I saw a discussion in a forum some time ago about how to pay a salesperson. There were as many different answers to the question as there are stars in the sky.
If you were a salesperson, how would you want to be paid? If you were to work for yourself, would you be okay with the rules you’ve established for paying your salespeople? When I’ve asked coaching clients that question, I often hear a “YaBut” response. That’s not good.
I could write a book on this subject (and I did) but I’ll keep this short. After many years in sales, both owning a business and working for others, I firmly believe salespeople should be paid a percent of total sales. The percent could range from 6% to 12%, depending on your specialty and the size of your jobs. You have to make their effort worthwhile. If a salesperson can’t make good money, a good salesperson will go work for someone else.
I wouldn’t hire a salesperson who didn’t want to make at least $60,000 a year in commission. Sales requires a great deal of self-discipline and determination, and if the salesperson is willing to settle for a low salary, they aren’t interested in working hard.
And I wouldn’t hire a salesperson who insists on being paid a salary, an hourly wage, or base plus commission. That’s a sign that they aren’t confident in their ability to sell. If they aren’t confident, how can they sell to others?
The other method of compensation often used, paying a percent of gross or net profits, is not fair to your sales person. They aren’t responsible for building the job, so their pay shouldn’t be dependent on how efficiently the job is built. Many business owners use this method to keep their salespeople from selling a job cheap. There are better ways to prevent having jobs sold short – the best is to review and approve every contract before it’s final.
The old adage of treating others the way you want to be treated is true. Pay your salesperson fairly, establish rules you’d be willing to work under, and you’ll see an improvement in their sales ability. And that will improve your bottom line.