What percent do you pay your sales guys and please mention if it is off of revenue or profit. Also do you have base salary + commision or just commision. We are rolling out a sales team and while we want to be fair to the sales guys, we want to make sure that we not giving away too much.
I didnt really find this discussed before. The closest I found was how you base the commision (revenue or profit).
Thanks
base + comission
6% of sale for new deals, 3% of sale for house accounts
example: $100,000 on target = $50,000 base + 6% on $833,333 new deals
People do things very differently at different companies, but something I heard when I first entered the industry seems to hold true.
If you want to retain exceptional sales people, the good ones should make about 10% of what their gross sales are. That of course assumes that they are within the acceptable margin rates.
You can plan the pay a lot of ways. Base + commission, commission only, Draw + commission after quota exceeded, but at the end of the day if you have a good person their quota is something that amuses them to exceed in the first few months of the year (and don't raise it just to annoy them; if they're good, they'll sell).
If I were starting a company, I'd tell my salespeople your margins need to be x-y without approval, and on those you'll be paid z percent of margin. If it's below normal margins, our risk increases, so you'll be paid c percent of margin, and it needs approval before finalization of the sale.
Also, please do NOT tie the commission to the final margin of the project. I've been a project manager, operations manager, etc. I've seen MANY projects sold, accepted by the PM who will be handling it, at a certain cost, and then the project go to hell. In EVERY single case, it was the fault of the project staff, not the sales person. There should be a review process before the PM accepts the project. After that, they own it. The salesperson should be involved, but it's the PM's barbeque at that point. If they screw it up, a real good way to lose great sales people is to take away commission because the PM screwed up a perfectly good project.
We do not pay commissions and do not employ sales personnel. Our project managers are our "sales people" and they are bonused on the performance of their projects. I have never understood the "sales" part of the business. I think it comes from the alarm industry companies, who needed staff to cold-call prospective clients and pull in new accounts. We are a solutions provider, not an alarm company.
In my opinion, sales and business development should be utilized for the "first contact" with the customer. After which, a sales engineer or project manager should be utilized to listen to the customer and design a solution that meets the customer's needs. If you commission the person who is responsible for this task, you have created an inherent conflict of interest. Sales people will always do what is in their best interest because that is how they are paid. So, don't put them into a position that will sacrifice the best interests of the customer or the company they work for.
In my opinion, if there is no need for cold calls, this is the best model. The people responsible for delivery of the solution are the people who are actually designing the solution versus "over the wall engineering" by a sales engineer, or worse, the sales person (though I know there are some who can do this well). I am assuming someone in executive management is setting the margins or at least has defined the criteria for certain margin ratios?
"We do not pay commissions and do not employ sales personnel... I have never understood the "sales" part of the business."
This might sound strange that I am taking the opposing side of the position but...
Imagine you are in a fight. You say, "Real men use their bare hands only." And then the guy you are fighting pulls out a knife. You might be a 'real' or an 'honorable' man but you are going to be at steep disadvantage to the guy with a knife. You might beat him but you are going to have to be a lot better to overcome that.
In the same way, an integrator who has commissioned sales people has a 'fighter' with a lot more financial motivation to go the extra mile to win the deal. Now, I totally agree with you that this can lead to bad things - overselling, lying, bribing, etc. But lots of ends users fall for that.
And on the positive side, a commissioned sales person has more incentive to work all weekend or stay up late at night or be away from his family because he can justify the extra money as reward for those sacrifices.
Salary only depending upon expertise of individual.
Excellent employeess 100K - 150K [Design Engineer some would call them Sales]
IT specialists 75K-95K
PM 75K + Bonus
Techs 35K to 85K + bonus [Entry to Top Level Tech]
Btw, this was covered in the Integrator Salary Results 2014 report, not specifically percentage rates, but a breakdown of base vs commissions.
Sales should be based on base + commission = Return
If you cannot sell you should not be rewarded. and if your not a salesman you should get into something your good at.
I got a position as a salesman for a large national acct.s company.
They promised me 25% of the net plus 2500 per month base + expenses. I would have to pay expenses, as they would pay back with in 90 days, usually in 90 days
as it turned out that would not even pay the bills as the following factors were not considered.
1.base stays constant , Commissions are based on profit
2.commission was based on how well the projects were managed by the incompetant management team who just were inexperieced at their jobs.
3.Commissions were paid after all expenses, cost associated with projects were deducted.
4. unless you can do large projects , you cannot make good returns
5. Usually if you have good management , you can make decient returns
I complete project now all the time for large companys that will send me the wrong products and way too much in materials to complete the project.
They will send out 4 ea. rools of 1k wire for a application which only requires 1 k of wire, and because it is drop shipped, you cannot return it. Incompatable Products Shipped
or send out 17 addressable modules for a application which needs only 8 modules
They really did not know the product line they were suppling for.
Sometimes an older product (legacy) is not compatable with a newer product or software revision.
Unless you really know the ins,outs of the product you would not know the compatability issues with the product.
Communication is very important with the Technicians in field.
Technicians learn this with experience., Pms just run the projects. They dont have the experience levels required to know the internal issues with the product lines.
or Compatability issues, usually with proprietary systems.
Quirky on site fixes with these system s .
This changes the Commission Rate as the (amt of product ) inflates the bottom line cost of materials. materials, labor, technician time
Commission changes due to Good or Bad mangement of project.
Accurate Planning keeps the commission up where it should be.
3% flat rate , 5 % flat rate or % of net profit.
as a professional there are different levels of sales forces out there .
The Mom & Pops Little guys out there have multifaceted roles ( sales tech ) sales accountant
Professional to County,State,Federal or International Co.s
Those you deal with require a large amt of funding for the upfront ( process of wine,dine,work involved to get the account ) Professional upfront Set up of proposals
1 page vs 14 pages and details, details, details
This requires a large amout of upfront time and resources to complete the sales process.
Ask questions and get answers to your physical security questions from IPVM team members and fellow subscribers.
