How to and how much to pay?
I知 a newbie here, but I知 investing on a technology start-up and I値l need to hire several employees. I壇 like you to help me to develop salesmen remuneration plans, in other words, methods of remunerating that stimulates the sales force.
I知 going to hire 20 salesman. The company will give each one a laptop and all the needed things for them to work, but a vehicle. However, during the sales planning the salesmen payment method become a questioning thing.
I壇 like you to help me solve this subject with different, creative and viable means on how to remunerate them.
Thanks for all and sorry my poor English.
My apologies if this is not the appropriated session to post this topic.
You can pay them a basic salary and allowances based on their qualification and experience with performance based increment or on purely commission basis depends upon the trend of your country or region.
However it also depends upon your sales projection and what gross profit you're going to expect after hiring those 20 salesmen.
Good salesmen want to be paid on a comission basis.. And usually a fairly large one.. Depending on the product, markup, support from the office, etc, minimum 10% of the gross sales up to as much as 25% of your gross..
Less profficient salesmen, and those willing to work for startups may want a balanced pay structure.. A small salary plus a small percentage.. Some fair mix of the two..
Personaly, any salesman that wants to be paid salary only probably isn't going to be a real go getter..
Be very careful with you terms
Employee VS independent
You are from a legal stand point of view (USA) only able to define the product they sale and territory the rest is upon themselves.
I used to pay 30% of gross and did the closing; I never did let them close a deal.
Speaking from a perspective of twenty-years in corporate sales management...
If you are really hiring 20 salespeople, then you need to spend a few extra dollars on someone to manage them. More specifically, someone who has the experience and education to properly manage them.
Let your new "Sales Manager" come up with the incentives, and get on with making and selling your new product/service. He should already know how to "Incentivize" them, so you don't have to worry about it.
I知 thinking about giving then the gas needed to work and tickets for the food, both not limited. Then I値l pay them commissions that would work like this:
-2 to 10% depending how many sites were sold.
-A program that measure their qualification during the sells. It would give them from -5% to 5%.
-Bonus when achieved a goal.
-A plus when developing their knowledge with courses.
They値l work like independent, they値l be not registered by the company. There値l be 20 of them and a Sales Promoter controlling it. But I知 not sure about some question:
-May I stipulate them a minimum quota of 20 sales monthly by employee?
-What if he don稚 get it, what decisions to have about it?
-Do you believe a good salesman can sell up to 35 web sites monthly?
Thank you guys!
And by the way, I live in Brasil and I don稚 have any competitor in my region, only a few freelancers.
BuyonLine has a good tip
Seek pro advises, at least hire a consultant for the input and pre-run setup
Be very aware of your local laws regarding employment and sales persons.
I am involved with this topic in my company and our commission structure has evolved in this manner:
The salespeople have a base salary, plus commission, up to a maximum cap.
When I joined, SEM sales were low and we had two products, so there was a minimum number of unit sales for which no commission was paid. The cheaper product was counted as half a sale. Above that minimum number of "full" sales, they were paid $200 for a full sale and $100 for a half sale.
Once we introduced more products and complex pricing, we had to move to a $ based model. There is now a minimum $ figure to keep their job; a monthly target figure they have to aim for. They get x% commission for up to $xx,000 sales, then if they exceed that level, they get xx% commission, up to a maximum commission cap. This incents them to reach that level, as their entire sales figure is applied to the higher %.
The maximum cap is not popular, but nobody has reached it, so it is in place. If someone hit it, we may have to increase the cap.
In general, different companies have different models and there are books written about better ways to do these things.
I was surprised to see a maximum cap in your post as well.. From your perspective, what is the rational for it?