Getting a Sales Rep

EDV

EDV

Well-known member
Hey guys,

Business is kind of slow, so I'm thinking of hiring a part-time sales rep. I can't afford to pay them a full-time salary (or even a low salary for that matter), so I'm thinking going 40 - 60 with them. (40% for them) It seems kind of high, a $400 commission for a $1000 job, but I really want to get more clients. I won't expect her to put in a certain number of hours a week, rather, I'll be sending her to different events, parties, festivals, etc. to see if she can get me some clients. All the phone and email work I can do myself.

Let me know what you think!

EDV
 
What kind of percentage do you suppose would attract a talented salesperson?
I agree 40 - 60 is high, I may actually end up going lower, BUT, I also realise that the lower I go, the less attractive my offer will appear. After all, my salesperson won't be getting any job security, or added benefits that come with a steady income.
Besides, she won't get any commission for any jobs I get through my own efforts.
 
For that kind of percentage, you should just make them a partner and not only have them find the business, but run the business, taxes, etc for the company. Just a person making sales calls is a different scenario - perhaps 20%.

Michael
 
Thanks for the input ppl. I am not looking for a business partner, or someone to run the business for me (for that, I'd try to recruit someone with different skills), I'm just looking for someone to get me the clients basically. While going to various events armed with business cards and a good attitude sounds easy, it's actually quite time-consuming, and I don't particularly enjoy it. Would much rather have a pro salesperson handle it, even if it costs me. Not sure if 20% would be high enough to motivate a really good salesperson, but I'll try it.
Any thoughts on whether an older person would be better than a younger person? (or vice-versa?)
 
EDV said:
It seems kind of high, a $400 commission for a $1000 job, but I really want to get more clients.
Click to expand...

You're right, that is very high.
Obviously deals are negotiated all the time, but as far as I know a standard sales commission is usually in the range of 15-20%.

Not sure if 20% would be high enough to motivate a really good salesperson, but I'll try it.
Click to expand...

Well, that all depends on what they are getting 20% of.
:)

But think about this - if you suddenly give away 40% of your gross income so you can drum up more work then you're going to have to work an extra 40 minutes for every hour just to make the same amount of money you were making before you got the sales rep.
That means that your sales rep is going to have to increase your business by more than 66% just to keep you where you're at right now.

By the way - if you're that interested in getting more work - you could probably drop your rates by 40% and achieve the same result.
(not that I would suggest that as the best course of action.)


If it's new clients you're after... well, you could always raise your rates to help cover the commission you're planning on offering your sales person.
Just a thought.
 
If "business is slow", you're probably going to have a difficult time enticing a sales rep to work for you, even for 40% of what she gets you. Reps, managers, agents - all are most relevant when their clients are in demand. Not when they're struggling. Imagine yourself in her position - investing your own time trying to 'sell' something that isn't selling very well, and your only compensation is a percentage of those hypothetical, presumably difficult to make sales. Would you take that gig? I wouldn't. I would for a fixed fee matched to an appropriately limited effort, but that doesn't sound like what you're offering.

IMHO, if the events, parties, and festivals you mentioned are where the jobs are to be found, then *you* should attend them. Once your work calendar is full, and you need help managing all the business you've generated, *then* hire a rep/agent/manager/whatever. At that point, they'll be happy to do for you what they do best - get you the best deals on the best projects, while they take an amount off the top (probably 10-15%), that is more than made up for *for you* by the bigger, better deals they've put together. If they're good, it'll be a *lot* more. That's a win-win, and it's the only game any competent rep/agent etc. will want to play...
 
I'd agree with the person who said it's a better idea to drop your rates. I make 70% commission on all of my closes (real estate), so my business model is either direct marketing (e.g. mailers, etc) or using lead generation companies -- both of which you pay for upfront.

So my average model would go: approx 2K for 5,000 mailers. From 5,000 I'll usually see maybe a 5% pull-thru (or, 250-ish inquiries). From there you can start using a 10% ratio, knocking the 250 to 25 and then another 10% for qualifying customers knocking down the 25 to 2.5.

2.5 for me equals on average about 7K, so a 5K profit in this case (not including taxes).

Lead gen companies I keep by the short and curlies, $600 at a pop which yields 12 prospects. From those 12 you go straight to the 10% ratio for closed clients and see between 1-2 (but also sometimes none). On average, though, $600 gets you $3500, equalling a $2900 profit.

Things vary quite a bit in any sales position, but if you stick with a 5% ratio on direct marketing and a 10% ratio on 3rd party stuff, maybe that will help you come up with some (upfront) marketing costs that you can wrap your head around (giving you something more effective than a sales person who is working strictly on percentages for peanuts).

A tactic I'm not allowed to use because it's illegal in my work is referral compensation. Some guys I know do it anyway (typically $500 for each new client who closes), but you could start with your previous customer base and simply offer them cash for clients. Send them a letter or something, like, "$200 per new customer referral". Or, alternatively, you could send your clients coupons that they can use themselves and one that they can pass on to a friend. Again, *I* can't do any of this cool stuff because RESPA laws prohibit it (for fear that overall costs will be inflated due to the referral compensation).

I'd look more into direct marketing with an existing client (and friend and family) base prior to hiring someone else to fix your financial woes.
 
It's a film market, Chip. Let me know what your concerns are. Or did you mean I shouldn't rep anybody else's movies?
 
Hey

Hey

Well I have a sales lady I pay full-time salary, but then she gets an additional commission for projects. It ranges from 5-10% depending on how much business she brings in per quarter. Anything more than 10% would be untenable because that's 10% of the gross, and profit margins are just not at all high enough to be giving away a salary PLUS that much of the project budget. It works out well for everyone involved, though. She makes enough money to be minimally happy but then if she closes lots of deals she can make quite a lot. It took a long time figuring out exact numbers that made sense, and I went back and forth between different systems, ultimately figuring salary was the best option with a small commission.

It's great to have a sales rep though because an experienced one who is really good can help your company so much.

We don't do low end work, though, you really can't afford a sales rep if you're just a contractor in my opinion. You need to be running a real business, i.e. doing shoots that justify that. If you're just a videographer, your profits are far too low to be giving them away to someone else. It's just too tough to compete.
 
JonathanLB said:
Well I have a sales lady I pay full-time salary, but then she gets an additional commission for projects. It ranges from 5-10% depending on how much business she brings in per quarter. Anything more than 10% would be untenable because that's 10% of the gross, and profit margins are just not at all high enough to be giving away a salary PLUS that much of the project budget. It works out well for everyone involved, though. She makes enough money to be minimally happy but then if she closes lots of deals she can make quite a lot. It took a long time figuring out exact numbers that made sense, and I went back and forth between different systems, ultimately figuring salary was the best option with a small commission.

It's great to have a sales rep though because an experienced one who is really good can help your company so much.

We don't do low end work, though, you really can't afford a sales rep if you're just a contractor in my opinion. You need to be running a real business, i.e. doing shoots that justify that. If you're just a videographer, your profits are far too low to be giving them away to someone else. It's just too tough to compete.
Click to expand...

This sounds like the best strategy IMO. I'd compare it to paying a telemarketer on salary plus "spiff cash" (or, a percentage/dollar amount per new client project).
 
I think the best strategy is for him to promote himself and build from the ground up until demand increases. Spending money to promote a difficult to sell asset is quite possibly throwing good money after bad at this stage. I hate to put it that way, but...

Have a rock-solid, proven product (himself, in this case) first. Then hire someone to promote it...
 
We are quite a new and small company, we have completed a few projects recently and thing have slowed down now... we are considering a sales agent to basically use their contacts and sales experience to sell our company and gain contracts.

Has anybody else, who is in a similar position to us had any good experiences with an agent who works purely on commission??

Tom
 
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