B2B Commission-Only Sales Networks - do they work?

[Saleem Beg]

I was looking into hiring sales people on commission only basis and came across some networks where you can hire self-employed sales people.

Has anyone tried them? How does it compare to having a dedicated sales person?

 

[Karllacey]

The problem is with commission only sales people is that their is no commitment from either side and therefore no party is answerable. You cannot exactly put pressure on comm only people as they can advise you that they have other better paying prospects, so the whole business is built on whether a sales person can be bothered with your product.

On the flip side also with the sales person, they do not know you from anyone else. Who is to say that they can trust you to pay their commission and on what terms. There needs to be a certain water tight contract that acknowledges both parties.

I have seen it from both sides, and generally speaking with commission only sales as a general rule (it is not 100%) commission only sales people tend to be the sales people who are left.

That aside, it is a roll of the dice in all cases.

 

[Ashley_Price]

Another thing to remember, is if you are paying commission only, then the percentage is going to need to be high enough for any decent sales person to be interested.

So, you're going to need to make sure you can realistically afford to pay someone for the sales they make for you. Depending on the industry, there might be a lot of sales, but if the commission is too low, they'll never make a decent amount.

 

[MBE2017]

It can work well, but it needs to work well for all concerned. Unless a commission only salesperson can realistically earn £50k plus, do not expect much in today’s market. Most guys last only a few months, and look to change to the next company, truth being both they and the company are not doing things the right way.

The best salespeople I know are commission only, most have worked that way for 10-20 years and would not consider dropping to a salaried role. They are true salespeople, not order takers or company reps, totally different from many salaried roles.

So, could you OP earn £50k commission only selling your product/service?

 

[Saleem Beg]

Thanks for the contribution.

It's a tough one, because our projects can range from £15k - £100k+, and setting a higher commission really depends on how important it is for us to win a contract. I guess it is equally important for the sales person to believe in our products/service to be able to sell it.

What's an average % range for commission-only contracts?

I only came across this idea by stumbling upon a service called Commission Crowd. It's website is made to impress, obviously, but I wanted to know if anyone has tried such services.

 

[7Tom7]

There isn’t a straight forward answer to what the % range of commission will be. There are factors for both parties. From your point of view what is your margin on each sale, how much are you selling at the moment, how much capacity for growth do you have?


From the sales persons point of view, how well know is your product, what is the monthly and annual commission likely to be, how easy is it to sell, what is the likely timescale from initial contact to a contract/order, how well will it fit with their existing contacts?


I have used Commission Crowd, I was looking for sales opportunities. IMO there are a few companies on there I would be happy to sell for but a lot where I can see no way to make any kind of reasonable income.

 

[MBE2017]

7Tom7 has nailed the important questions you need to answer, how long to find, quote, supply and get paid per job. How easy is it to contact the decision makers etc.

When you understand the questions and answers you can decide on a commission level.

I used to mainly work in B2C market for the last twenty years, where contacting a decision maker, securing an order etc can take anything from minutes to several hours. When I did the same in B2B for a decade it could take anything from a day to a year or two to do the same, the longer and harder deals tend to be the large ones. Commission could range from 50% to 5%, but as mentioned it has to work for everyone.