Questions

What is the best commission model when hiring a sales person to sell digital marketing services to small businesses?

We are a bootstrapped startup and need someone to make calls to our targeted lists and set up free consults. What commission plans work for this "pre-sales" process? The owners will handle the free consult and close the sales.

6answers

Option #1 (recommended): Use https://www.voiq.com/ and skip hiring someone.

Option #2: Hire an SDR (right out of college, ex-athlete): and pay them an hourly rate as a consultant (3 month trial period). Pay them upon deals closing (commission % - the % will depend on your margins and the the On-Target Earnings you'd like them to make) and then give them bonuses in the form of prizes (i.e. a trip to Vegas for hitting their quota -- # of calls, # of meetings/# of opportunities created, # of deals closed that they sourced). Bonuses in the form of physical Gifts, especially at the SDR level, have been proven to drive employee happiness over $.

If you have additional questions, happy to get on a call.


Answered 6 years ago

If the owner is doing all the hard work of handling the consultation and closing the deal, you're not hiring a sales person you're hiring a telemarketer. Personally, I wouldn't pay out a lot of commission on that, unless these are very difficult leads to work and secure calls for. If a salesperson gets 10-20%, doing all the heavy labor, a telemarketer should get under 5%, IMO.


Answered 6 years ago

I've set up agencies for commission sales teams in the management consulting field.

Finding people to work entirely on commission was OK pre-2008, but nearly impossible after 2011. The level of skepticism, coupled with people realizing with PhDs and psychiatry degrees realizing they shouldn't be trying to be telemarketers until their practices picked back up, lead to a huge drop-off in the number of candidates.

I also hired firms specializing in finding commission sales candidates, and they were unable to provide me more than a couple of resumes of people who did not stick. To be fair, this was in 2012-13 and their situation may have changed by now.

However--with the minimal buy-in, loyalty and typically abysmal investment in training the hiring company provides, it is in my opinion not worth traveling down that path.

The candidate doesn't really have a reason to stick around. Any time a regular wage job is put in front of them, they'll jump. And most never wanted to be making calls in the first place.

I know several business owners who run "boiler room" type operations and they are constantly juggling and struggling with staffing. Callers go to lunch and don't return. They don't show up. For me, it wasn't worth the hassle.

Perhaps you'll find someone who has the commitment, the drive, the energy and the talent to be a good commission appointment setter (which is what you're looking for based on your description.) As far as I'm concerned, that would be like winning the lottery.

Two more thoughts.

First, to attract someone into a role like this, you really have to be paying an hourly rate. I'd skip commission entirely Your retention will be much better, depending on how well you screen candidates.

Second, if you're going the commission route, the rate has to be big enough to be worthwhile. Yes, maybe 5% IS an appropriate *percentage* of the sale to give an appointment setter--but is it a significant-enough amount of *money* to be worth the person's time?

You'll have to figure this out with your own numbers and see if a person can really make a livable wage out of your numbers.

After all, they don't get paid unless the owners do their job, too. If they don't sell, the setter doesn't make anything. Personally, I would not want to hand my financial fortunes over to someone else like that.


Answered 6 years ago

The best commission model is one that reinforces the behavior and activity that you are asking the sales person to do. So if the goal of your sales person is to simply set up free consults, maybe they get a flat fee for each call they set up or maybe a percentage of the deal if it closes? Or maybe you set goals and if they reach the goal each month, they receive a bonus paid monthly. There a variety of ways to set this up but definitely think about the behaviors and how to reinforce for the specific activity you need from the rep.


Answered 6 years ago

Carefully. Make sure you've defined clearly what is new vs recurring business. Then the percentages matter.

We've just established this for our company, Keywee. Let's setup a call.


Answered 6 years ago

If you're going to be investing in an in-house employee, then don't hire sales based on commission. a) Pay them a low base salary that's fair and means they don't have to struggle to pay the rent (you don't want desperate salespeople, because it increases the chances they won't treat prospects they way you want). Again, you don't want them selling the wrong product. They need time to ramp up and learn your product. Give them the proper tools, time, and training.

The other route you can go with in the beginning is outsourcing your sales to a company like http://inspirebeats.com With InspireBeats, you can get all the value of a sales rep for a fraction of the price without the need to train them. InspireBeats can help you do the list building, lead research, as well as personalized outreach, so that you only deal with qualified and targeted leads.


Answered 6 years ago

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