Thoughts on hiring first sales person?

[santiago]

Looking for some advice. We've had a business that really needs a full-time sales person to manage leads, close deals, etc.

However; a few issues:

1. as a business owner - psychologically its a little difficult to "trust" that someone will be representing your company.
2. I have really no idea on compensation packages. We have a service business where the average sale is about $100 and an account would probably buy anywhere from 50 on up "sales".
3. Do we hire a seasoned veteran..someone that worked for a competitor and has industry experience and contacts OR do we go for a young and hungry sales person who brings less experience at a lesser cost.

Plus, I'm sure there are many more issues I don't even know yet.

Any thoughts would be greatly appreciated!

 

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[healthstatus]

Salespeople are smart, they will figure out your compensation package to work to their advantage, so make sure that is aligned with what you want them to do. If new sales are more important than "maintaining clients" make sure the get a bonus every 5-10 new clients. Make sure they have a support system so they don't end up delivering orders instead of selling. Setup the system so if they don't sell, they quit and if they haven't sold anything new in x amount of time they don't get any commissions from "old" sales.

 

[TexasVentures]

Santiago I'm in the same boat, was actually just talking to my business partner about that today. However one thing I'm sure of is make sure you have the back end 'service do-ers' in place before you bring in a sales person. We thought we wanted a sales person so we could make more money, but the more we talked about it, whether they were young or old, new or a veteran, if they brought in jobs, they'd need to be done. If we were at maximum capacity already, then we realized it would be more practical to free up the tasks we do from day to day so we (the owners) could go sell more. This may not be the case in your situation, but i know for us were implementing more 'behind the scenes' people. So far its been working.

However, if your 100% sure you can handle 2x+ the volume then go for it!

The question i have on this is commission and percentages. Do you pay commission on the profit on the job, or on the revenue on the job. See with our company we have mostly 100% markup on things. However, if we have a salesman and offer 15% commission that's great...but here's my question, say the salesman lands a larger gig, something where the customer wants 100,000 units @$1ea, and we make $.20/unit profit and since their buying in bulk, how do you compensate the salesman then? because the company just made $20,000, but 15% on the revenue is $15000, which only leaves $5000 profit to the company. How do you structure something like that? Has anyone seen anything like this?

 

[100k]

Intr. discussion.

Please continue. Subscribed.

 

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[healthstatus]

The question i have on this is commission and percentages. Do you pay commission on the profit on the job, or on the revenue on the job. See with our company we have mostly 100% markup on things. However, if we have a salesman and offer 15% commission that's great...but here's my question, say the salesman lands a larger gig, something where the customer wants 100,000 units @$1ea, and we make $.20/unit profit and since their buying in bulk, how do you compensate the salesman then? because the company just made $20,000, but 15% on the revenue is $15000, which only leaves $5000 profit to the company. How do you structure something like that? Has anyone seen anything like this?

One of the best plans I ever saw, that minimized arguments about this very thing, worked like this. Come up with your absolute bottom line price that you would sell your widgets at and setup a flat commission for selling one at that price (so for your example, maybe 5 cents commission). Then anything they get above that price you will split with them either 60/40 or 50/50 (you take the 60). The salesperson is then motivated to sell for as much as possible since they basically write their own bonus. Small jobs become practical to mess with because they might markup a small order by 200% instead of your 100%, and even big jobs like your commission, they know if they can get an extra 10 cents out of the client, they double their commission.

 

[TexasVentures]

I could see that structure working but I still don't know how it could with me. We have hundreds of products with ribs of different quantities. Example: one product could have up to 10 different quantity options, each a different price. Now hundreds of products like that. And sometimes items are on a, per project quote

 

[Mr. E]

Make sure they aren't an irreplaceable

 

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[100k]

I could see that structure working but I still don't know how it could with me. We have hundreds of products with ribs of different quantities. Example: one product could have up to 10 different quantity options, each a different price. Now hundreds of products like that. And sometimes items are on a, per project quote

Why not just agree on a % of whatever your net is from each sale.

So regardless if he sells product X for 1000 or product Y for 200.... then his commission will be a % of the net profit from the deal/sale.

 

[TexasVentures]

That's what i was thinking... Teach him what really has the highest markup so we can all maximize our profits

 

[healthstatus]

That's what i was thinking... Teach him what really has the highest markup so we can all maximize our profits

Nope, he will sell the easiest sale with the highest amount of reorders, get that to a comfortable level for him and manage his accounts.

 

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[randallg99]

the first thing that came to mind is that you appear to have a lot of items to offer. In my experience, teaching people about a lot of different things can take a long time and many of your efforts will not be streamlined. Sales training never ends, but you don't want anyone to be overwhelmed. I did not read who is currently selling at this juncture but I assume it is you who is at the helm of driving sales and if that's the case, some of your sales may be compromised while you're teaching others so it's important to simplify the process as much as possible.

The one solution I have is to compartmentalize your product offerings and have your future salesperson only learn the fastest growing segment of your business. Let the new salesperson master this before undertaking other aspects so that he/she can master the offerings and gain high level of confidence.

Another suggestion is that all commission structure should be based on profitability and not revenue. Pay the highest commission only on the highest profitable items and lowest comm. on the lowest profitable products.

Good Luck.