Are you looking to hire sales staff? Well below gives you an insight into what I look at when working out what package to put them on.
Last week I was in a meeting with someone who owns an emerging quality assurance company and is looking for sales staff to take his product to the next level.
One thing that he was totally baffled with, is what salary package he should offer and how can he safe guard himself against a new sales person not making him any money.
I ran him through the way we work out our sales targets within my company and tried to see if we can fit that to his model.
I don’t know about you, but when I hire new sales staff I always come against the same issues.
1. Can this person do what they say they can do?
2. What package do I put them on
3. How do I make money from this person?
4. How do I formulate their targets
Can this person do what they say they can do?
Tackling issue one is the hardest in this equation. Too often have I hired a sales person who has promised the world but under delivered. You need to learn to look past the jargon and get to the core of what this person is like. In essence when working out there salary package, you will be in asking them to put their money where their mouth is.
What package do I put them on?
What base salary to offer is the next issue. Sales people are expensive and as spoken about often sell themselves better then they do your product.
Each sales person will no doubt have an idea of what salary he or she wants. Do your research, make sure that what they are asking is market value for a sales person, so check Seek or other job boards at what other roles are being offered at.
Make sure you keep your budget in mind. If you cannot afford to pay $100K then don’t, perhaps you need to look at less experience and do some training. My thoughts are that even if you pay someone an astronomical amount of money there are absolutely no guarantees that this person is going to make you a cent.
How do I make money from this person?
Obviously there are no guarantees. Working in labour hire in Brisbane for many years has enabled me to try many different types of packages and commission structures.
Currently I have a tried and proven sales person one package and commission structure and a newer sales person on another.
Being a small business owner myself, my budget for base salaries is also limited. In the event of the experience proven sales person I wasn’t able to pay the base that they were asking, so to counter that I offered less and incentivized the salesperson by an increase commission percentage on sales.
For new sales people I offer a lower base and what we call in labour hire and recruitment a “desk cost.”
How do I formulate their targets?
Below is the equation used in the recruitment industry to work out sales targets (desk cost):
To work out a desk cost I use the following equation:
Base salary package x 2
Divide that by 52 weeks.
That will give you a weekly target. Once that target is reached then you give that person a percentage of each dollar earned. That percentage is at your discretion.
So for $100K base the equation looks as follows
$100K x 2 = $200,000
Divided by 52 weeks = $3846 per week
$3856 per week is now your weekly target. Once that target is reached then that person will begin to earn commission. This ensures that you are making enough money from that sales person to cover costs as well as profit. It will also constitute as your sales targets going forward.
This is obviously just one example of how to structure to salary packages, commission and sales targets. The one thing to keep in mind is your budget and understands that hiring a sales person doesn’t mean automatic sales. Too often have I seen a sales person over promise and under deliver.
You also need to budget on that person not selling anything from a period of time once they start.
Hiring any staff member is a costly exercise but sales people even more so. Do your background checks and keep a very close eye on them once they start. It’s very important to tackle any issues as soon as they pop up, as this person is representing you and your brand.
Happy selling!
Last week I was in a meeting with someone who owns an emerging quality assurance company and is looking for sales staff to take his product to the next level.
One thing that he was totally baffled with, is what salary package he should offer and how can he safe guard himself against a new sales person not making him any money.
I ran him through the way we work out our sales targets within my company and tried to see if we can fit that to his model.
I don’t know about you, but when I hire new sales staff I always come against the same issues.
1. Can this person do what they say they can do?
2. What package do I put them on
3. How do I make money from this person?
4. How do I formulate their targets
Can this person do what they say they can do?
Tackling issue one is the hardest in this equation. Too often have I hired a sales person who has promised the world but under delivered. You need to learn to look past the jargon and get to the core of what this person is like. In essence when working out there salary package, you will be in asking them to put their money where their mouth is.
What package do I put them on?
What base salary to offer is the next issue. Sales people are expensive and as spoken about often sell themselves better then they do your product.
Each sales person will no doubt have an idea of what salary he or she wants. Do your research, make sure that what they are asking is market value for a sales person, so check Seek or other job boards at what other roles are being offered at.
Make sure you keep your budget in mind. If you cannot afford to pay $100K then don’t, perhaps you need to look at less experience and do some training. My thoughts are that even if you pay someone an astronomical amount of money there are absolutely no guarantees that this person is going to make you a cent.
How do I make money from this person?
Obviously there are no guarantees. Working in labour hire in Brisbane for many years has enabled me to try many different types of packages and commission structures.
Currently I have a tried and proven sales person one package and commission structure and a newer sales person on another.
Being a small business owner myself, my budget for base salaries is also limited. In the event of the experience proven sales person I wasn’t able to pay the base that they were asking, so to counter that I offered less and incentivized the salesperson by an increase commission percentage on sales.
For new sales people I offer a lower base and what we call in labour hire and recruitment a “desk cost.”
How do I formulate their targets?
Below is the equation used in the recruitment industry to work out sales targets (desk cost):
To work out a desk cost I use the following equation:
Base salary package x 2
Divide that by 52 weeks.
That will give you a weekly target. Once that target is reached then you give that person a percentage of each dollar earned. That percentage is at your discretion.
So for $100K base the equation looks as follows
$100K x 2 = $200,000
Divided by 52 weeks = $3846 per week
$3856 per week is now your weekly target. Once that target is reached then that person will begin to earn commission. This ensures that you are making enough money from that sales person to cover costs as well as profit. It will also constitute as your sales targets going forward.
This is obviously just one example of how to structure to salary packages, commission and sales targets. The one thing to keep in mind is your budget and understands that hiring a sales person doesn’t mean automatic sales. Too often have I seen a sales person over promise and under deliver.
You also need to budget on that person not selling anything from a period of time once they start.
Hiring any staff member is a costly exercise but sales people even more so. Do your background checks and keep a very close eye on them once they start. It’s very important to tackle any issues as soon as they pop up, as this person is representing you and your brand.
Happy selling!
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