Why companies fail to hire commission based sales representatives?

Since last year the inquiries for commission-only sales representatives have grown 5 times on our website Selloverseas.com. Most of the companies are able to successfully appoint within 3-4 months depending on the subscribed package and target country.

After a few sales quarters, we sometimes hear comments like “I don’t understand them” or “The results are not as expected”. Agree sometimes the results are not as expected or commission-based sales agents also lose interest. The majority are very dedicated and smart with high sales conversion rates.

In 75% of cases, it is generally,  either companies do not have the necessary infrastructure, policies, and processes in place or they simply have the intention to use commission-based sales agents to test the market. When our experts discuss the viability of the sales commission model or qualify the commission sales structure

a. Only 10% qualify,

b. 70% have no formal policy or structured model.

c. Balance 20% are just experimenting or want to test a new market with no serious commitment.

How do commission-based sales reps qualify company?

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. Product Performance Vs. Price Point:

Believe it or not, an 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-users, stockists, etc., or where it stands on the demand curve vs. price elasticity.

They only proceed once they are sure that the product is a good fit in “My  Market”.

B. Walk Away Reliability:

This means- How much time will this product consume in after-sales service? Intelligent commission sales reps always keep presales and post-sales time consumed by the product or service. It is an important criterion for them even before starting discussions on commission sales agreement.

C. Customer Support:

Commission-based sales representatives want to understand – How many rings are required to answer a product or service-related query? or how queries are managed remotely?

They are always on the road and detest talking to a robot or chatbot. For them time is money and if they perceive that it takes ages to get through the right staff…the chances are they will simply drop it.

D. Delivery commitments:

What is your delivery commitment track record? Is it always available in stock? Or is the delivery period 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.

E. Contract Terms:

Companies need to understand, to buy the time of high-performing commission-based sales agents, they may need to up the game as well. An experience sales commission representative is also constantly evaluating-

Is it worth my time?

Is Sales Volume enough to generate sizeable commissions?

It is the most important decision-making criteria – they want to clearly understand contractual terms –

Who else (distributor, stockists or master franchisee, etc.) has a product line in their territory?

What is the period of the contract?

When do I get paid? How much do I get paid?

F. Sales Communication Tools

Many business owners still need to understand that mere Brochures or Websites do NOT COUNT as a sales communication tool for freelance sales representatives.

How deeply your processes are integrated with new age functional tools like CRM, ERP etc.? Today these are not only good to have but a must have for optimum performance for any freelance sales representatives. They also look for easily accessible structured online demos or interactive presence on social media.

G. Available Key Accounts (Installed Base)

Planned introduction to  key accounts and sharing list of installed base or existing customers  gives commission based sales agents confidence yo move ahead. This also builds trust and basis of transparent information sharing and customer feedback.

H. How flexible is your commission structure for sales?

Some of the broadly followed commission structures by freelance sales representatives 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.

Schedule a video call with our expert to understand more and build the commission structure which is best fit for your business.

FAQs

What are important elements of a sales commission agreement?

Typically commission sales 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 hiring templates?

There are many readymade templates available online which can be used to simply modify or amended to suit your specific needs.  Or go to your DASHBOARD on selloverseas.com to build basic readymade template  for hiring commission based sales representative.