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I'm considering filling a position for a salesman. I envision the person meeting with customers, job site measurements, helping the customers with various selections etc. After putting together the information I'll take it and design the job for output to the shop. In this scenario would you have this as a commission or base plus commission?
If so what would the % be for commission?
From your description of duties, I don't see many typical sales responsibilities on the list. Think about a few of the following questions?
How many hours would it save you per prospect to have someone else meet with customers, do job site measurements, help customers through various selections etc.?
Do you expect this person to do a design and present it to the customer?
Do you expect this person to price the design and close the sale?
Do you expect this person to do prospecting work or other duties beyond working with customers?
You could have anyone who understands cabinet layout do site measurements and pay them a fee for their time.
If your customer happens to go into a big box store with photos and/or dimensions of their spaces, the "designers" at the big box can do a complete design with full pricing and spit our a contract for a customer to sign within about 30 minutes. Is that where you want your sales person to be?
I'd guess an average big box "designer" would earn in the $25K-$50K per year. Top performers may earn double that amount. What can you afford to pay someone who would take a customer through design to contracting the job?
I guess I left out the main point. This position would require getting new work. Calling on new builders and in the case of walk ins, taking their project from that point to the point of handing me a file I can input to our CNC software. I'm not sure about estimating but this is something I would rather have as a responsibility of the new "Sales" position also. I would work with the sales person throughout the project but only as needed. A brief meeting each morning or every couple days to coordinate the schedule or any other questions that may need communication. Does this sound more like typical sales responsibilities?
In my opinion, sales without including pricing is customer service and customer service is compensated differently than sales. How can you expect someone to make a sale if they don't know what the items will cost? If it isn't the number 1 concern of a prospect or customer, it certainly is in the top 3.
You'll need to figure out a system to get pricing back to the prospect within minutes or hours, not within days or weeks if you want your sales person to succeed. What if your salesperson brings you 10 new jobs to estimate in a typical week? How long would it take you to estimate them and get pricing back to your salesperson and potential customer? Get your estimating part figured out and automated so that when your salesperson draws up a design, they can have instantaneous or very quick pricing information available to share with a customer. You will need to do at least some modest delegation of estimating duties to your salesperson.
I go back to how many hours do you expect to take off your plate each week if someone else handles the responsibilities you have listed? What are those hours worth to you if you no longer had to handle those duties? You should be willing to pay up to that amount each week to no longer have those responsibilities. Secondly, how many hours do you expect your salesperson will spend doing thing like prospecting that is currently not being done routinely each week? There should be a figure you can make workable for those additional duties. Thirdly, what if your salesperson is very successful and doubles the number of jobs you'll need to run through your shop each week or month? Can you double your production? What is the cost impact on doubling your production? What additional gross profit would be available as a result? A portion of that gross profit should be what you'd be willing to pay your sales person.
I really see this as a base plus commission position, with a sliding commission schedule based on increased sales over your current volume.
Dave's responses are 'spot on'!
I have re-read them a few times breaking each part down. Which is what I suggest to you. This way you can put values against them and determine.
We just hired an Estimator. Believe we were very lucky in only having to go through 3 individuals before finding the right fit.
FYI: I found him from this site!
Sales compensation is a tricky thing. I've been a total failure in covering all the bases. From what I've learned: they will want commission on all work you do, meaning current customers too. If they land a job that is way bigger than what you can do they want their cut on it, even if they were told the limits to start with. They will offer discounts to "get their foot in the door." They will want you to pay for "perks" so they can sell more to a given customer. Freebies in the job, a GC's favorite booze, or a free trip. If they land a good customer that fills your schedule they won't go looking for new work, because you can't do any more, and they are happy with their commission stream. You, of course have all your eggs in one basket. All these things make perfect sense if you are in sales. You just need to cover all of them (& more) in writing, before you hire.
Larry, We have a very simple system.
Depending on hire conditions , the Sale expenses may be on the Sales person.
Then comes going beyond the parameters Sales. On their dime, sorry but you knew the rules. On our dime, they're going to get an ear full!
I just sold a 1.2m project. That is twice what we find our Profit market to be.
If your Salespeople are not willing to take the risk to get you 'Good' work. Then you need new Salespeople.
My humble opinion..