Factory Salesman Commission. Please Help.

[offspring016]

Hello guys,

Would really appreciate your input on hiring as salesman for my company. Heres a brief outline of my company before I post my quetsion.

Company details:

Have products in 300+ locations.
Sell to 5 distributors (with salesman), west coast only.
Products in Big 5, Sports Authority and other stores.
42 current skus.
Marketing rep group on west coast handles all current distributors.
customer program for distributors: opening order $2000. reorder $700
customer program for stores direct (if the stores dont have one of our current dist.'s only): opening order $400. reorder $250.

Heres my question. All my store locations are on the west coast, mainly california, but want to expand into new distributors / stores nation wide. There is a tonnnn of room to expand quickly but want to focus my time on marketing, pr, and advertising and want to hire a salesman to do the sales calls for me. I want to base salary 100% on commission. I have some buddies that want to take the position right away, but not sure what commissions / finders fee to pay them. I want them to contact distributors / stores (focus mainly on distributors), get them to place an order, and follow up with them once / twice month.

Here are my thoughts so far:

a) to my salesman: ___ % of initial order by new customer and ___% for recurring orders (i want them to keep in touch with my new clients)

b) to my salesman: $_(flat rate)___ for every new account they bring in. Distributors place large orders, stores place small orders, so id imagine id pay a higher flat rate for every new distributor brought in. ___% for recurring orders

Anymore ideas work for you guys? Is there a standard industry salary for this type of work? Id really appreciate your opinions on this!

[mcfarldr1]

Recurring orders are going to be what you are going to want to strive for. Make sure that percentage/dollar amount is pretty high, or your salesman or woman is going to just keep looking for new orders. Recurring sales are also going to aid in keeping your business "recession proof".

[offspring016]

Thanks for your response. Do you have any suggestions?

[mcfarldr1]

As far as the actual percentage you want to use ... I think that is up to you. If you can run your business best by giving your salesmen more money or a higher percentage of the sale, then by all means do it, they will work hard for the cash and you will be rewarded with more business.

[BizDoc]

Hi,
My company used to help companies set compensation for sales executives. There are several things to keep in mind - it's beyond the scope of this reply - but essentially our guidance was to:

- pay them a base enough to live/get by
- incent them so if they do well they enjoy pay
- "" so if they excel they get rich

CHeers!

[vafire]

A. Should be 2% depending on volumes that are usually worked out in tiers. i.e. 1000-10,000 units sold 2% 10,000-20,000 4% and so on.

B. is usually an industry standard of 7%. This is a number that industries have come up with over the years that they say keeps a sales employee motivated and allows your company to grow. Again some companies work out commission in tiers as in the example above to offer more incentive to sell more.

I have years of experience in sales from cars to working with fortune 500 companies and larger corporations like Delta Air, Verizon, Nike, At&T and many more. Now in graphic art, website development, and many more aspects of sales.

It all will boil down to knowing your overhead, prices of the items you sell, and how much profit after shipping. Once these numbers are looked at, you should better be able to determine what is financially do-able. Usually you will find the above numbers in companies that are in the 75-90% profit range.

Hope this helps!
Vafire
Founder & CEO CDS and CDS Entertainment
Chiefdesignstudios com