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.
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.
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.
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!
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.
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.
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.
At YourSales we have extensive experience with the 100% commission model for 3+ month sales cycles and are leaving it in favour of other commission models with higher sales productivity.
I know, I know... "any sales person worth their salt, yadee, yadee yaaa...".
The numbers don't lie: for longer sales cycles (and likely also for shorter) a single digit percentage of sales professionals will commit to 100% commission sales, and if they do you have zero control over when they work, how they work, which other products they carry, etc.
What I'm saying is that I'm not sure you even should want to have someone working for you on 100% commission basis. It just doesn't yield the same results as retainer-based commission plans.
You may not have other options, though...
Working commission only, as others have noted, really means working for free quite a bit -- since it takes time to generate sales.
You may want to consider offering a high enough commission rate to make the opportunity worthwhile for your sales people -- Make it an incentivized rate since there's no base pay.
Also, if you find people who are already well connected in your target market, this would help reduce the risk of working a lot of time without pay and might make it a more attractive opportunity.
Hi Chris, Absolutely. Any sales person, man or women worth their salt and that belief in the product can and will work on 100% commision.
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!
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.
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.
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!