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View Full Version : Attn: Hot Boat Sales Managers.............



bear down
12-14-2007, 08:15 AM
Just started with a new company and they are on a straight commission program. I have never been a fan of this and they are giving me free riegn to change the whole program. Can you guys give me some examples of what has worked. I am contemplating a salary to draw program, but not sure if I would rather go with straight salary with a bonus program instead. Give me your thougths
Thanks
Memo

voodoomedman
12-14-2007, 08:21 AM
Just started with a new company and they are on a straight commission program. I have never been a fan of this and they are giving me free riegn to change the whole program. Can you guys give me some examples of what has worked. I am contemplating a salary to draw program, but not sure if I would rather go with straight salary with a bonus program instead. Give me your thougths
Thanks
Memo
Salary plus commission. People need to live and sometimes there are just bad months no matter how good you are. Of course if every month is a bad month then they need disciplined up to and including termination. Just make sure the commission is setup as a reward for production and not a scare tactic or carrot on a string in front of the donkey. Also look at the percentages. If the salary is too low then you will not have happy folk. But if it is too high and the commission is not very much then there is no incentive to bust your a$$ for another 10 grand when your already get 60 for doing crap kinda thing. It's sales and your always going to have whiners but do it right and you will minimize it.

sleekcraft80
12-14-2007, 08:34 AM
I am one of those people who who has to survive on straight commision. It really sucks. I am a loan officer and it takes awhile to get a loan thru, so being without is a really hard deal. If you could go with the salary/commision deal I think the employees would be very greatful

PinkTaco
12-14-2007, 12:02 PM
We used to be straight commision. It worked out great while the market was good, but things have changed a bit. Basically we have gone to a commision with subsidy plan. In other words, if our people don't exceed a certain number with their sales they are subsidized with a salary at a preset dollar amount. They get either salary or commision. Which ever is higher. There are consequences for those who subsidize more than two months in a row. Seems to be working out so far...

Boozer
12-14-2007, 12:17 PM
Salary +
ALWAYS give a salary +
If your employees work on straight commission their productivity can be grealty limited do to the fact that a person who is flat broke is going to be more concerned about how they are going to get the bill collectors to stop calling then how they are going to set new company sales records.
ALWAYS give commission when pertaining to sales. If I get paid the same regardless of what I sale why am I going to stress over setting records, making huge checks, etc...?

Havasu1986
12-14-2007, 12:20 PM
What are you selling. :confused:

fatboy95
12-14-2007, 12:24 PM
What are you selling. :confused:
And what margin is the employer working on? :idea:

lalhc
12-14-2007, 12:28 PM
We offer our employee's the opportunity to be straight commission only or salary +. In either case make sure you have a baseline of what their expected goals are during a ramp-up period and once they're ramped up. You may also want to set minimum expectations (below ramp-up goals) in order to meet to get their salary.

racecar.hotshoe
12-14-2007, 12:42 PM
What are you selling. :confused:
:D :D :D :D
http://sp1.mm-a6.yimg.com/image/3491929079

Old Texan
12-14-2007, 12:49 PM
Always base commissions on profit, never volume. Your sales people need to realize profit makes the company stable and is in the best interest to their personal bottom line. Anybody can be an order taker, only professioanls can be salesmen(women).

bear down
12-14-2007, 02:43 PM
And what margin is the employer working on? :idea:
I am in marketing. We sell and deveop ads for magazine/brochures and stuff like that. I just started and want the best system possible. It's a small business with two owners (8 employees total) so I don't want them to go broke. As far as GP, don't know yet, so trying to figure that out before i decide on a commision rate...Great ideas keep them coming. I am digging the subsidy plan!

Wavemaker
12-14-2007, 04:02 PM
You may consider a base salary (a small but livable monthly salary), with a quota and an incentive commission system on top of the base salary with the usual company paid benefits. Here is how it works:
Base salary = $36,000 annual (This figure is a hypothetical number only for the sake of this discussion, adjust this figure to what your company budget can handle).
Set an Annual quota for each sales territory or sales region = (set a real figure for this based upon what the existing customer base supported in the previous fiscal year, plus what new customer growth percentage for sales in the specific territory or region is your expected growth factor, i.e.: 15% or 20% based upon marketing data supporting the expected growth). Keep in mind new product sales projections of any new products being introduced in the new year.
You can set either a set sales commissions rate of whatever percentage your company salary budgeting allows for or, you may go with a a "milestone achievement commission plan." This is a sliding scale system which is based upon a set commission rate for the first 1/3 of the annual quota. Lets say 5% commission rate until actual sales of the individual sales territory or sales region achieves the 1/3 annual quota threashold. Once the first threashhold is achieved, the commission rate becomes a higher commission rate, say 10% or whatever rate your budgeting allows for). Upon achievement of 2/3 of annual quota threashold, the sales commission rate increases once again, let's say it becomes 15%. Once the annual quota figure is achieved, the sales commission rate is now raised again to become 20% as a reward the full annual quota achievement. The commissions can remain "open ended" until the end of your fiscal year or you can set a limit on the sales commissions to be double the base salary figure as a cap point.
This system rewards the salespeople that produce actual sales. They are basically pressured and rewarded to achieve their annual quotas as fast as possible and can make serious money by working harder to make the sales pay off.
Only pay commissions on order value of what goods actually ship, and after any returns and or replacements are adjusted for things as "shipping damages", "shoratages" etc. Commissions paid 30 days after the previous monthly closing.
I worked in this system for 10 years and always achieved my quotas. The incentive is to "get out there and sell, if you what want to make the money."
Good luck to you in the New Year ahead.

Chipster27
12-14-2007, 10:49 PM
Bear in mind incentive drives behaviors, if you think it doesn't your out of your mind. What is your industry paying? How does it pay? What do you want from your sales people? Is there a product or service that is of higher value to your company, will you pay more when that product/service is sold? When will you pay them the incentive, partial at booking rest upon recivables collecting? How important is working capital to the company?
I've managed people that have a high base and "bonus" plan and I've hired people with a moderate base and are highly compensated through the incentive plan. Lower base makes it difficult to bring on the talent, will you consider a ramp up comp plan to help the new guy get started?
There are a lot of things to consider beyond base/incentive vs no base. It boils down to what are the companies financial goals. In the incentive plan, will you cap the incentive? How often will you pay it? Is there a penalty for discounting to different levels. We penalize reps for selling below a certain level, you would be amazed at how many customers seem to find their price point at the level just above the point where the rep is penalized.
You need to look at your industry and determine what to do from there.
Anyway, back to your original question. Base+. You should also consider a ramp up plan tied to goals and objectives.

parker guy
12-15-2007, 06:13 AM
Salary + commision
my work has our commision based on profit
were on a matrix if there is a 1000.00 profit on a 10,000 order i might get 15% of the profit on the other hand if there is a 1000.00 profit on a 5000.00 order I might get 35% . It works because the more you up sale the more you make.....:) :)