your precious time on recruitment or ads, please make sure you have prepared all the material required to answer the questions above before pulling the trigger.
The reason for this is simple. Any decent sales person will evaluate the opportunity laid before them, assess it against their knowledge of the market and their confidence in their ability to sell, and they will then derive an idea as to how much the opportunity may be worth to them. If it meets their needs, they will commit, if not, they will walk away. This is important to understand as you will find that there are many people out there who think sales is easy and they will gladly miss-lead you and waste your time. But the seasoned sales professional, the person who really DOES sell, has a track record of selling and delivering growth, well they know their worth and they also know that they have the power in this buying decision - in other words, you will need to compete to secure the best, as they are in demand and they know it.
Through being prepared, putting in the effort you will attract the right calibre of sales person, who will be impressed with your prep and who will therefore take you seriously. You both will have a common objective and will work to achieve it.
The other route is to just splash some adds, quickly interview people who claim they can sell (but who may just be desperate to try to earn - there is a difference) and take your chances.
Can you afford to take a chance with sales and growth? Also remember, from both sides, 50% of nothing is still nothing!
It does however highlight a bigger for issue me, probably less so in the US but more so over here in Europe and that is just how late people realise that sales IS THEIR BUSINESS. It doesn't matter if you make cup cakes, if you polish shoes on the sidewalk or have the best technology - if you haven't thought through how you are going to sell it, where you are going to sell it, who is going to sell it and most importantly who is going to buy it and why - then you're not ready to launch a business. Anyone can spend their life savings, their families and friends life savings, investors cash or drum up debt trying to make an idea into a business reality, the trick is to sell enough quickly so that you can replace those finances before they run out, invest in your offerings and expand.
Hope this helps - successfully sales is process and like all good processes it needs to be prepared and executed well to be successful.
Totally agree Dan. The funny thing is that everyone see's the value in product development, great customer service, having great products and therefore they plow their seed money / capital into that. But when it comes to selling the product or service they expect someone else (the sales person on 100% commission) to do it for free, and to take all the risk. Come on everybody, if sales was easy everyone would be doing it and everyone would be making a million+ bucks a year.
I just took a look at your web site (which appears to be a work in progress) and based upon what I saw, I believe that you will have a real challenge finding commission-only salespeople. This is mainly because of the length of your sales cycle. The products and services you sell don't lend themselves to a quick sale.
One way around this is to offer either a recoverable or non-recoverable draw against commission to help keep the wolf away from the salesperson's door while they get established.
Alternately, a small base to help keep the person fed so that they can go out and sell is another approach for situations such as yours.
If you happen to find someone who will work in your industry for 100% commission, carefully monitor their sales. Commission-only salespeople have been know to drag home anything that will get them a commission and not what the company needs to thrive.
Just my 2 cents worth.
From my past experience, this really depend on individual attitude towards 100% commission approach and the nature of industry you are in.
But I have a simple concept for this "100% commission = 0% commitment". This will differ from people and industries, however taking 80/20 rule - my concept is true.
Do your own selling, get strategic partners co-brand or bundle product, and use technology to enhance your sales process.
When your business shaping up and afford to get paid people to help, get a dedicated staff with low basis but high commission for a start .... than expand further
Agreed with Nicholas. I'm not looking for a job and I'm not a sales expert, but I'd absolutely work for 100% commission if I was confident I'd make more money that way vs. a combo or a fixed wage/salary. But I think the key would be whether I thought the product would sell and whether the commission rate was worth it.
Hey Chris, brand-new to this site so bear with my underdeveloped profile.
There are a number of different scenarios when it comes to salespeople and how companies hire them. I, myself, have been in sales for about 5 years and I've been in 100% commission roles throughout. These have included as a 1099 rep and a 100% commission W-2 employee carrying an existing book of business.
What you're probably looking for is a contract salesperson EAGER to earn some good money. If you don't plan on paying this person, you can hire them as a 1099 independent rep. Be aware, however, that to get potential hires for this type of role, you will need to come up with some type of compensation structure (i.e. commission split, etc.). I would talk to your CPA about this as they would probably have some good answers on the tax/financial end of things.
Hope that helps.
From our experience as a sales commission solutions provider we see that it varies.
Some industries seem to be only 100% commission ( classic example: MLM). Whereas some mostly do base pay. It has to do with how much risk/reward the company wants to offer and how much the rep is willing to accept. They approach it from opposite ends.
Big brand companies where closing the sales is very likely ( particularly with limited competition will offer more base pay and less commissions. They feel the product is selling itself and they can make the commissions smaller and the costs more predicable.
New companies or also-ran companies will tend to do more commissions and less base pay. They don't want high fixed costs and want to share the risk of closing the deal with the rep.
In both cases, reps come from the opposite end. For almost-guaranteed sales, they would like more sales commission even up to 100%. For low-probability sales they want more base pay.
These are rational choices from both sides.
As with your sales hat, its a numbers game. We employ commission only sales people, but it is a tough row to hoe. Everyone wants base and benefits. Put an ad out there (paper, Craigslist, LinkedIn, anywhere you can think of). Block off 1/2 of one day to do nothing but interview and have your thick skin ready.
Do not underestimate the amount of time you are going to need to spend on training. Even if they are seasoned on the phone, they are still going to need product knowledge to actually serve the purpose you need.
Alternatively, you can bring someone in to manage what is spreading you so thin. It can be someone young and hungry and willing to work for minimum wage or a bit over. Put together a very simple training program to get them into position to handle some of the grunt work.
Either way you go, there is going to be a time/resource investment to get you over the hump.
I just saw Chris' answer and his idea of a recoverable draw. Excellent idea and one we use as well. However, make sure you draw a line in the sand on time frame, total draw amount, and payback terms before you go this route. Otherwise, it is a great idea to help out a salesperson in the short term so they can get their feet wet and start earning. Once they do, they payback rate is crucial because you don't want to lose the draw capital, but you don't want to discourage or cripple them with draw repayment.
Finding full commission sales people is a challenge.
If your in the business of relationships, consider offering a residual on the back end. ie, If they pay ongoing fees or maintenance.
Incentive packages such as benefits are also attractive and should garner a more serious look from prospective sales people.
Profit sharing is another way to go and also has the added benefit of invested interest.
Many of the business members of my exchange, tceXtrade.ca, barter for incentives and benefits for employees and clients. They'll cover a specific amount of glasses/contacts, dental, massage, chiropractic, etc and pay for it with excess capacity and downtime.
I'm sure there are a few more ideas out there but those are the ones off the top of my head.
100% commission is almost the industry standard, depending on where you live but most people must see a good reward for the risk. Most Insurance companies are 100% commission but If you can sell Life Insurance, or Health insurance well you can make 6 figures in 2 years or less.
Most outside sales positions are 100% commission and most inside sales have a little pay a sales commission slashed way down because of the pay.
You have to be ready for high turn over at 100% commission and how much time are you going to spend to train them.