Since last year the inquiries for commission-only sales representatives have grown 5 times on our website Selloverseas.com. However, down the line a few months, we start hearing comments like “I don’t understand them” or “They don’t work and just collect the cheque”. Agree few literally don’t work but we can say with confidence that majority are very smart and have high sales conversion rates, provided companies have the necessary infrastructure, policies and processes in place.
When SellOverseas experts discuss the viability of the sales commission model or qualify the commission sales structure with companies hardly 10% qualify, 70% need to rework or realign and balance 20% are just experimenting with no clue how to move.
So what are these qualifying criteria’s?
We have arrived at these broad criteria after years of experience with both, the companies looking to hire commission-only sales reps and manufacturer’s agents.
A. What commission agents look in the product line?
- Product performance Vs. Price Point: Believe it or not experienced sales rep has an excellent knack for understanding where the product stands in terms of technology or specifications vs. the price point. Price-performance includes both selling price and commercial structure- How the discount structure works for end-user, stockist etc., or where it does stand on demand curve vs. price elasticity.
They only proceed once they are sure that the product is a good fit in “My Market”.
- Walk Away Reliability: This literally means- How much of time will this product consume in aftersales service? Intelligent sales agents always keep presales and post-sales time consumed by the product or service at the back of their head before closing the commission agreement.
- Customer Support: They want to understand – How many rings are required to answer a product or service-related query or how it is managed remotely. They are always on the road and detest talking to a robot or chatbot. For the time is money and if they perceive that it takes ages to get through right staff…the chances are they will simply drop it.
- Delivery commitments: What is your delivery commitment track record? Is it always available in stock? Or is the delivery period is in line with customer expectations? It is their reputation also which is at stake and manufacturer’s reps equate delivery follow-ups as opportunity cost.
- Contract Terms: It is the most important decision making criteria – they want to clearly understand contractual terms – Who else (distributor, stockist or master franchisee etc.) has a product line in their territory? What is the time period of the contract? When do I get paid? How much do I get paid?
Businesses need to understand to buy the time of a reputable manufacturer’s agent they may need to up the game as well; as commission agents also constantly evaluate- Is it really worth their time?
- Communication Tools
Many business owners still need to understand that mere Brochures and Website for the current generation does NOT COUNT as a Communication Tool.
How deeply your processes are integrated with CRM tools like salesforce or spotio etc. and new age on the go functional tools? Today these are not only good to have but a must have for optimum performance of a sales representatives. They also look for easily accessible structured online demos and interactive presence on social media.
How flexible is your commission structure for sales?
Some of the broadly followed commission structures are as below;
- Base rate commission only.
- Base Salary plus commission.
- Draw against Commission.
- Gross Margin Commission.
- Residual Commission.
- Revenue commission.
- Straight commission.
- Tiered commission.
- Territory Volume commission.
What works best for one business may not be applicable to other. It all depends upon where you stand on product cycle, brand acceptance, sales cycle closing time and many other factors. We would advise to get in touch with Selloverseas.com expert to understand more and which build the commission structure which is best fit for your business.
What are important elements of a sales commission agreement?
Typically commission agreement includes –
Names of both signing parties, the legal relationship between the parties, start and end date, non-compete clause, commission structure, potential base salary, non-disclosure clause and other elements specific to business category and geography of operation.
Where can I find sales commission agreement templates?
There are many readymade templates available online which can be used to simply modify or amended to suit your specific needs. Or register with Selloverseas.com to download sales commission contract samples as per your business category and zone of operation.