Paying my sales people
Share:
Hi everyone!
The number one question I'm asked is how I pay a sales person.....Well here it is, and NOT in a nutshell. It's complicated, because salespeople are very sensitive to how they are paid and its usually complicated. And it is with me, too...complicated. Anyway here goes:
I talk with them and feel them out as to what THEY want out of the position. If they have some experience in sales they'll start to talk about commissions, base, residuals, and the like. You need to understand that unlike the insurance industry, the owner (you) gets the residuals. The sales person's job exists to build the business for the owner, not to build up a customer base and sit on it. If you as the owner want to build a base and sit on it, that's fine, but in my world a sales person exists only to add new accounts, period. Today, I'm offering $100 per week for gas plus sales commissions. When it comes to sales commissions, I have adapted the Fish system to better address my needs.
For route work, every week, every two weeks, or every four weeks only, I pay a Fish 2 sales factor of 2.5...in Fish 3, 20% total.
For residentials, one time cleans, construction clean ups, and repeat quarterly, semi annually, or annually I pay a Fish 2 sales factor of 1.0 or 10% in Fish 3.
This way, when they are actually cold calling, they focus on building route work. I pay less than that for the others because its usually a warm lead that they are following up on. Keep in mind that its great to have your phone ring, but you as the owner ARE paying for it! You pay for it when you buy the cleaners clothes, the advertising/brand building fee for Google, the yellow page ads, your BIG RED van, etc. You have paid for someone to find you and they are calling your business. That's a warm lead you are going to provide for the sales people, its not their cold call, so the commission is less.
Now if someone talks residuals, I offer a "Building Your Base" program. For every 100 new accounts brought in, add something to their $100 in gas as a base. This is what you feel comfortable with, maybe $25 per week, it does not sound like much, but that's $1,300 annually. Then I have a bonus program for Tyler, as Sales Manager, that encompasses the whole company and anyone that sells...My Operations Managers all sell, and I have a few cleaners that'll write up an estimate and pretend that they cold called it, so I give Tyler a goal of 200 new accounts in first quarter, 300 in the second quarter, 300 in the third, and 200 in the fourth. If we as a company hit this bonus, I go out and buy him something that amounts to $300-400 in value each quarter, and keep it nontaxable as well.
Here's the real secret....I pay my sales staff, and my operations managers like I pay the cleaners....with mileage! I have them track their mileage and turn in the sheet bi-weekly. When payroll comes, I simply add up everything I owe them. I multiply the miles driven by the maximum allowable reimbursement from the IRS (as of July 1, its $.55 per mile), I pay them mileage first and the rest of their commissions in wages. That way they get extra dollars to drive their own vehicle.
If I had it to do all over again, I'd also have an even lower commission rate on construction clean ups....They take the same amount of time to count panes as regular window cleaning, but the price is 3-4 times higher than standard cleaning, and you have to supply all the extra razor blades, steel wool, and the LIABILITY. So I'd pay a sales factor in Fish 2 of .5 or 5% in Fish 3. This is just a thought.
Keep in mind, the idea with this is to grow your business while remaining more profitable. New owners that are getting started aren't making a profit, so its hard to justify a salesperson. Paying 20% is expensive to grow, but these are repeat customers that we assume you have for life. The quicker you get a salesperson, the faster your business grows in profitability!
It's easy to keep track of, you simply enter the same sales person in your database then add a tag like, "Tyler Hansen - Route Work" with a 20% factor. Enter the new accounts that are every four weeks or more often here. Enter the same sales person, "Tyler Hansen - Non route" with a 10% sales factor. Enter the new accounts that are less then every four weeks here. If you want to break it down more and have different commission levels based on your needs as an owner, enter as many as you like! Then when payroll comes simply add them all up, add the gas money, any added base, and split it with mileage, and boom...your person is happy and you are happy! I hear it all the time, "I can't afford a salesperson....!" I think you can't afford NOT to. Using this system lets them cold call an entire territory, include everything with a window, and grows your business profitably.....and profit is what we all want right?
Have a great week!
Tony
The number one question I'm asked is how I pay a sales person.....Well here it is, and NOT in a nutshell. It's complicated, because salespeople are very sensitive to how they are paid and its usually complicated. And it is with me, too...complicated. Anyway here goes:
I talk with them and feel them out as to what THEY want out of the position. If they have some experience in sales they'll start to talk about commissions, base, residuals, and the like. You need to understand that unlike the insurance industry, the owner (you) gets the residuals. The sales person's job exists to build the business for the owner, not to build up a customer base and sit on it. If you as the owner want to build a base and sit on it, that's fine, but in my world a sales person exists only to add new accounts, period. Today, I'm offering $100 per week for gas plus sales commissions. When it comes to sales commissions, I have adapted the Fish system to better address my needs.
For route work, every week, every two weeks, or every four weeks only, I pay a Fish 2 sales factor of 2.5...in Fish 3, 20% total.
For residentials, one time cleans, construction clean ups, and repeat quarterly, semi annually, or annually I pay a Fish 2 sales factor of 1.0 or 10% in Fish 3.
This way, when they are actually cold calling, they focus on building route work. I pay less than that for the others because its usually a warm lead that they are following up on. Keep in mind that its great to have your phone ring, but you as the owner ARE paying for it! You pay for it when you buy the cleaners clothes, the advertising/brand building fee for Google, the yellow page ads, your BIG RED van, etc. You have paid for someone to find you and they are calling your business. That's a warm lead you are going to provide for the sales people, its not their cold call, so the commission is less.
Now if someone talks residuals, I offer a "Building Your Base" program. For every 100 new accounts brought in, add something to their $100 in gas as a base. This is what you feel comfortable with, maybe $25 per week, it does not sound like much, but that's $1,300 annually. Then I have a bonus program for Tyler, as Sales Manager, that encompasses the whole company and anyone that sells...My Operations Managers all sell, and I have a few cleaners that'll write up an estimate and pretend that they cold called it, so I give Tyler a goal of 200 new accounts in first quarter, 300 in the second quarter, 300 in the third, and 200 in the fourth. If we as a company hit this bonus, I go out and buy him something that amounts to $300-400 in value each quarter, and keep it nontaxable as well.
Here's the real secret....I pay my sales staff, and my operations managers like I pay the cleaners....with mileage! I have them track their mileage and turn in the sheet bi-weekly. When payroll comes, I simply add up everything I owe them. I multiply the miles driven by the maximum allowable reimbursement from the IRS (as of July 1, its $.55 per mile), I pay them mileage first and the rest of their commissions in wages. That way they get extra dollars to drive their own vehicle.
If I had it to do all over again, I'd also have an even lower commission rate on construction clean ups....They take the same amount of time to count panes as regular window cleaning, but the price is 3-4 times higher than standard cleaning, and you have to supply all the extra razor blades, steel wool, and the LIABILITY. So I'd pay a sales factor in Fish 2 of .5 or 5% in Fish 3. This is just a thought.
Keep in mind, the idea with this is to grow your business while remaining more profitable. New owners that are getting started aren't making a profit, so its hard to justify a salesperson. Paying 20% is expensive to grow, but these are repeat customers that we assume you have for life. The quicker you get a salesperson, the faster your business grows in profitability!
It's easy to keep track of, you simply enter the same sales person in your database then add a tag like, "Tyler Hansen - Route Work" with a 20% factor. Enter the new accounts that are every four weeks or more often here. Enter the same sales person, "Tyler Hansen - Non route" with a 10% sales factor. Enter the new accounts that are less then every four weeks here. If you want to break it down more and have different commission levels based on your needs as an owner, enter as many as you like! Then when payroll comes simply add them all up, add the gas money, any added base, and split it with mileage, and boom...your person is happy and you are happy! I hear it all the time, "I can't afford a salesperson....!" I think you can't afford NOT to. Using this system lets them cold call an entire territory, include everything with a window, and grows your business profitably.....and profit is what we all want right?
Have a great week!
Tony
Comments
Hi Tony,
With the $100 "base" pay that you are paying, do you give them required goals to meet each day in order to receive this pay?
No, if they don't work, they don't earn and are let go quickly. We establish this in the interview and training. Its Sales, if they don't sell, they quit pretty fast. no one can live on $100 per week.
Since this BLOG, I have had to establish sales quotas with all of my staff that receives any salary to be selling. I too, experience dips in sales due to lack of proper controls over my sales staff. Just before I left for the Convention I had had enough and couldn't take it any more. I wrote quotas for everyone that represent a minimum performance standard per week. Just like we have minimums we need to meet for Mike, I now have minimums that need to be met for me. In the first month, my sales team has gone out and brought in 20+ accounts per week and I only had quotas for 18 route based "GO's." It took me too long to implement these and my sales staff actually "thanked me" for providing a clear and concise sales quota. If you would like a copy of my quota, please email me at espeseth@fishwindowcleaning.com and I'll be happy to forward a copy to you!
Andrew and Jordan did an EXCELLENT job cleanng our windows this past Thursday. They were polite, courteous at all times, and did their job well. We will recommend FISH to our friends. Thank you!
Was your quota 5 per week per full time sales rep?