Cornish Steve
29th December 2005, 22:10
Imagine for a moment that your company rents equipment. You hire some top salespeople to sell your service. Joe sells successfully to company ABC, which becomes a loyal customer over a long time period.
How much commission should be paid to Joe? For sake of argument, should he be paid 10% of the price of every rental that ABC ever makes? Should he be paid 10% up to a certain maximum? Should he be paid 10% for the first six months only? Should he be paid 10% for six months, 5% for the next six months, and 2% for ever after that?
On the one hand, Joe should be rewarded for his work and given a good incentive to sell. Also, he should be encouraged to keep ABC renting equipment. On the other hand, his employer wants to keep selling costs to a minimum, the up-front sale is more difficult than follow-on sales, and an open-ended commission approach is overly generous.
What are your thoughts and experiences? What is a decent commission percentage? Should that percentage decline over time? Should there be a time limit?
For the moment, we can leave out other aspects of commission, such as kickers for selling over quota, for selling new product, and so on.
How much commission should be paid to Joe? For sake of argument, should he be paid 10% of the price of every rental that ABC ever makes? Should he be paid 10% up to a certain maximum? Should he be paid 10% for the first six months only? Should he be paid 10% for six months, 5% for the next six months, and 2% for ever after that?
On the one hand, Joe should be rewarded for his work and given a good incentive to sell. Also, he should be encouraged to keep ABC renting equipment. On the other hand, his employer wants to keep selling costs to a minimum, the up-front sale is more difficult than follow-on sales, and an open-ended commission approach is overly generous.
What are your thoughts and experiences? What is a decent commission percentage? Should that percentage decline over time? Should there be a time limit?
For the moment, we can leave out other aspects of commission, such as kickers for selling over quota, for selling new product, and so on.