Sales person commission rates...

[ComputerPro]

For those that employ sales people, what is the 'norm' for compensation?
Commission only? If so, what are the 'normal' tech sales commission rates that you use?

Up to this point we have been doing fairly well with no dedicated sales staff. I act as our salesman for the most part and the rest of us do our part also. We have been busy enough that we are usually swamped with service so bringing addl systems in was never an issue. We are in a small plateau and would like to 'bump up' to the next level if you will. I was thinking of employing a dedicated outside sales person but wasn't sure of the 'normal' compensation commission pkg. Google searches reveal 5-10% as being avg but it seems to be for very large companies where the salesmen can make $50-$60k a year with those rates. We are nowhere near that large so the incentive would have to be good enough that descent salesmen actually want to push our services.

Just wondered if any of you are doing this and if you would have any tips?

Thanks,

 

[PCX]

We do not have any dedicate sales people, although that may change soon here . . . However, we have been paying our techs hourly plus commission on up-sales for the last couple of years and it has a made a huge improvement in our profits. We give 10% on service up-sales and 5% on retail up-sales. I also give bonuses for new processes and ideas that save time and money and overall makes the business more profitable.

 

[Cornerstone Technologies]

However, we have been paying our techs hourly plus commission on up-sales for the last couple of years and it has a made a huge improvement in our profits.

I have worked for both types of shops and would favor working for one that does pay a commission on top of regular wages for upselling and going beyond normal job expectations. Not only did I make the company more money for the same amount of work, I was always hesitant to take a day off because a single day could yield commission returns that would otherwise go to someone else who was already doing pretty well for himself. It also builds a sense of loyalty, which is something that lacks for shops that skip commission.

Two examples: The first shop I worked at had a commission of 5-10% for various upsells that were inshop and 15-20% for upsells done at a client site. Techs were constantly upselling so much that our inventory was constantly at a state where new orders were being placed on an almost daily basis. I made enough to outright buy a newer used car at the end of the year, though the owners sons managed to get some fancy cars for whatever they did. The point is, it made the difference to everyone across the board.

The last shop I worked for hired a salesman and promised a hourly wage and dangled a hope that commission sales would be in his future if he managed to sell a certain dollar amount per month. The owners **** their pants when he far exceeded his quotas and actually made waves to get what they promised. Because I was the lead tech, I was in charge of compiling the orders for the shop with the orders for the showroom and placing the appropriate orders with various vendors. Needless to say, at some point some of the showroom stuff began to disappear. The owners had a habit of seeing something we had ordered and taking it home with them because they wanted to play with it. Eventually, I left that job for various reasons. Turns out that that sales guy was taking inventory home and unloading it on ebay and craigslist. His justification was that since they denied him commission, he figured he would get even by stealing. He would go so far to cover his tracks that he falsified invoices, which one of the owners was also doing to cover up his cocaine addiction.

Anyway, I think the rewards of some commission based system is better than not having one.

 

[Tony_Scarpelli]

In 1994 I was brought in as a salesman for my bothers IT Company. He paid me $500 per week base (I had an MBA and plenty of sales and marketing experience) plus 25% of gross profit margin on all new projects brought in and 20% of gross on all(consulting/breakfix fees) accounts I managed.

So when I sold a server, network of 10 computers, cabling, routers, hubs and a few thousand of consulting it might be a $27k bill (back then) and If the hardware/software costs were $12k the gross margin was $15k and I would get 25% of $15k =$3500 on that project. On going billings after that project I would collect 20% of gross (which was usually just consulting and break fix labor).

I averaged about $1000-1500 a week the first year and $2500 a week the 2nd and 3 years sales grew by about 300%.

Salesman are like criminal attorneys you really cannot afford a cheap one. Pay to get it done right or forget about it.

In my case $500 a week base salary was half of what I needed to stay with that company and about what the company felt they could afford not realizing how much money I could actually bring in but I made the rest of the opportunity myself.

To be fare, I completely setup and manged the sales/estimate and promotion part of this organization and it was a one man marketing department. All calls came in to me even-though they would have to pay me a commission on existing business I was able to take current customers and up their participation by 3x or 5x so it was very good for the company. Account Representative is a better name than salesman.

For those that employ sales people, what is the 'norm' for compensation?
Commission only? If so, what are the 'normal' tech sales commission rates that you use?

Up to this point we have been doing fairly well with no dedicated sales staff. I act as our salesman for the most part and the rest of us do our part also. We have been busy enough that we are usually swamped with service so bringing addl systems in was never an issue. We are in a small plateau and would like to 'bump up' to the next level if you will. I was thinking of employing a dedicated outside sales person but wasn't sure of the 'normal' compensation commission pkg. Google searches reveal 5-10% as being avg but it seems to be for very large companies where the salesmen can make $50-$60k a year with those rates. We are nowhere near that large so the incentive would have to be good enough that descent salesmen actually want to push our services.

Just wondered if any of you are doing this and if you would have any tips?

Thanks,

 

[ComputerPro]

Commission...

Thanks for all the info!

One question that came up is how did you guys track all that stuff? We currently use mHelpdesk daily and Qbooks for the tax quarterly stuff. With all the techs getting a percentage for selling stuff how does one track all those things?

Thanks,

 

[PCX]

Thanks for all the info!

One question that came up is how did you guys track all that stuff? We currently use mHelpdesk daily and Qbooks for the tax quarterly stuff. With all the techs getting a percentage for selling stuff how does one track all those things?

Thanks,

Unfortunately, mHelpdesk does not have a way to do this that I know of, so we have a timesheet that every tech fills out in a spreadsheet. Under the timesheet is a commission section. They are required to fill out what the up-sale was, how much it was, the customers name and the ticket number so that we can verify the up-sale. The commission is then automatically calculated and added to their pay for that pay period.

 

[Tony_Scarpelli]

I filled out a project sheet every two weeks before payday.

It listed hardware sold which had a specific % margin so it was easy to track.

The bookkeeper looked it over checked the figures and forwarded it to the owner to write that check.

 

[OCWI]

Alot of good info here and ive been struggling with the same thing. I have a sales guy that i pay him basically min base and 20% commission after that. I have tried this with several people. This one is the best so far but still DOES NOT pay for himself. W T F? Am i/we doing something wrong? He is attending weekly BNI events and that may have some meat to it but other than that not much... he has tried cold calling, door to door soliciiting (and hes good at what he does). Does any one here have a good working sales guys? If so what /how does he/she do it???

 

[PCX]

Alot of good info here and ive been struggling with the same thing. I have a sales guy that i pay him basically min base and 20% commission after that. I have tried this with several people. This one is the best so far but still DOES NOT pay for himself. W T F? Am i/we doing something wrong? He is attending weekly BNI events and that may have some meat to it but other than that not much... he has tried cold calling, door to door soliciiting (and hes good at what he does). Does any one here have a good working sales guys? If so what /how does he/she do it???

I have no clue what you bring in or what that 20% is based on, but i'm guessing that you are paying him way too much commission. With that high of a commission (and depending on what you are basing that of), maybe you should not be paying him a salary at all. Depending on what the commission is based on and how much salary you are paying him, you may not be giving him any reason to make more money. Maybe he is comfortable with what you are giving him?

Personally, if I were to pay someone that type of commission, they would have a lot of responsibility and would be paid commission only. If I really wanted to pay him that much plus a salary, then I would start with a small salary and a small commission. As he continues to outperform himself and your expectations, then maybe raise his commission. Point being, you want to give him a reason to want to make you more money.

Then again, maybe you are doing everything right and he just sucks . . .

 

[Tony_Scarpelli]

This is exactly how a tech or engineer thinks.....A good salesman is worth three perfect technicians...

You are not going to get a good salesman unless you pay him a kings ransom in your mind. You will get a wanttobe salesman which may not have the skills required to really move your business and when he quits and or you fire him you will say to yourself "I knew it." Self fulfilling prophecy.

I have no clue what you bring in or what that 20% is based on, but i'm guessing that you are paying him way too much commission. With that high of a commission (and depending on what you are basing that of), maybe you should not be paying him a salary at all. Depending on what the commission is based on and how much salary you are paying him, you may not be giving him any reason to make more money. Maybe he is comfortable with what you are giving him?

Personally, if I were to pay someone that type of commission, they would have a lot of responsibility and would be paid commission only. If I really wanted to pay him that much plus a salary, then I would start with a small salary and a small commission. As he continues to outperform himself and your expectations, then maybe raise his commission. Point being, you want to give him a reason to want to make you more money.

Then again, maybe you are doing everything right and he just sucks . . .

 

[PCX]

This is exactly how a tech or engineer thinks.....A good salesman is worth three perfect technicians...

You are not going to get a good salesman unless you pay him a kings ransom in your mind. You will get a wanttobe salesman which may not have the skills required to really move your business and when he quits and or you fire him you will say to yourself "I knew it." Self fulfilling prophecy.

While i would typically agree with you, I do not believe you can justify this type of commission rate with most break fix computer repair shops. IT consulting businesses that deal mosty with commercial contracts yes, those whose bread and butter is based on $100 virus removals, $75 tune-ups and cheap cellphone repairs, no. Salary plus 20% commission rate just does not make a whole lot of business sense with this business model. That said, I do not claim to know all things busines so if you know how one could justify this type of pay with a break fix business model, i personally would like to know. I am always up to learning better ways of increasing my business.

 

[nesrinamb]

@OCWI

Is he/she meeting with fellow bni members to get to know them better? Its not about what happens during the meetings but what goes on after.

Is he/she persistent? sure you can try door to door and sure you can try cold calling but does it continue after 50 people saying no. After every failed attempt they should be asking themselves where did i do things right and where did i do them wrong.Same thing after every success. Eventually your gonna have a really good door to door system or cold calling system. If you do it ten times and give up its not gonna happen.

As for payment depends on what their selling but i think base plus commission is good. Percentage I would say your paying to much unless hes bringing in crazy amounts of clients and you gave him a bonus because of the awesome job. However you said they cant pay for themselves sooo....yeah.

Look at tonys post in it he says he got existing clients to buy more. is your sales guy doing that?

Also read up on sales. Your sales guy may seem good but then again you might be looking at the wrong things.

 

[Tony_Scarpelli]

Break fix is a different matter as you pay % on upsales only. But for a guy who is going to beat the bushes and pound the drums to get business into you that is another matter.

Consulting, network setup and website building and development are areas where you need someone to go find new business. It is well worth your time to make it worth his time IMO.

While i would typically agree with you, I do not believe you can justify this type of commission rate with most break fix computer repair shops. IT consulting businesses that deal mosty with commercial contracts yes, those whose bread and butter is based on $100 virus removals, $75 tune-ups and cheap cellphone repairs, no. Salary plus 20% commission rate just does not make a whole lot of business sense with this business model. That said, I do not claim to know all things busines so if you know how one could justify this type of pay with a break fix business model, i personally would like to know. I am always up to learning better ways of increasing my business.

 

[Tony_Scarpelli]

I did the breakfast and lead swap thing and it never worked for me. I also did the chamber mixers and picked up a few gals but never got a lead for business.

What does work for me is to get two dozend donuts one day a week and go visit as many clients as I can until I run out of donuts. Do it every week.

I spend about 50-75% of my time visiting existing larger clients as a service to see if there is anything we can do for them. The other 25% I spend visiting brand new potential clients. It is especially important to take gifts or donuts to the new clients. Even if they say they will never hire you, drop in once every three or four weeks and give them a donuts. One day in the future they will say "Hi Tony, I have a question for you." then they are your customer. It is human nature for them to get to know you and think of you as the IT guy. Then they think of you as their IT guy. From then on they will actually look forward to your visits and even call you. But you see you turned a cold call into a warm lead by continuing to visit bringing donuts, gifts, pens, hats, what have you and then one day the gift becomes your visit and the information you share with them and what you can do for them. This process is so subtle that they won't realize that it happened to them. They just start to think of you as their IT guy.

@OCWI

Is he/she meeting with fellow bni members to get to know them better? Its not about what happens during the meetings but what goes on after.

Is he/she persistent? sure you can try door to door and sure you can try cold calling but does it continue after 50 people saying no. After every failed attempt they should be asking themselves where did i do things right and where did i do them wrong.Same thing after every success. Eventually your gonna have a really good door to door system or cold calling system. If you do it ten times and give up its not gonna happen.

As for payment depends on what their selling but i think base plus commission is good. Percentage I would say your paying to much unless hes bringing in crazy amounts of clients and you gave him a bonus because of the awesome job. However you said they cant pay for themselves sooo....yeah.

Look at tonys post in it he says he got existing clients to buy more. is your sales guy doing that?

Also read up on sales. Your sales guy may seem good but then again you might be looking at the wrong things.

 

[YeOldeStonecat]

When I started in the biz....I had a similar paycheck as Tony did. Trying to recall back when I was hired by the ComputerLand franchise I worked for back then...if I recall, I had a base annual salary of $28,000 annual + benefits, and I got 20% commish of the GP that I sold.

Back then....(was around the Windows 95b/98 just came out days)...28k alone wasn't a lot to live on, but it was a decent start. But the 20% commish allowed me to nearly double that back then. And within a couple of years...as I built my client list, I did double it...and a few years after that, as my client list still grew, I more than doubled it. Fast forward to now...and my current paycheck is based on the same formula...just different numbers for the base.

It's a good setup, during the very slow times...when client's aren't paying, you still take home some money from that base. And then peak times...take home some crazy big checks. But you're in control of what you make...not bringing home enough money? Work harder!

 

[PCX]

Break fix is a different matter as you pay % on upsales only. But for a guy who is going to beat the bushes and pound the drums to get business into you that is another matter.

Consulting, network setup and website building and development are areas where you need someone to go find new business. It is well worth your time to make it worth his time IMO.

Alright, so we are in the same page. Obviously for different industries there are different standards according to what makes sense for that industry. Even in real estate the commission for a sale is somewhere between 4% and 7% depending on the market. Then that commission typically gets split in half between the different real estate firms, then again between the firm and broker. Every industry is different with its own set of standards and practices.

 

[Tony_Scarpelli]

I could make due with 1.5% net commission when selling $400k-875k homes. I would only need to sell one or two a month.

We are talking apples and oranges. I tried to pay my techs commissions on up-sells and I gave up. Techs are the worst salesman in the world. It is a right brain left brain thing. Salesman are not very great technicians either.

The two sides greatly under appreciate the other as they are so clueless to the talents needed for the other.

Alright, so we are in the same page. Obviously for different industries there are different standards according to what makes sense for that industry. Even in real estate the commission for a sale is somewhere between 4% and 7% depending on the market. Then that commission typically gets split in half between the different real estate firms, then again between the firm and broker. Every industry is different with its own set of standards and practices.

 

[PCX]

I could make due with 1.5% net commission when selling $400k-875k homes. I would only need to sell one or two a month.

We are talking apples and oranges. I tried to pay my techs commissions on up-sells and I gave up. Techs are the worst salesman in the world. It is a right brain left brain thing. Salesman are not very great technicians either.

The two sides greatly under appreciate the other as they are so clueless to the talents needed for the other.

This is where the art of hiring good people come in. We personally do not hire technicians, we hire personalities and character. I can train any person who has common sense and deductive reasoning skills to be a technician. What is harder to teach is a technician (who are by in large introverts) how to be a salesmen. Point being, if you hire a person with the right personality, character and willingness to learn (as well as the capability) then you can (and we do) have good technicians who can also sell.

 

[Tony_Scarpelli]

This is our experience as well.

This is where the art of hiring good people come in. We personally do not hire technicians, we hire personalities and character. I can train any person who has common sense and deductive reasoning skills to be a technician. What is harder to teach is a technician (who are by in large introverts) how to be a salesmen. Point being, if you hire a person with the right personality, character and willingness to learn (as well as the capability) then you can (and we do) have good technicians who can also sell.

 

[Tony_Scarpelli]

Alright, so we are in the same page.

Agreed!