Commission vs. Wage - How Do You Decide? | Warrior Forum - The #1 Digital Marketing Forum & Marketplace

10 years ago

Subjective as you say and determined by need.

We are currently offering commission only opportunities for those exact reasons you spelled out. And the "impetuous" point is spot on.

On the other side, I've worked under both structures, my lowest salary was 500 per week + commission (Remote Direct Marketing of supplements)

And with commission only there has been a sliding scale based on performance, to help ME overcome those impetuous moments.

A hybrid is salary which becomes a draw over time.

And as a creative, I've taken smaller amounts of up front money for a higher commission on projects which I felt I could perform well in, and more money less back-end on projects which lacked potential (although I've been wrong on both accounts).

I'm also a fan of short term contracts, 90 days, which are renewable with performance goals reached, this gives you and the person you've given the opportunity to see how things work out. With a 1099er you can use the 90 days as a trial to hire.

Depending on the project, I like commission only for starting, it is a quick qualifier, and reward the ones who perform with tier and unexpected bonuses...and, if needed, convert them to a payroll person.

gjabiz

Originally Posted by TheBigBee

I was speaking with a fellow Warrior and he told me about a merchant processing company that pays an attractive base + commission to it's sales reps. When I heard what the base was ($30k) - I was floored. I've never seen or heard of a merchant processor offering that kind of base, I have seen minimum wage your first 2 weeks to a month but that's about it. I was super curious though because I've been thinking about this for a while..

He wasn't in a position to say a ton about them as he maintains a working relationship with them, but hinted at there being a unique selling point that anchored a sales process. The sales process was optimized to be repeatable (efficient), so by installing people into it and paying them a guaranteed wage, they got a lot more upside.

I've been thinking about this a lot and here are some bullets I jotted down as I mulled this over....

Benefits to hiring commission only sales reps:

Less red tape (dealing Uncle Sam and so forth).
Mitigates downside risk... You will never pay anyone for $0 worth of production.
Can use the commission model as a "cheap" way to learn and optimize training and your sales process to be as efficient as possible.

Benefits to hiring wage earner (+ bonus) sales reps:

Attracts a wider pool of talent. You'd be surprised what people will do to earn a guaranteed paycheck in a couple of weeks.
They'll work harder to keep that locked in wage vs. the impetuous commission only guy.
More profitable in many cases where you're making 4 figure sales.

It seems like starting with commission only sales reps so as to optimize a killer training and sales process before going the wage earner route makes the most sense. Hiring wage earners without a killer sales process and a great training structure is flushing money down the toilet.

However, this is all subjective because there are certain products that I would never in a million years offer for a wage no matter how tight my sales process and training process was. Like offering alternative business loans for instance.

Case in point; I know that Groupon hired people based on salary. In the case of Groupon that made a lot of sense because if they paid commissions they would have been far less profitable. Groupon was selling a "unique" and shiny object; "loads of customers, all kinds of exposure, a newer brighter future, etc." They literally had people wait listed for months... And "group think" was a driver as well; "everyone else is doing it, I may as well do it too..."

Nonetheless, I welcome you guys' thoughts and experiences...

Thanks

{{ DiscussionBoard.errors[10173188].message }}

Claude Whitacre

10 years ago

Originally Posted by TheBigBee

I was speaking with a fellow Warrior and he told me about a merchant processing company that pays an attractive base + commission to it's sales reps. When I heard what the base was ($30k) - I was floored. I've never seen or heard of a merchant processor offering that kind of base, I have seen minimum wage your first 2 weeks to a month but that's about it. I was super curious though because I've been thinking about this for a while..

He wasn't in a position to say a ton about them as he maintains a working relationship with them, but hinted at there being a unique selling point that anchored a sales process. The sales process was optimized to be repeatable (efficient), so by installing people into it and paying them a guaranteed wage, they got a lot more upside.

I've been thinking about this a lot and here are some bullets I jotted down as I mulled this over....

Benefits to hiring commission only sales reps:

Less red tape (dealing Uncle Sam and so forth).
Mitigates downside risk... You will never pay anyone for $0 worth of production.
Can use the commission model as a "cheap" way to learn and optimize training and your sales process to be as efficient as possible.

Benefits to hiring wage earner (+ bonus) sales reps:

Attracts a wider pool of talent. You'd be surprised what people will do to earn a guaranteed paycheck in a couple of weeks.
They'll work harder to keep that locked in wage vs. the impetuous commission only guy.
More profitable in many cases where you're making 4 figure sales.

It seems like starting with commission only sales reps so as to optimize a killer training and sales process before going the wage earner route makes the most sense. Hiring wage earners without a killer sales process and a great training structure is flushing money down the toilet.

However, this is all subjective because there are certain products that I would never in a million years offer for a wage no matter how tight my sales process and training process was. Like offering alternative business loans for instance.

Case in point; I know that Groupon hired people based on salary. In the case of Groupon that made a lot of sense because if they paid commissions they would have been far less profitable. Groupon was selling a "unique" and shiny object; "loads of customers, all kinds of exposure, a newer brighter future, etc." They literally had people wait listed for months... And "group think" was a driver as well; "everyone else is doing it, I may as well do it too..."

Nonetheless, I welcome you guys' thoughts and experiences...

It isn't the hiring, it's the training....it's the selection process. What do you do with the rep after they start?

If training is, "Here's a script. Here's a list, go to it"...... the rep will likely fail....and you'll hear every excuse imaginable.

If the training is, "I'll show you ten sales in a week. You'll see how easy this is, and that people buy. Then I'll meet with you every day, to sharpen your skills, and keep you making money."....you'll have a rep who knows that selling is a process that can be learned.

When you hire a rep, are you hiring someone who is thinking about guarantees? Security? vacations? You'll get them, if you offer a salary.

If you want sales sharks that will make sales, pay a high commission, and sculpt your interview around that.

Commission is more. Commission salespeople make more than salaried salespeople. A salary is a way for the top producers to help pay for the weakest reps.

[ 2 ] Thanks

Signature

One Call Closing book https://www.amazon.com/One-Call-Clos...=1527788418&sr

â€œDo not seek to follow in the footsteps of the wise; seek what they sought.â€ - Matsuo Basho

{{ DiscussionBoard.errors[10173256].message }}

tryinhere

10 years ago

Originally Posted by TheBigBee

I
I've been thinking about this a lot and here are some bullets I jotted down as I mulled this over....

It seems like starting with commission only sales reps so as to optimize a killer training and sales process before going the wage earner route makes the most sense. Hiring wage earners without a killer sales process and a great training structure is flushing money down the toilet...

I am guessing you dont have much experience at all with sales and that's why your guessing ? and you hire then use comm guys to develop your sales script before dumping them fr the paid guys.

It's a long way to the top sometimes for some people and I am not sure why people treat sales people like meat or cannon fodder when for most comm guys the manager who thinks this crap up and there are a lot of them have no idea at all and then they wonder why things don't work and all they would do is blame the sales guy.

I promise with that thinking you would only attract bottom level if that people to sell your product, you waste your time and theirs.

[ 1 ] Thanks
1 reply

Signature

| > Choosing to go off the grid for a while to focus on family, work and life in general. Have a great 2020 < |

{{ DiscussionBoard.errors[10173319].message }}

TheBigBee

10 years ago

Originally Posted by tryinhere

I am guessing you dont have much experience at all with sales and that's why your guessing ? and you hire then use comm guys to develop your sales script before dumping them fr the paid guys.

It's a long way to the top sometimes for some people and I am not sure why people treat sales people like meat or cannon fodder when for most comm guys the manager who thinks this crap up and there are a lot of them have no idea at all and then they wonder why things don't work and all they would do is blame the sales guy.

I promise with that thinking you would only attract bottom level if that people to sell your product, you waste your time and theirs.

It sounds like you have had some really bad experiences. I'm sorry those experiences have lead you to attack me personally - someone you don't know.

I've been selling all my life. Door to door sales for years. I was treated Ike a piece of meat. Cattle. Ran sales crews and currently rely on closing deals in order to pay my bills... I sell money. I also sell consulting on the side. The money isn't cheap and neither is the consulting.

But while you have gone personal, I will not. Instead I will take you through my line of thinking.

Groupon

Hired salary.
Scaled fast.
Dumped salaried employees.

After dumping the salaried sales reps, they were able to lock in a greater share of long term revenue. Not only that, they were able to lock in a greater share of short term revenue while also maintaining tight control over sales and recruiting.

Not sure if you knew, when you hire indie contractors you're precluded from doing things like training them. Legally, the instant you start training a 1099, under a structured training program you're in violation of the law.

You were right about one thing... Long way up to the top. I started off being used like a peace of meat 6 days a week. I figured out how to use the experience to my advantage.

[ 1 ] Thanks
1 reply

Signature

FILL IN THE BLANKS!

{{ DiscussionBoard.errors[10173402].message }}

tryinhere

10 years ago

Originally Posted by TheBigBee

I've been selling all my life. Door to door sales for years. I was treated Ike a piece of meat. Cattle. Ran sales crews and currently rely on closing deals in order to pay my bills... I sell money. I also sell consulting on the side. The money isn't cheap and neither is the consulting. .

It was not meant to be personal but more a broad view, but I will man up and say I called it wrong or could have called it better on this one and apologise for that.

Thanks

Signature

| > Choosing to go off the grid for a while to focus on family, work and life in general. Have a great 2020 < |

{{ DiscussionBoard.errors[10173984].message }}

Freebiequeen1999

10 years ago

Honestly most of the people I see here looking for "sales reps" are out to waste other people's time
The good news is most real sales people will not even deal with nonsense like this

Oftentimes the idea here is to get someone to write your script, objections, comebacks - develop your whole sales process then you think you can farm it out to someone in India or Philipines

good luck with that. Here is a funny thought - it would be funny if a salesperson took a warrior "idea" and ran with it themselves LOL.....once they know the company hopefully they will jump ship and apply for the position themselves...at least they know how to pick up a phone and sell.

I agree with Tryinhere - the complete disrespect to people with sales skills is very disheartning

Thanks
2 replies

{{ DiscussionBoard.errors[10173597].message }}

ewenmack 10 years ago

The following is my one and only experience coaching
a telephone one call close sales guy.

I identified him as having the traits
of a superstar sales guy about a week in.

Since I'm talking with him everyday for the last month,
I get to observe and learn how he thinks and what he thinks about
compared with the other 14 in the phone room.

Let's back up.

He calls me the day before his job interview with the largest
media company in his country.

He was panicking on how to handle the interview
because he really wanted the sales job in the media company
and get very good at sales.

He nailed the interview and gets job.

He is already #2 in sales and #1 in dollars brought in
for the month.

He is breaking barriers regularly...

Like

1 Monday was always his worst day.
This Monday was his biggest day

2 He can adapt to the softer women and close them

3 He can adapt and close the hard driving
"get to the point" style guys.

4 He can close the ones that say "you've only got 2 minutes"

5 He can get through the gate keeper and speak to the country
ceo of the largest freight forwarding company in the world

Now here's the thing about his successes, if he isn't challenged
and incentivezed by big enough rewards, he gets dissatisfied very quickly.

This leads to him looking elsewhere where he can
be challenged and having greater rewards for breakthroughs.

Recognizing that, I'm scrambling to create a new business
that is the right model to fit superstar sales people like my client.

The biz model is recurring monthly fees and he gets
all the money from sale minus the hard costs.
This works out about 80% he keeps.

I write the phone script for him.

We are trialing it for 2 weeks while the phone room
is shut down for the holidays.

There's no base, it's 100% commission.

I've already shown how he can make more money beyond lifting his closing ratio
so it tests his pre-existing assumptions what is possible.

So to summarize, knowing how to recognize superstar sales people by their traits,
know how to recruit them, how to nurture them...then create a biz around these superstars is I believe a recipe for rapid biz success.

The business model for the whole sales training world is
lifting those with ordinary sales traits to do better.

The biggest return on time and investment is hiring those
who exhibit the traits of a superstar.

And you can get them on 100% commission.

The breakdown is people don't recognize a
superstar and fall for those that appear to be of that status.

That's the catch.

Best,
Doctor E. Vile

P.S. The company he admired and wanted the job badly as a sales rep there,
is rewarding the wrong things.

They are rewarding the bottom and medium closers.

Like...

1 make a sale and you can go home for the day

2 Allowed to give discounts up to 50%
without a longer term commitment by the buyer

3 Base pay is lifted after hitting a benchmark
when the commission lift is what a superstar wants.

Superstars aren't rewarded.

I guess it's because they have a room full of ordinary sales people
and they dream up ways to get more production out of them.

The problem all stems from not knowing how to recruit superstars
and then give them what they want
to excel.
- [ 3 ] Thanks
{{ DiscussionBoard.errors[10173866].message }}

TheBigBee

9 years ago

Originally Posted by Freebiequeen1999

Honestly most of the people I see here

good luck with that. Here is a funny thought - it would be funny if a salesperson took a warrior "idea" and ran with it themselves LOL.....

Keyword HERE. Here = not place to recruit.

There are tons of nuggets of gold here that no one is taking and running with. Ideas constantly generated that are ripe for "stealing."

Also whenever I hear "steal an idea" I chuckle inside. Most people find it so difficult to execute on their own idea that stealing others' is not in the question. Call 10,000 THRIVING businesses and try to get them to steal your idea. Then call 10,000 businesses and then try to sell them something.

Thanks

Signature

FILL IN THE BLANKS!

{{ DiscussionBoard.errors[10179186].message }}

TrumpiaTim

10 years ago

I noticed that a lot of sales organizations where they tend to go through sales reps quite quickly work on a pure commission based system. Whereas organizations which are trying to retain talent and have individuals grow over the years with the company will have a more attractive offer by doing a guaranteed base + upside.

They both makes sense, I guess it really depends on the expected lifetime of a sales rep with any organization which might dictate which option is better to offer.

Thanks
1 reply

Signature

www.Trumpia.com

Trumpia: The Most Completed SMS Text Messaging Software & API Solution.

{{ DiscussionBoard.errors[10174891].message }}

Barry Unruh

9 years ago

Originally Posted by TrumpiaTim

I noticed that a lot of sales organizations where they tend to go through sales reps quite quickly work on a pure commission based system. Whereas organizations which are trying to retain talent and have individuals grow over the years with the company will have a more attractive offer by doing a guaranteed base + upside

The opposite side of that statement is that most frightened sales reps tend to choose an opportunity with a guaranteed base + upside, where highly confident reps are more likely to look at the overall opportunity to see which offers the most potential.

Thanks

Signature

Brain Drained...Signature Coming Soon!

{{ DiscussionBoard.errors[10179376].message }}

writeaway

9 years ago

If I was offered a choice between commission or wages, I would always choose commission.

I will always choose to work on commission.

This, of course, is assuming that I really know my game.

If I have the game down tight, then this is a no-brainer.

Why?

I would always make more money with a commission system because I know my stuff.

I know that I can convert.

I know that I can produce a certain sales level.

I know that I can pretty much write my own paycheck.

However, if I’m still trying to cut my teeth into the game or I have some serious confidence issues, then I would take the security of a wage.

A wage really is for people simply looking for guaranteed results.

This really is too bad because if you are a serious producer, you’re actually selling yourself short with a wage.

The value of your sales might actually be in the millions and you’re just simply settling for a tiny fraction of dollars for all that quality work.

Again, there’s really no right or wrong answer here.

It all boils down to what’s important to you.

If your value stands to lean towards security or if you have small children to take care of, or you have a lot financial obligations, then wages might be the way to go.

However, if you are a fairly young person or a seasoned professional who really know your stuff, then commission is probably the more attractive route to take.

Thanks

Signature

Earn More Money with your AI IMAGES- FREE TOOL

{{ DiscussionBoard.errors[10187443].message }}

decidefreedom

9 years ago

Mmmmm something to think about.

Thanks

{{ DiscussionBoard.errors[10190108].message }}

Commission vs. Wage - How Do You Decide?

Trending Topics

Hello!

How can I start and where? Cold emailing is forbidden in GERMANY, since GDPR, which paid networking

December Google Update

Hello Everyone

Happy Birthday Claude