Commission Only Sales Agents - Company Strategy

[Ryan000001]

Building a team of commission only sales agents should be an integral part of any company's growth strategy.

Consider this scenario:

The Commission Only Sales Agent

Thomas is a commission only sales agent. He was a senior sales manager for ten years before deciding to work for himself and become his own boss.

He has spent the last ten years working in the Health Care industry, selling products up and down the country and has built up quite a considerable list of contacts in the industry over the years.

He is extremely confident in his ability to sell if he believes in the product and now, as a commission only sales agent he gets to choose the companies he wants to work with and products he wants to sell.

He doesn't need to rely on a small wage to lock him into one company and suck 95% of his life from under his feet. The companies he works freelance for appreciate his expertise, time and existing contacts, and is rewarded with great levels of residual commission and sometimes even small amounts of equity depending on the company and their position.

Thomas is happy. He can live life on his own terms, can go and pick the kids up from school or take a family holiday when he so desires.

The Company

Mike, owns a small company which produces a new kind of product designed for a very specific sector of the Health Industry. Business has been building steadily and the demand for his company's product is clearly there.

They are just about breaking even after the fortune they spent on research and development, and all the other costs involved in manufacturing a product, especially one which needs rigorously tested for years before is approved for sale within his industry.

He needs a Nationwide sales team to get out there quickly before the competition and simply can not afford the risk of hiring a couple of full time employees. Most of the profits are being re-invested back into the company and what if one of his employees falls sick and can't work for months or just simply isn't successful? Mike needs his product out there quickly to become the Market leader!

So instead he decides to try and build a team of commission only sales agents. He puts together a comprehensive and attractive remuneration package which runs on a recurring monthly basis and sets out looking for freelancers.

Eventually Thomas and Mike Meet:

This is just the opportunity that Thomas has been looking for. He understands and believes in the product and knows exactly what Mike's company are trying to achieve.

This is an exciting opportunity and one in which he can utilise his database of existing contacts which are exactly the kind of companies that need this new product.

And the rest is history.....

I truly believe that any company, regardless of size or age, can benefit immensely from building a team of commission only sales agents. Even in addition to a team of employed sales people!

You are not being 'stingy' by not offering a wage to freelancers. They choose to work freelance because that is the life they want to live.

Thomas is still able to work with other companies that fit his niche and can still utilise his contacts as long as there is no conflict of interest.

There will always be people who will argue that a company does not 'value' a person if a wage is not offered but it is simply not the case in my eyes.

 

[mobious]

Really good post but may be impractical for some people who do not know website design or SEO and can be costly to get up and running for some however this would defeat the point of commission only as you may as well filter your budget into a basic.

 

[Ryan000001]

That's where I can help. If you take a look at the link in my Email signature.

 

[ScottMallonSportsCoaching]

Am looking to employ a team just like this for my business and this sounds perfect!

Please can you message me your number so I can discuss fully

 

[telemax]

There will always be people who will argue that a company does not 'value' a person if a wage is not offered but it is simply not the case in my eyes.[/quote]

A lot of what you say is very valid but how do you filter out the 95% of companies that want commission only sales people because either

A. They are skint
B. They haven't sold anything. They always make some excuse like 'I don't have the time to sell myself'
C, They have zero intention of ever paying commissions on products sold.
D. Have an unsaleable, unproven product/ service


Before I get a blasting, I have worked comms only in the past, for an exemplary company, who had an amazing product and paid me on the nose. Sadly I have found that the scenarios above are the vast , vast majority.

 

[HorseLatitudes]

"He needs a Nationwide sales team to get out there quickly before the competition and simply can not afford the risk of hiring a couple of full time employees"

The employer musn't believe in himself, his product or his recruitment process if he's that terrified of hiring full time employees.

I've worked in sales for a number of years and I'm a bloody good salesman. Records have tumbled where ever I've been.

But there's not a cat in hells chance I'd take the risk of going commission only.

You mention "what if one of his employees falls sick and can't work for months".

Why should the employee be the one to take all the risk? When things are booming and the dividends are rolling in because of the work the sales people have done, it'll be the employer smoking his cigars on his yacht.

 

[ScottMallonSportsCoaching]

Hi Telemax, no blasting from me. Like you I worked on commission only basis and made a brilliant life from it which is why im now looking for someone similar. I want the person to have a desire to make money with no comfort blanket. A hunger to earn as much money as possible!

I too know the value of being paid on time by a great company and I have these rules within my company. Work hard, make the sales get paid........ don't work hard, no sales equals no money!

It worked for me just hop there are people out there with the same mentality as me!!!

 

[Green Onion]

Reading your story it sounded like you were writing about me! I'm now commission only after 10+ years in healthcare sales. It's awesome. I think the key to it working is having the market knowledge and contacts to be able to evaluate a product offering quickly and see where it can fit into the market. There is a degree of trust in terms of commissions being paid however if the company doesn't then you just find another supplier, no problem. The benefit to the company is that they don't have the overheads associated with a full time rep and that the agent they hire is going to generally look after the business much better. It's a win win.

 

[Ryan000001]

Hi Green Onion,
Glad you can relate. I would be interested to find out what made you decide to become self-employed after all that time as an employee? We speak with so many self-employed sales agents who make the decision to fulfill their entrepreneurial desire to run their own business after an extensive time building contacts and networks within their industry.

 

[telemax]

I got into my comms only Sales Agent work because I originally worked as an employee for a company who were a partner for that particular product. Therefore I knew how reliable and solvent they were. Also it gave me an understanding of how rapid it's uptake was at the time, therefore I knew it was extremely saleable. Plus I was earning 5 times the commision as self employed!

 

[Green Onion]

Hey Ryan,

Down to money mostly. As telemax points out you earn more when commission only. Further to that if self employed you're then paying less in tax so an even larger take home. For me it wasn't so much the push to being my own boss as most companies I've worked for have allowed me to work like I'm my own boss anyway - as long as I was growing the business they didn't really worry about managing me. I have wanted my own company for a long time however that didn't really factor into commission only work.

I had two goals that I have been working towards the last 5 years or so one of which becoming an agent for medical devices and the second to set up a sales training company. I've started them both around the same time which works well as commissions from the medical devices enable me to grow the training business without worrying about not having an income.

Hope that answers your question. I've registered on your site by the way. Hope it goes well. The key for you in medical devices is to build relations with the right companies and have highly specialised agents rather than a large database of failed reps.

 

[Ryan000001]

Hi Tom,

Sorry I've been neglecting the Forum recently as we are due to launch in private beta (a techy term for a private test phase for our founding members).

Thank you so much for sharing your views and we are so excited at the quality of sales agents we have been attracting to date. I'll check out your sales training company also as there may be some synergy there. We plan to integrate some kind of sales training/coaching functionality in the near future and will definitely be looking to partner with great people.

We've actually been working closely with Paul Atherton who won the 2014 UK Sales and Marketing Coach of the Year and it's just so great to surround ourselves with truly inspirational people. PM me your Email as it would be great to connect!

 

[chunxiao li]

Am looking to employ a team just like this for my business and this sounds perfect!

Please can you message me your number so I can discuss fully

 

[call the caterers]

Really interesting reading your posts, I have a great service based product with potentially great commissions to be earnt. Would you be interested to find out more?

 

[splashweb]

Glad to hear that there are "success" stories out there, but I'm very inclined to agree with telemax on this. I've been commission only within the affialite marketing arena for over 10 years and it's gone from a great concept that offered fair play and decent reward, for those that made the effort, to one of contempt, abuse and a general lack of respect for the "sales" person. I would only commit to this type of scenario if it was for the short term with potential major returns. After all, I'm taking all the risk here, and unless there's a solid contract to back me up I would never go to this place again.

 

[Nick James Lomax]

Hi Ryan - I agree with that every business should explore the commission only route as an enhancement to their existing sales structure - logically, what would the business have to lose?

I guess sometimes finding the right people to represent your brand/product isn't easy, in the majority of cases people are unable to source, manage or maintain clients/leads and you'll always get those who sell well and shoot off to the next product...

I registered myself with Commission Crowd last year - as I think it's a great concept that you/Laura have how have things gone ?

Nick

 

[MidlandFoodService]

I took on 5 commission only sales reps over the last two years.
One of them had a small company turning over £14'000 per week, but was fed up of handling his employees, vehicles and accounts. Since joining me, now turns over £23'000 per week due to better cost price and more comprehensive product range.

Another worked for a competitor with a non compete/solicit contract in place so started with zero turnover but built up to £18'000 per week in just under a year. With this guy i put a 'safety net' of £400 per week take home until £10'000 turnover is reached and commission takes over.

Another was a sales guy in a different part of the food industry with only a few relevant contact. Once again 'safety net' was put in place which will be replaced by commission within a few months if sales grow as they have been.

99% of our customers have deliveries once or twice a week on regular delivery days so the sales figure can grow week on week without having to find new deals\leads constantly.

I would recommend putting a safety net in if viable, for me it helped to avoid sales reps feeling pressured to make bad deals just to get turnover to an acceptable level.

Commission is certainly not for everyone and can be a fairly expensive way of doing business but also can grow a business fast and sustainably. I guess it all depends on the individuals. I got quite lucky and with my guys being on good take-home they have a genuine interest in the health of the business and not just dumping cheap stock on bad payers to achieve better commission.

Works for me

 

[Mark T Jones]

I do agree that commission-only has a valid place for both parties - but it is by no means a universally 'good' solution.

Having run salaries, commission-only and mixed teams over the years I have seen the advantages and disadvantages of both.

In our environment, ironically the biggest disadvantage of commission only is the need to sell - which generally takes the form of heading for the bottom of the market (people who are desperate for funding and have been declined by everyone else) - which leads to lots of time wasting and disappointment. The honest ones get dejected, the dishonest start to fabricate information.

Whilst you can guide & point non-employed people, you can't tell them what to do or when to do it, as you can with employed.

Overall, I'm receptive to both, but would look far more closely at the credentials of commission only.

 

[Abijay]

Mine is a start-up company with a product with some reviews on Amazon. It has proved difficult to find Sales Agents experienced in the beauty/skincare business. The platforms I found are asking for a significant upfront fee, something that is difficult for us as a new business. Can anyone please offer advice. We are offering a 25% commission per sale.

 

[Gary Gill]

Great post read, Personally I only ever worked on a commission basis since I gave up the decorating trade when I was a young 21. I chose who, where and when I worked, I made the most of my choice and enjoyed every minute of my sales life. You either love it or hate it, I loved it with a passion and sold everything from double glazing, sky, virgin media, gas, electric, phone system, vehicles, ILA,s bankrupt stock etc back in the good old days of door knocking and walking the streets when it wasn't frowned upon and people had time to listen. If you were good at what you do you,d always get head hunted of which I did on a good few occasions manly for short term promotions to meet end of year targets for clients. I met the most amazing people in the unlikeliest of place and still friends with some of them to this day. I'm now 52 and still have the drive and ambition I did when I was 21. Unfortunately I had a stroke (probably due to the life style of a salesman back in the days) and now been diagnosed with fibromyalgia which leaves me in excruciating pain but the passion never dies for something exciting to sell. I am now starting a children's charity which we have a good portfolio of web domains ranging from £500-35k+ that we sell to fund the project and if I could find someone as hungry as I was for a good sale I'd be a happy man. Good commission based sale people are a rare breed and hard to come by nowadays as everyone likes to have their salary comfort zone which unfortunately falls in the covering the bills and enjoying a night out now and then range, plus a little commission for effort or sales wannabes as I like to call them. Commission only breeds quality salesmen that are hungry for the next sale not just satisfied with the last.