Sales commission advice needed... NEW SUBFORUM SETUP FOR THIS!
 

OK background: I just started a new business that is taking off in Austin and is launching next week in Dublin and Belfast. I plan to expand to other cities but will need salespeople and am wondering what a fair compensation is.

The job is quite easy, it is a service that is sold to a bar, restaurant, or similar venue... the service is very cheap (~$100/month) and is currently being VERY well received (i.e. selling itself, at the least a very easy sell).

Based on the above... what is a fair commission per sale? I plan for each sale to CONTINUAL pay out to the salesperson as long as they remain a customer... this encourages the salesperson to maintain the relationship and gives them a nice residual income should they decide to move on at some point.

My gut tells me the proper price point is between $15-$30, which works out to $1500-$3000/month in CONTINUOUS income once they have sold 100 clients (the LOW, LOW, LOW estimate for any given region). The more realistic estimate is in the range of 200-250.. so to play it safe.. they SHOULD be able to build a client base to 200 and earn between $3k-$6k /month

OK! Now ..what is the EXACT figure that seems the most FAIR and will be able to attract competent salespeople without being exorbitant?

Poll to follow

That really depends on what the service costs you.

how many total salepersons will you hire per market?

not really, I want to see what is appropriate simply based on the work a salesperson does.. doesn't matter if I make $10 or $50 per sale, I'm not interested in a figure based on anything but what the salesperson's time is worth. Having never worked sales, this is hard to calculate althout I think I have an idea.

Probably only the 1 per market... giving them the freedom to work the market as they see fit and not worry about ganked sales.

If the service costs you $90 a month per client, then you cant pay them any money at all, the cost does matter.

I work in Sales.

It will probably take your guys more than an hour to convince someone to put something in their bar.

$15 for a couple hours is nothing. I wouldn't take that job. Maybe once they reach a certain amount of clients $15 is something, but usually with stuff like that you give them a base pay at first until they reach a certain amount of Sales per month, then get them commission.

I think he said... "the service is very cheap (~$100/month) and is currently being VERY well received".

I guess it depends on how hard is each sell perceived to be... how long will it take someone to close the deal?

If this is one of those things that can be sold in 1 or 2 meetings with the client, and you're talking about $1,200 the client is going to invest annually... then $25 per deal for the rep would be $300 annually. They sign up 100 clients and you have a $30,000 a year gig.

How does tax play into this one? What does the rep have to do to make sure he's accounting accurately for taxes, etc? Do you have all of that in line?

Also, how are you set up to pay the reps? Are you cutting checks or making online deposits after each transaction monthly or are you waiting until the end of a month (say Jan 31) and then paying the rep in full for January at the beginning or end of February?

Are they 100% commission or are they employees with some type of base/draw and benefits?

Thats what he is selling the service for, not how much it costs him. Unless I am reading it wrong.

100% commission

Remember, it's recurring. So 2 hours of work comes down to $180 a year. Which I would take happily. I would never suggest paying your sales guys anything over about 7%. They'll bitch, they'll whine, and they'll complain they're worth more. But they're really primadonna wannabe athletes and can be replaced by anyone else with a mouth. That said, you get this going in Seattle shoot me a smoke Austin. I have experience in selling bar owners, and am always looking for opportunities to make money.

1 suggestion is if this is a software type operation, throw in a 1 time "user license fee" and give your sales a guy a good portion of it to give him some up front incentive while he's building a long term income base. Seriously, hollar at me if you want to chat about this some more.

My guess is you won't have 'employees'... you'll have contract employees or whatever the legal name for that is, correct?

Yeah, at 100% commission he'll just I-9 them. Independent contractors. Which does mean the 7% goes out the window. Probably between $15-$25 per sale depending on what kind of projected volume and close rate is involved.

Depends on the product and level of person you're targeting... sales is a relationship business. Much like everything else, you have all sorts of people in sales... you get what you pay for in that regard.

If you want high quality reps that will maintain great relationships - be selective, make it worth their time and easy from the perspective of getting paid.

That always makes sense, but starting off with little to offer, choose wisely.

Good point.

I want a little more incentive up front though.

Maybe $25 the month you land them, $20 from there on out.

It is what it is... $25 (my vote) per deal per month that you close. You're not an 'employee', you're an independent contractor and your geography is your territory. You're responsible for all expenses, you get no benefits... bust your ass and get 150 happy clients to pay their $100 a month.

$100 service X 150 clients X 12 months = $180,000 in revenue
The sales guy would receive $25 X 150 X 12 = $45,000 annually.

Do it right and this is a nice side gig.

Or better yet, a 1 time "user license fee" of $195 in which you get half and proceed to collect your $20 a month. That is a great solution for start up software companies hiring I-9 salesmen.

So far this isn't the case... so far the process is working like this...

Go in possible client's place, try to talk to relevent person, if no go then leave literature, otherwise explain service (takes 10-15 mins max.) and leave with sale (or 2nd meeting which has always lead to sale) or again if not interested yet then leave literature.

So, the process is VERY easy and VERY quick.

Sure, but your main selling point is that its only $100 a month and its a great service, and then you mention right before you are about to close the $195 license fee and you lose the client. Not always, but that would happen.

Depending on the type of service, I could probably do this in my spare time... there's a ton of bar activity in Dallas. :p

You want to expand into Arkansas?

Sounds pretty interesting. If you need someone for the SD area let me know, I might like to give it a try.

Depends on how valuable the service is. If you're willing to invest $1200 a year into a software program that is greatly going to help your business, $195 up front is nothing. And honestly, when I was doing poker in bars the first thing bar owners asked me was the up front licensing fee. They expected it. It was a lot easier to sell when I told them there wasn't one, but I could've got them on one if I'd pushed it.

Oh and I know my brother could be a great option for you in Central Arkansas.. he's very well connected to the bar scene. He's a firefighter and always looking for a side gig. Shoot me a PM when you get details and look to expand.

Better yet, just tell them that they only have to pay the fee when they break the relationship, and then they'll never want to leave...

Just kidding.

LOL Definitely throw in a 30 day written cancellation notice into the contract.

Question - are you charging fees for people signing up as reps? Are you charging them for the literature they leave behind?

I think this is more the route i am going... sortof. Currently the structure is this...

1 time SETUP fee of $100 and $100/month
OR if they sign a 6 month deal we waive the setup fee
OR if they sign 1 year we waive the setup and charge $1000 for the year.

Now for a salesperson I could see

...a 50/50 split on the setup fee +20% ($50+20%=$290/year) ~24%

OR on a 6 month deal they get $125 ($125+$125=$250/year) ~21%

OR on a 12 month deal they get $225 ($225/year) 22.5% (although it is only ~19% of the undiscounted rate)

Nope on signing up. Yes on literature. but it is simply business cards and pamphlets.. if needed I guess I could pay for those and have them pick them up at officemax or wherever I have them printed.

Since the salesperson would be an independent contractor receiving no salary or other benefits, I think you have to go the $30.

BTW, are you viewing this as a full time position?

If it turns out to be as easy as you think it is, you might be able to reduce the pay to future hires.

Let me know when you get to Albuquerque. I love easy money!

Yeah but that is a secure 12 month deal, so its okay.

Eh hem....If you need printed supplies, let me know. Thats what I do. Office Max is a big ripoff.

Just keep it reasonable... so, when do you share the details on your li'l venture?

That is actually the kicker... the owners/managers I have spoken to that GET IT, have ALL agreed that $100/month is way too low to charge... BUT knowing that MOST will not get the value right away... I am setting the price point low enough to make it a no brainer for most.

For people that are genuinely interested... shoot me a PM and I will discuss it in further detail if you want. I am hoping to get this rolling nationwide fairly quickly. Kinda funny that my first expansion market is overseas...

PM sent.

If you need a strong representative in the Phoenix/Scottsdale market drop me a line.

How much can you bench press?

I'm dead serious. I'll shoot you a PM. We can lock Seattle/Portland down.

I sent a brief PM. I get home around 4pm PST. Let me know if you want to talk in more depth. I know you're still working on getting things together, but whenever you're ready I am.

PM sent...
I vote the $30 option. :D

OK, without getting into details publicly (want to hold off on that for a bit).. the structure is as follows...

you have 3 layers to the business...

sales - duh
maintenance - the BULK of the work
development - ME! (this is where most of what makes the service very hard to replicate easily come from)

a very ROUGH estimate of compensation is as follows...

20% sales / 60% maintenance / 20% backend, devel, support, etc

In Austin, I am all three at the moment... (hot saleschicks in the area are welcome to apply at all hours)

In Ireland this is split into a saleperson in Belfast who gets 20% a saleperson in Dublin who gets 20% and the maintainer who gets 65% (the extra 5% is because they have to handle more of the business than normal due to being in a different country and whatnot) and finally the backend gets 15%.

As this (hopefully) expands to more cities this can be split into 2+backend or 1+backend ... depending on how much a person want to handle.

For example, I PROBABLY have someone lined up for Boulder/Denver. He will handle sales AND maintenance and receive 80% of each sale. (not sure what percentage of setup fee... either 80 or possibly 100%)

The great thing is that if I don't have a maintenance person in that town (preferred) I can handle it all from here. There are no ONSITE visits required.

The maintenance side of thing is very very easy, but does require being "on call" (near a computer with internet) most of the time.

If anyone thinks it's a good idea.. I can setup a conference IM or chat .. I just don't want the details out just yet.. it isn't ground breaking.. but it's better left unpublished for now.

That's the deal. I would be interested in sales/maintenence. I'm a relationship developer, and not only is it added income, but it's an opportunity to keep that relationship strong every time maintenence is required.

Obviously as things blow up, you're going to have to have someone fill the 2nd role. Again, choose wisely.

This isn't one of those bar-type Bible Trivia games, is it? I don't know anything about Dublin, but I don't think that will fly here.

ok, anyone interested in me setting up a private chat room and going over the details of this? Let me know and I will get one going and PM the address to you guys.

Definitely.

Yep.

I have a little time.

NO, it is not a trivia game! :D

OK.. private chat room is setup in the CP chat area...

http://www.chiefsplanet.com/BB/misc.php?do=flashchat

I will actually publish the password ... monarch ... since I can just BOOT any strangers that come in... :D

Austin,

I sent a PM your way, but am interested in what you have going. I'm in the St. Louis area.

I am thinking of setting up a webinar to expand on all the stuff we talked about in CHAT the other day. What say you? Any particular day/time that is best?

I missed the chat the other day, but have shot you a few PMs. I am really interested in this, and have ties to many of the bars and restaurants here in KC. I would be interested in a webinar and could do any time that worked for everyone else. I work from home so I can be on anytime.

I'm in, as long as it doesn't fall during my work hours, which it most likely will.

How does 8pm central time sound? Tuesday or Wednesday?

Works for me.

Speaking from experience:

Pay the sales guy the bulk of their money on the contract signing. If they're making enough on the residuals most will just stop working.

You also need to be clear on how long that residual is guaranteed to pay, even if you fire the guy. If a new sales guy takes over an existing area does he get the residual payments from the last guy? If not, is he going to be expected to maintain that relationship anyway?

Thats 6 PM here, I can work with either of those days.

Works for me too...Would prefer Wednesday if that works for you...

I can do Wednesday, or be about 20 minutes late on Tuesday.

Yeah, Tuesday will be really tough for me if it is then

Ok, I will shoot for Wednesday. I will let everyone know early next week via PM.

Ok Wednesday at 8pm CENTRAL time. I'll run the Webinar using GoToMeeting. This will limit us to 15 people which is cool cuz I expect only about 5.

I will provide the meeting password via PM.

Awesome. I'll be on.

I'll do my best to be there, as I really want to be part of this.

I've already spoken to a few of my contacts about it very loosely, and they want to hear more.

I'm in.

Nice! Ok, just to be clear, this is a webinar to go over how this is marketed and go into further detail on the process itself.

If everything goes as planned... I will PM people in each available region and line up an individual phone call to nail it all down.

I'll look forward to hearing more on Wednesday.

I'd like to be there. Please shoot me the password. Thanks

Same here. I may be 10 to 15 min late depending on traffic.

No worries. I will send out invites in about 90 minutes.

Sounds good.

EDIT: Shit. Something came up.

Kyle, are you able to save a transcript of this and send it to me via PM or email? I can't make it, but I really want to be involved. I already have several contacts in STL that are dying to hear more.

I'll assume your salespeople will need to be in markets where there are hundreds of restaurants an bars? I'm a TV advertising salesperson, but I don't live in a very large market. Unfortunately, I wont be able to see the webinar.

By the way, the link provided by AustinChief wont work in firefox unless you delete the 1 after www

Has anyone gotten the password yet?

I still haven't received a password. Anyone else?

Slight delay. I will send them out in 5 minutes. 8:10 start time

Just followed the link, it says "Waiting for Organizer"

Yeah, mine says "Successfully Connected; Waiting for Organizer"

I've never used gotomeeting. Is this something I need to call in for? I don't have voip or anything like that on my CPU, and just use external speakers for audio. I don't have a microphone or anything like that though.

1. Please join my meeting.
https://www.gotomeeting.com/join/351263617
2. Use your microphone and speakers (VoIP) - a headset is recommended. Or, call in using your telephone.
Dial 712-338-7131
Access Code: 351-263-617
Audio PIN: Shown after joining the meeting
Meeting Password: monarch17
Meeting ID: 351-263-617


PASSWORD monarch17