One of the biggest decisions any employer makes is how to pay their sales staff. There are two basic models: commission and salary. Each has benefits and drawbacks. So how do you choose which model is right for your business? Education and evaluation are key here. You need to know the differences between the two models and you have to know what your company goals are. Once you have both these things in mind it will be clear which model will serve you best.
Commission - Employees being paid on commission only earn money when a sale is made. The benefits here are clear. Employers only pay for sales so there is no risk of spending money without achieving results. This can be great for your business cashflow. Money only goes out for salaries when there is money coming in from sales. This system can also be very motivating for employees. When you don’t get paid just for showing up that is a great incentive to provide results. The drawback with this system is that it can create a very competitive environment and actually discourage employees working together for the common good. Customer service can also suffer if employees are too focused on making the next sale.
Salary - Having a staff of salaried sales people can be a boon for customer service. Since your staff is getting paid regardless of the outcome they may spend more time with each customer evaluating which of your products or services will best meet their needs. This extra care and attention could be just the competitive advantage that your company needs to stay ahead of your competitors. Employees are often more relaxed since they can count on a steady paycheck. Of course, knowing they have a steady paycheck coming no matter what can also lead to a lack of motivation and time spent slacking off at work. From a cash flow perspective you will have to keep a close eye on your bottom line since you are responsible for meeting payroll regardless of that month’s sale volume.
There are ways to tweak each system to make it work to your advantage as well. For instance, if you go the salary route you could offer bonuses or other incentives for reaching sales goals. This can increase the motivation factor without sacrificing the customer service aspect. For commission employees, offering a comprehensive benefits package could make up for the income uncertainty that employees face. You could also hire a separate staff member to handle customer service after the sale or offer incentives to employees who are recognized for providing superior customer service during the sale.
Really, which model you choose will depend on what you hope to achieve for your business. If you're not ready to hire your own inhouse sales force but you need help reaching that next level of sales success, Lease A Sales Rep can help. We'll help you build a direct sales operation without the capital costs and management overhead of recruiting and training in-house sales people. We provide a variety of services. including lead generation, appointment setting, telesales, inside sales, outside sales, trade show lead follow up, inbound call center, and services Espanol. Whatever your sales force needs include, Lease A Sales Rep has got you covered. We can even help with healthcare sales outsourcing and technology sales outsourcing. We offer contracts for as few as four months. All services are prepaid, we do not offer our services on a commission basis but we do provide results! Check us out on Facebook and contact us today to learn more about how we can help you!