Advice on sales commission structure please?

rob1100

Hi
I run a small contract cleaning company in Scotland, I want to employ a salesperson in the new year. I am looking for advice on a sales commission structure please from anyone who has experience in the daily contract cleaning industry, or any general advice that would help.
I am looking to pay a basic salary with commissions based on sales.
I would like to know the following~:
A realistic starting salary?
A bonus structure?
Percentage commissions and when they should be paid?

Anything else you think may help.

Thanks guys!

rattus58

Welcome...

Have no idea where you should start. Here you've got minimum wage issues, medical, workers compensation, mandated short term disability that goes into every new hire if the work 20 hours or more, so you have burdens here that you may or may not there.

Bonuses, Commissions, renewal bonuses (which I had paid over the following year monthly worked for me) renewal commissions help with keeping people on board and encouraging service of the client.

Congratulations on expanding your business.

Aloha..

saleshangout

You really have to work backwards on this to come up with a comp plan that works for your business first, and then for the sales rep. Too many start up companies try to put a comp plan together that will appeal to a sales rep and forget that it has to be profitable for the company. So, I would suggest starting here:

1. What is your average sale amount?

2. If you or someone else has been selling or marketing this service full time, what has been your average number of sales per month? If nobody has been selling it full time, what would you anticipate the results to be if someone was selling it full time? You may have to make some assumptions here.

3. Multiply #1 and #2 together and that will give you a basis for setting a quota for your new rep on a monthly basis.

4. What is your average gross profit per sale? For your situation, you will need to look at your average contract length and what the profit potential is for that customer over the length of the contract.

5. Once you have your anticipated gross profit from the expected sales results, you will have to subtract your expenses for having this rep on board (cell phone, laptop, mileage or auto expenses, insurance, taxes, benefits, training etc...)

6. From here you can start to determine how much salary you can afford to pay and how much commission you can afford to pay. You may need to consider a commission only plan, or market your service aggressively via the Internet and employ an inside sales rep, both of these options would reduce your sales expense.

7. Consider paying either a one time up front commission or paying a percentage of revenue generated per month on the accounts they have sold. As mentioned above, paying a % of monthly revenue can lead to a longer term sales rep that is building a growing annuity and greater customer loyalty because the rep is paid to keep his customers on board with you. I have also used a combination of the two so that the rep gets a nice pop for the initial sale and then residuals.

8. Lastly, before you finalize any compensation plan, make sure you have the legal terminology inserted. Things to consider are; non-compete, non-disclosure, consequences of termination, etc...

Contact me if you would like to discuss further.

Good luck!

MrCharisma

I would also suggest looking into what the competitors pay. Check out job advertisement.

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TonyB

Some good points above. I would also consider that there are many very poor salespeople in the marketplace. They may invent amazing stories about their claimed successes but they can cost you a lot of money, for little return. This can have a big impact on a small company.

I would suggest that your pay plan should have a base salary that keeps salespeople hungry. It should give big rewards for achievement.

Commission only pay plans tend to attract salespeople from both ends of the spectrum - those who have failed and can't get a sales job with a base salary, as well as the very successful salespeople, looking for maximum income.

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