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
Some great and hopefully helpful answers here Chris.
From the standpoint of a compensation expert (not someone dependent on a commission), the answer unfortunately is "it depends." That has to do with what you are selling, how long is the sales cycle, how much of the sales person's success is dependent on their efforts vs. having a strong marketing program in place, are they selling direct or indirect, etc.
If it's just about managing expenses for you right now, go ahead and try 100% commission, but as some have said you may not get exactly what you're hoping for. One experience I had was in a printing company where we just needed a little outside business to supplement a good book of ongoing business so we hired someone on 100% commission. When he'd made enough to get him by for awhile, he'd slow down and stop selling, or just go back and work on existing accounts.
Behaviors of sales people aren't all that hard to predict. You can always start with a small base and remainder commission, then change it at some future point as you get some experience. Do an analysis on additional revenue you think a sales person would bring in and then estimate what you can afford for total cost of sales and use that as your "target cash". Anything above that means you are selling more; anything less means you are managing your expenses down in line with your reduced revenues.
Hope that helps.
This depends on what the realistic potential income is. If it's a product that has the capacity to provide a very significant income, many people could find a commission only position attractive. Another factor is how long it would likely take a good candidate, to get to the income level they need as a base. What many sales based businesses do is to provide a base guarantee for a few months to help the seller get established. This stops once the salesperson's guarantee period is up.
Hope this helps.
Chris: As a sales rep for the past 15+ years, I would ask you to put yourself in such a position. Unless you are living with your parents and fresh out of college you have living expenses. My guess is that you are doing transnational sales. If that is the case then it's a numbers game. Without going in to detail and all the potential variables, 100% commission is extremely difficult at best to live on. In addition, what happens when you get sick or have any other situation in which you can't work? A draw is one way you might attract candidates. This being said, most companies offer a base which does bring the commission potential down yet offers a little security. Every sales person is going to have a slow month or two and a base provides for living expenses. Any experienced sales rep is going to be able to find a good base + commission position. My advice is to find a college or high school grad, train them well and provide a draw for 3 months to get them on their feet. One last comment, if you don't spend the time and effort with sales and if applicable product training, then you are not going to get the performance you are looking for and constantly looking for new reps.
There are and I believe always will be business models that essentially work best with a 100 percent commission sales force. Sales agents have historically worked on this basis. Multi-level-marketing works on this premise and often start ups will seek sales people who have the right contacts and confidence to be remunerated in this manner. Although it is an attractive system from a cash flow perspective; longer term, companies regret the decision because the sales people typically "own" the customer and it is difficult to transition to greater interface with the customer or changes in sales force structure.
Your question is one you can answer yourself if you put yourself in the potential salesperson's position.
We all need money to live on - how quickly could I get money from your commission when I sell.
How much is 100% commission worth and how will this equate to a years income?
If I sell $100 of equipment and services for you - how much is profit?
What does this leave for me - because the rest is mine - isn't it?
How many will I need to sell to make a living, especially if I need to finance myself to get going?
Most business owners who want/ need commission only salespeople, do not believe in their own product.
Great sales people can and will continue to earn a great living in a traditional sales environment.
If your product will double their take because it is so good, you might as well offer them a part of the business to make it more successful.
There a plenty of sales people who work on straight commission. Some work full some work part time. In depends on the industry & markets you want sold. You could post on Linkedin and other sites and trade magazines you are looking for a rep to handle your line. (they would sell your product with others companies products) It works well with consumer driven products. make sure to offer a much higher commission rate.
You can get college students or grads, limited ability or desperate adults to do the work. They will need a good deal of training! Don't expect this group or allow them to go out hog wild with your product fishing for prospects or you'll get in trouble.
It's sad, because in the now distant past that was the way to go when business was abundant, there was not as much competition & a competent salesperson could earn the most money on straight commission. In today's market you've got to be nuts, or a college student, grad or adult with limited ability or desperate ;-)...
We see this problem in many SME organizations. And I am afraid there is not a positive answer on this. You can probably find a few sales reps that will work on 100% commission. The problem with this only that it is very difficult to get commitment from these sales people. What you are in fact asking these sales people is to invest in the sales cycle of your solution. In my experience without quick results for the respective sales rep, they will quickly turn their attention to the following project.
So you need to somehow find a way to get them started. Consider at least some sort of compensation for time invested. What you could offer is an advance on commissions. And when this is not earned in the first 6 months the agreement is terminated and they do not have to pay back. This way you have a limited risk and you can demand at least some commitment from the sales rep (like 1 or 2 days per week).
Hope this helps!
Finding good people to work on commission only is difficult because if they are really good they don't need to work on commission only and probably already are working for themselves or others (paying them well).
That given there are people willing to work commission only but from experience the turnover with these people is high and the training and effort to work with these people is extensive.
I recommend having a modest budget when hiring a salesperson and expect to pay them well if they produce. In addition to being compensated financially make sure you reward good people with appreciation as well.
For a sales person to work realistically on commission only, the commission split they get better be very high in terms of margin, or that they can make money other ways such as revenue from installations, be open to be sales agents for other products, or generally be given a great deal of support from the product manufacturer to help drive sales. If a commission only rep gets a better, safer offer from a competitor, or some other employer may bolt at the chance and possibly take your intellectual capital and client list with them.
As was stated below, draws against commission and fringe benefits are great ways to incent on commission only. Partnering with companies in your target industry with service providers or "affiliate partners" that can get lead referral bonuses as opposed to having to take every deal to a close can help you get more feet on the street to develop business. Value added resellers that can bundle or provide services and value on top of your product can become better than any one sales person.
ANYONE who would work on a 100% commission had better be real sure that they are going to work for a company that has done an outstanding job of building awareness for the product and company and that there is a genuine demand for what they are being asked to sell. If this sounds like it would take a significant investment in a well tuned and consistent marketing effort, it will. Anything short of that and you're actually asking the salesperson to build the business for you on their time and at their expense.
So Chris, if you got prospects waiting in line to give you money and you need a person to take the orders and work on building profitable relationships then you can find a sales person who will take a 100% commission job.
If you want someone to spend 40 or more hours a week finding prospects, explaining to them who the company is, what your products and services will do for them, and why they should buy from you instead of the competition and you want them to do these things for no compensation - think again. A smart salesperson might as well start their own business. Like you did!
Maybe you don't need another sales person. What you need is an experienced marketing connection that can help you get organized so that you get the word out and get leads coming in.
As someone who has been in sales for over 15 years, I can tell you there may be people out there willing to work for 100% commission but in my opinion, it is not the way to go. When you hire sales people ,they will need product knowledge at the very least and some sales training in most cases. That is valuable time (time=money) you are investing in them and if you are compensating them purely on commissions, chances are they will use the job as a stepping-stone until something else comes along that includes a fixed salary. No matter how small, a salary acts as a "retaining tool" and gives you a better chance at maximizing the investment in time you put into each sales person and keeping them on board long-term so you don't have to use your time to keep training new people.
Sure, there are your starving students out there who will gladly undertake the "commission only" task, but if they are good salespeople (which is what you want and need), they will move on as soon as a new opportunity comes their way. So my advice would be to try and increase sales on your own for a while longer and when you have some money saved, invest it in a small salary and perhaps 80% commission for a good salesperson. Good luck!
In my opinion a qualified sales rep will want a base pay.
Simple answer to your question. YES!
How can I be sure? Well... I do. I have a ton of clients that pay their sales people 100% commission.
Key thing is they have to be a 1099 employee (independent contractor) That is how you get around min wage requirements...
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.
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.
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.
Yes. Absolutely, depending on your field. Go to lead group meetings in your area. Post in your affinity groups. Join LinkedIn and post there and also join and post in the relative groups.
Obviously also post on Facebook and Twitter.
Best of luck
In most industries there are Independent sales reps or groups. Most will want a 15% to 30% commission depending on the product. You did not say what area your product fits, but you can do a search for independent sales reps for your industry by state or region. They will want to know about marketing materials, product samples, support available, delivery time, guarantees/warranties, etc.
You will need to know about them or their group. Who do they represent, years of experience, do they have a client base or need to develop one for your product, how much time they can devote, expectations on exclusivity of representation, how often they will communicate, if they will need your help with presentations, training expectations, etc.
Have a good contract/agreement of representation ready which clearly states, terms, territory, separation conditions/time, commissions (frequency, when paid), communication, etc.
Good Luck finding reps and expanding your business!
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.