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If you're seeking a commission-only sales force, these tips can help you figure out what questions to ask during the interview process.
December 2, 2022
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.
Hiring commission-only sales reps is a newer idea that helps you free up money to improve other parts of your business. Moreover, it reduces risk while helping you increase your client base. Keep reading to learn how to hire commission-only sales reps.
By hiring commission-only salespeople, you directly pay employees for the money they bring in. This removes the risk of hiring too many employees, which could reduce profitability. As a result, it's easy to scale quickly — after all, if you only pay when they close sales, you don't need a large payroll budget.
Businesses also often find that salaried salespeople have less motivation to close sales because the money they earn doesn't directly relate to the sales they facilitate. Paying salespeople per commission incentivizes them to become more results-oriented, which helps your business grow.
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.
Before looking for salespeople, you should figure out how you want to pay sales representatives. Here are a few common commission structures:
100% commission: Here, 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 complicated structure, but it gives salespeople some financial certainty. They receive advance commission payments before the sales cycle closes like a base salary. That way, employees are guaranteed their payment at the start of the pay period but still have a motivator to meet their sales quota.
Residual commission: 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: Here, you split commissions 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 employee. 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.
Hiring commission-only sales reps revolutionize the way you should think about team size. If you pay each employee a salary, you may try to only 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, expanding 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.
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:
Sales agencies are also a great way to access a large number of reps without too much work. It's also easier to learn about an agency's track record, like the revenue their closers have generated and the kinds of brands and companies they've worked with.
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 candidate will look, especially if they're wary of getting scammed. To settle these concerns, ensure your site looks professional but not overly generic. It should have functioning links that navigate to different pages on your site, relevant pictures, and contact information.
Online reviews: Sales candidates want to know how other people feel about working with you, so keep an eye on the reviews you get. If there are any negative ones, responding to them professionally and constructively can show candidates that you're actively working to improve.
Once you've found your candidates, you should also have a strong, simple onboarding and training process before jumping into the sales process. All new reps, regardless of experience level, need to learn the specifics of your product, sales cycle, and company to feel comfortable in their role.
It can also help to monitor new salespeople's engagement levels. That way, you can help people who are having difficulties, are demotivated, and are likely to disengage with their work before resigning. Meeting with a struggling sales rep to learn how you can support them better and improve their performance can significantly increase their loyalty to your company.
After all the effort you put in to hire the best commission-only sales rep, converting them to employees is the next hurdle. Remember that the connections you build with candidates as you find and hire them will entice them to work with you and directly contribute to their work quality.
The Sales Connection can help you connect with top commission-based sales reps to build your business. We've trained over 20,000 sales professionals over the years, so we can help you find and optimize a digitally enabled sales team to convert your inbound leads into customers, clients, and profits.
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.
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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