Which Sales Compensation Plans Works Best for Your Agency?
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If you are in the process of hiring a dedicated salesperson at your agency you need a solid compensation plan in place.
In this episode of Inbound Sales Journey, Gray and I (Ryan) discuss some different options to consider when putting a plan in place.
We share from our own experience when I started back at GuavaBox as well as experience talking with other agencies around the world.
Gray gives perspective as the agency owner making the hire while I provide experience through the lens of the salesperson being hired.
If you are in the position of making a sales hire now this episode will hopefully shed light on how to make the process a smooth one.
A Two Plan Approach
When I was hired as a sales rep for a large home builder before joining the agency I was offered a salary for the duration of my training (7 months) followed by a 100% commission compensation plan after that was over.
That was it, take it or leave it.
When Gray and Andrew approached me about coming back to GuavaBox to head up sales the process was a little different.
And frankly, I liked it better.
They presented me with two options.
Option 1: Base Salary + Commission
This option was tempting because I was moving into a new space. I was unsure how realistic it would be to hit the established sales goals.
Even Gray and Andrew had a hard time knowing if the goals were realistic.
They had been handling sales while juggling everything else at the agency.
They had hired some part-time salespeople in the past, but full-time is a different story.
In this model, I recommend a pretty low base salary (around $30k-$50k) and then a commission structure that makes sense with the services you offer.
Incentivize your salesperson to sell good clients. Reward them for long-term retainers, and discourage short projects.
Option 2: 100% Commission
This is the option that I chose.
There are two primary reasons I chose to go 100% commission.
First, you have the ability to make more money. If someone is opting to go 100% commission it only makes sense if the commission percentages are higher.
Second, I was used to it. I had been a 100% commission sales rep in new home construction and was fortunate to do very well during my 2 years.
What Are Reasonable Commission Percentages?
Quick disclaimer: every agency offers different services and has different profit margins.
We are not saying that these numbers are exactly what you should be offering.
We are saying that based on our own experience and the experience of other agencies we have spoken with, these numbers should help act as a guide.
Website projects: 2.5-10%
Inbound Retainers: 2-8% (at least through year 1)
Discovery project (GamePlan):15-25%
One quick note, percentages should be determined by the level of involvement the salesperson has in the entire process.
Are they just handling the initial calls and closing the deal, then passing them off? If so, a lower percentage is justifiable.
Some salespeople actually handle some of the client delivery. That will warrant larger percentages, but also might make the base salary plus commission a more appealing route.
If you have any other thoughts or advice, feel free to let us know!
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