How to avoid conflict with new sales person?

[simonswords]

I'm working with a new sales person who is promoting my enterprise software to a potential client base of circa 2,000 firms - all very large financial services firms. Sales cycle is anything from 3 - 6 months.

The agreement we have is that I will pay him 20% of annual revenue for any clients he introduces to us we are not already speaking with.

He has asked the question - what happens if I reach out to XYZ Company and while I'm having initial discussions with my contact(s) other people at XYZ Company reach out to you directly to start a discussion? Do I still receive my commission as I was already talking to XYZ Company?

It's a good question, and whilst this scenario is unlikely I would like to agree how we handle it upfront.

One approach is to pay sales guy a lower percentage, say 5 - 10%, in the event that he can evidence he was already in dialog and XYZ Company reaches out.

I would welcome alternative approaches no matter how radical as I'm not satisfied that this approach is optimal.

 

[WebshopMechanic]

How likely is that scenario?

Seems quite slim doesn't it?

If they reach out to you then I'd pass it to him to manage the situation and close the deal, if you're confident in his abilities.

At the end of the day, if he is someone who can grow significantly your business by closing deals then don't let commission get in the way. It will just sour the relationship. If there is a potential client base of 2,000+ firms then there is plenty to go after.

You are all on the same side after all.

 

[MBE2017]

Get a list of companies you are both talking too, dated with meetings etc. If he approaches 1st allow him to continue, after say 9 months if nothing gained take it over and vice versa.

Personally I think one person dealing with such inquiries is enough at a time.

 

[Broadside Capital]

Firstly, use a CRM (plenty of good free ones) track everything - if it’s not recorded in there treat as though it didn’t happen. Set rules of engagement around this i.e. when reaching out to a new business always check to see if it already exists. If you’re both already having conversations with different contacts then agree a co-ownership of the lead at the start with agreed commission for the salesperson.
the weighting here should really depend on who is doing the work? If you just pass on to the sales person then pay 50%. If you’re running with it and theirs a lot of work, you shouldn’t be paying them anything. Remember there are plenty of good salespeople out there.

 

[antropy]

As they made the initial contact then they should get the reward. Even if someone else reaches out to you, the first point of contact made to that company was made by the salesperson. Alex

 

[Paul Norman]

Err on the side of being generous.

Use a system, as advised above, so that they can reasonable know who is already being spoken to.

Otherwise, unless their is a compelling reason not to, pay them the full commission.

 

[Simon Berry-Hill]

I think you raise a couple of very important points.

1. To avoid any doubt implement a CRM system to record and manage all prospecting and deal conversions. There are plenty of free options out there to use, however there are also some excellent low cost fully functional ones too, I have used in the past and would recommend the following to look at 3 w's greenrope dot (com). It is probably one of the most powerful low cost options out there especially when using a sale generator system to manage your prospecting, quoting and pipeline. It is an awesome piece of of software and will only cost you about £120 per month for the size of your database for unlimited users.

2. We have a rule in our business, if no action recorded on the system against a prospect for 6 months all bets are off. So if the enquiry came in after 6 months from contact the company gets the benefit of the sale. If the rep is active on the account inside the 6 month period, the rep gets the commission.

3. If the enquiry comes in after the 6 months but you need the Rep to close the deal, the rep gets the benefit in its entirety. You cannot expect a salesperson to work on accounts where they don't get rewarded its unethical and immoral in my opinion.

4. In our experience Co- ownership doesn't work, it confuses the lines of communication, it can create discord between staff internally and it can confuse the client have multiple sales point within your company.

If nothing else refer to point 1 it will help you your business immensely. Happy hunting

regards

Si

 

[antropy]

Err on the side of being generous.

Use a system, as advised above, so that they can reasonable know who is already being spoken to.

Otherwise, unless their is a compelling reason not to, pay them the full commission.

Also it will motivate them more to get that first contact. If you don't reward them even though they have been in contact then this will de-motivate the sales person and therefore not get the best out of them. Alex

 

[Anon2718]

If he leaves your employment in 3 months what happens with ongoing negotiations?