How to Hire Commission-Only Sales Representatives

How to Hire Commission-Only Sales Representatives

If you're seeking a commission-only sales force, these tips can help you figure out what questions to ask during the interview process.

Kayvon Kay
Kayvon Kay

December 2, 2022

How to Hire Commission-Only Sales Representatives

You might think handling all your sales in-house makes the most sense. You can train your salaried salespeople to sell your products better than anyone — and no doubt, they'll land many clients. But you might start to notice that your salespeople seem expensive for the amount they bring into the company, no matter how good they are.‍

You might think that keeping your sales team in-house is the golden ticket to success. After all, you can train them to be masters of your product, right? But what’s really happening in your organization is real—sometimes, even your best salaried salespeople might not bring in revenue that justifies their cost. Here are just a few concerns that we hear from new clients in-house sales reps:‍

  • Inconsistent behavioral and/or performance issues,
  • Poor deal closing ratio,
  • High cost per acquisition 
  • Lack of productivity 
  • Complacency: doing just enough to keep the business going, but the growth isn’t there.  

The nagging question amongst all business owners is, how much money am I leaving on the table?

That's where commission-only sales reps come into play. This isn't just another hiring strategy; it's a game-changer that frees up your capital to invest in other growth areas of your business. It minimizes your financial risk and amplifies your client acquisition. So, how do you go about hiring these commission-only sales reps? Let's dive in.

Table of Contents: 

  1. Tips To Find The Best Commission-Only Sales Reps
  2. Decide on Your Sales Commission Structure
  3. Determine How Big Your Team Should Be
  4. Determine Where To Find Candidates
  5. Make a Strong Impression
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Why You Should Be All-In on Commission-Only Sales Reps

When you bring on commission-only reps, you're essentially paying for performance, not promises. This eliminates the risk of bloating your team and diluting your gross profit. It's a win-win; you pay for performance, making it easier to scale your operations without stressing over payroll.

In principle, salespeople need to feel a level of pressure in order to perform. Salaried salespeople often lack the same hunger that commission-based reps have because their earnings aren't directly tied to their performance. Switching to a commission-only model lights a fire under your sales team, making them laser-focused on results, especially if the incentives are attractive. And let's face it, in sales, results are what truly count for both yourself and your sales reps.

Tips To Find The Best Commission-Only Sales Reps

Because of the change in payment structure for commission sales reps, there are aspects of hiring for this role that you may not have thought about. Here are some tips to help you get the best sales reps.

Decide on Your Sales Commission Structure

Before looking for salespeople, you should figure out how you want to pay sales representatives. Here are a few common commission structures:

100% commission: Simply put, representatives earn income directly from sales. This gives them the highest earning potential and puts them in total control of their income. This offers the fastest route to market, so it's beneficial for startups.

Tiered commission: In this structure you increase the percentage reps receive after closing a certain number of deals or reaching specific revenue benchmarks. This gives you a way to reward top performers, motivating reps to keep improving. It also helps new reps make a good income while they settle into their role.

Commission draw: This is a more complicated structure that gives salespeople advance commission payments before the sales cycle closes, like a base salary. This gives your staff more financial stability with a guaranteed payment at the start of the pay period but still leaves them hungry enough to reach their sales quota. 

Residual commission (Ad Agency / Consulting Firm model): This encourages reps to keep fostering positive connections with customers they convert, paying them commissions for as long as the accounts they generate keep creating revenue. Agencies and consulting firms with high-budget, long-term accounts often use this structure.

Territory volume commission: Commissions are split evenly among reps in a territory based on total sales. This structure can help develop a spirit of cooperation and teamwork if you have sales teams organized by region or territory. Be wary when using this structure, though — high-performing reps can feel undervalued if they don't get the recognition they feel they deserve.

Multiplier commission model: This is a way to build customized compensation plans, though it's generally very complicated for you and your employees. Simply put, you offer a basic revenue commission percentage and then multiply it by a preset number for each sales rep according to how successfully they met their quota.

You should also figure out how you'll set your commission rates. Two common formats are:

  • Revenue Commission: The rep's rate is based on the revenue they bring in. This is more common when prices are fixed, so representatives can't alter the price to close a sale. It’s also common for businesses trying to scale or expand to a new area.
  • Gross margin commission: You pay your sales rep a commission on the gross margin from what they sell. This means they receive a different amount in commission when selling a product with a gross margin of 40% instead of 60%. Since it incentivizes reps to get the best price, it's a good system when prices are negotiable.

Determine How Big Your Team Should Be

Hiring commission-only sales reps revolutionize the way you should think about team size. If you pay each employee a salary, you may only have the budget to hire one salesperson at a time to handle significant workloads. But, if you pay commissions after they've closed a sale, you don't have the same limitation.

This means you can hire more reps, eliminating a potential bottleneck in your business. As a result, you can focus on scaling other parts of your business. You should also try to hire more reps than you think you need because commission-based salespeople can sometimes turnover quickly. Having more people working at once avoids the risk of downtime in your sales cycle.

Determine Where To Find Candidates

An important question to ask yourself is, "where can I hire commission-only sales reps?" Because they need to spread their names around to find work, you can generally find commission-only sales reps in places where people in your industry often congregate, such as:

  • Networking events
  • LinkedIn
  • Local trade and employer organizations
  • Talk to a Sales Agency like The Sales Connection

Talking to our team is a great way to access a large number of reps without too much work because we already have a team of vetted top performers. When you schedule a meeting with us, we will take you through our agency’s track record, the revenue our closers have generated and the companies we've worked with.

Make a Strong Impression

When recruiting sales reps, your business should display the confidence and success they want to work with. Consider where candidates will go to research you and what you can do to give them the best impression. For example:

Company website: Your website is the first place a top candidate will look before deciding to apply. You will attract greater interest if your website is functioning at a high level, appropriately branded, polished and authentic. Your candidates want to know that the brand that may be representing is already committed to routinely investing in sales and marketing.  

Online reviews: Sales candidates want to know how your customers feel about your products and services. Keep an eye on the reviews you get. If there are any negative reviews, responding to them professionally and constructively can show candidates how you handle conflicts with customers and how you're actively working to improve. 

Bonus Points: filtering out candidates

Check out the simple process we've devised to filter out over 98% of sales talent and find the best candidates to improve your sales team.

How We Recruit and Attract the Best Commission-Only Salespeople

At The Sales Connection, we don't just hire sales staff; we recruit winners. Our unique eight-step hiring process ensures we find sales reps with not just skills but the sales DNA you can't teach. These are the reps who thrive in a commission-only environment, the ones who help winners win more. 

If you're tired of the traditional hiring grind and you're looking to inject some real talent into your sales team, consider commission-only reps. Trust me, it's not just a hiring strategy; it's a business revolution.

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Kayvon Kay

Kayvon Kay

Kayvon has over two decades of experience working with high-level closers and perfecting his sales methodologies. He has earned the title of Canada’s #1 pharmaceutical sales representative and continues to share his expertise as a keynote speaker and through his multi-million-dollar coaching program.

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