How to Set Up a Commission Sales Force
Commission on sales is a traditional way for companies to pay their sales staff. From international insurance companies that create billions of dollars in revenue to the local mom-and-pop store, salespeople have always heard the question during an interview, "Do you mind working on commission"?
It is possible to earn a very good living on commission, but the likelihood is that it may not work for a salesperson. Few people have the level of aggressiveness and willingness to "do or die" to make it work. However, if the right person is matched with a structure that is set up for a successful commissioned sales force it can become a lifelong career.
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Instructions
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Have a strong manager. Commission-only salespeople usually have little accounting for their time since they are almost always considered independent reps. Without strong management guiding them and forcing them into accounting for the work they do, it becomes far too easy for them to slip into a pattern of not working as hard as they should.
A good manager will provide the necessary reporting structure so that everyone, including the salesperson, knows the actual numbers of people called, sales made and time expended per sale--among other information.
According to sales coach Keith Rosen, "These numbers are critical in order to give the salesperson a path, with the actions and goals to aspire to. In other words a success formula."
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Develop a fair compensation program. If the compensation plan is weak, overly complex or takes too long to begin paying off then it is designed to fail. Expecting a salesperson to go 30 to 60 days, or even longer, without a paycheck while they learn the job, begin to prospect and set up potential sales is unfair.
Equally bad is forcing the sales staff to wait a long period between a sale and the payoff. Another mistake is having the commission on the sale set so low that it becomes discouraging.
Provide a quick-start program that brings in dollars immediately, pay sales people well and pay them in a timely manner.
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Create a superb training program. For many years the standard way of starting a commission-sales job was to be handed a phone book, have the phone pointed out and be told to get to work. Today that is still found in many companies, but the ones that want to do it right have some kind of training.
Training breaks down into two main concerns: product knowledge and sales skills.
Some sales agents, such as insurance, must go through formal training and be licensed. This is only the beginning though, and if the sales training is lacking, the agent will not be around for long.
Other training can be as simple as following an experienced sales agent around from one to several days.
Whatever your training program looks like, it must be thorough, systematic and easily absorbed and learned.
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Hire the right people. They can overcome every handicap put in their way by the company and still go on to become a successful commissioned sales staff. But the wrong people will never work out, no matter how well the program is developed.
Andrew Neitlich, founder of The Institute for Business Growth, writes, "There's one rule in sales management that works every time: Out of every ten salespeople, three will be duds, five will be mediocre, and two will be superstars."
Dozens of companies offer various tests to give pre-hires to assess their ability to be successful in sales. The value of these tests have to be determined by each hiring manager.
Perhaps the most critical question to ask during the interview is, "Would I like and trust this person enough to buy from them?" The answer gives good direction as to where to go from there.
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Tips & Warnings
Many companies with commission-only sales staff face very high "churn" or turnover of staff. Be prepared to be constantly advertising for, interviewing and hiring new salespeople.
References
Resources
- Photo Credit sales manager checking the sales image by Peter Baxter from Fotolia.com
