Questions

Hi everyone, I'm a Google ads feelancer with just 2 clients in a construction niche, I don't do SEO but only PPC ads on Google/Bing. I wanted to ask for your opinions on a unique situation where one client of mine (minority co-owner of a relatively successful business) wants to get involved with helping me get OTHER clients in the same industry, just in different cities? Essentially a salesman, and I'd likely pay him only comission per client. He's asked about it twice in the last 4 months, and I think his motivation is that he's somewhat tired after a little under a decade with his current business (and possibly with his less growth oriented co-owner as well) and likely wants to explore other pastures, he's originally a tradesman in a niche of the construction industry. He might also be somewhat bitten by the guru/passive income/scale/location independent bug. I'm actually open to his help, as it would free up my time to focus on other ventures as well as other non-construction niches, and I think he'd be a good salesman too given he'd be pitching other owners in the same industry. I wouldn't plan to solely rely on him to get new clients either..just wondering if this might be a good or bad idea and more importantly what would be a fair compensation structure to pay him? A finite amount based on the retainer he closes? or a % perpetual commission ? I hear 10-15% of MRR is standard although I'm not sure. I'm ok with 15% but think 20% would be too much (I would not expect him to deal with client / do client management activities, only to get the sale) Would appreciate any thoughts and insights on this.

Some other things to consider:

There are a lot of different things sales people do. For example, a different sales person might do any of the following:

1. Make the phone ring that you answer.
2. Answers the phone and convinces them to talk to you so you can close the deal.
3. Closes the deal and hands you an actual client.
4. Babysits top clients to keep them happy for years.

Each has a different value. You may give 2% to the person who made the phone ring, 5% to the next person, 10% to the next, for total of 17%, plus another 5% to the next person.

Those are random numbers. You need to figure out you can spend on sales and how much they will get over time.

If you give a straight percentage commission on products that have a long stick rate, eventually they will sell enough that they don't need to sell any more, and then your new leads dry up. So, you may need to put caps on commissions. Good sales people have a magical power. They can swoop in, make some sales, earn a lot of commissions, take a vacation for six months and repeat when they run out of cash. They are always in demand.

So, caps might look like 5% of the first 100k, 2.5% next 100k, 0.5% of rest.

And of course, there are junior people and senior people, and combinations of pay + commissions or straight commissions. For example, you might have a college kid who makes the phone ring for 1% with caps + $2k/monthly, and the senior guy who closes them for 10% commissions with caps.

Hope that helps,
John


Answered 2 months ago

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