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OT Maybe? Need advice regarding employing commission only rep in US.
This thread has 10 replies. Displaying all posts.
Post 1 made on Sunday August 5, 2018 at 19:49
simoneales
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Hi All,

As some of will know, i dropped out of the CI game in 2012 and took up a position with a new tubular motor company in Australia as it was being launched. Since then we have turned our brand into the best selling external motor in the country, and second highest overall, behind Somfy.
Earlier in the year we launched our brand in the US, based in San Bernadino CA.
We are a full service motor supplier with products for most applications. We have a good app for control that also works with Amazon Alexa, Google home and control 4.

At this point sales are moderate as you would expect after a short period of time, and we are looking at lot's of different avenues for expansion and getting some volume sales. We have been in contact with a guy who seems to have an inside track to some high volume customers, and by the way he is talking he seems to be implying that he would be a good chance to get them on board. This guy currently runs his own business manufacturing roller blinds, so has an existing income from that and obviously significant time commitments relating to that. Our impression of him is that he does have good knowledge of the industry and does seem to know the right people.
Firstly let me point out that if he can deliver the customers he is implying, the commission structure being suggested to him would reap him 200k-300k + a year for very little effort. However he is asking for both a higher percentage and also wants a Salary/retainer. The impression he has left us with is that he would probably pursue some of the bigger companies in his spare time and probably not spend time finding and approaching other smaller companies. We are suspicious of his ability to deliver on what he says and feel like he's got an existing income so is going high with nothing to lose, but we don't want to end up paying this guy ongoing money (apart from a commission for business generated). If he wants a retainer then his commission would be much less but as i said, we don't believe he would work for the retainer.
Any suggestions or advice would be appreciated.

Also,
In Australia there are many commission only freelance reps that represent several companies within the same industry but that do not conflict with each other. Are there similar reps in the States and how do you find them?
I guarantee I'll tell you the truth and I guarantee I'll tell you what you need to know but I can't guarantee that I'll be telling you anything you want to hear.
Post 2 made on Sunday August 5, 2018 at 22:50
MNTommyBoy
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This all sounds way above my paygrade, so I'll chime in!

You probably have to sh!t or get off the pot. If you want to grow your sales, you gotta do it. Obviously, if this rep would make 200-300k, your company must be adding millions in revenue. I'd call that a fair trade.?

If you're skeptical, what does his network look like? LinkedIn has to be useful for something, no? Seeing as how there are CEOs to Sales Reps on the site, I would think you could find some of your answers.

He sounds like a great negotiator. He wants to start high and you want to start low (er). Meet in the middle, build an incentive-laden contract, do it for 6 months or a year and see what happens...
"Every word you just said was wrong." ~ Luke Skywalker
Post 3 made on Monday August 6, 2018 at 01:32
g007
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Simoneales

Scale him in, yeah he can talk the talk, but lets see if he can walk the walk.

Any previous proof of this kind of deliverables! He can claim and/or promise anything!

If reps get paid only upon you getting paid and the commission is in the range of let say 5-10%, were talking 3 million to 6 million in business. Let see the proof by actual sales!

His claims, let him deliver first, then comes the money!

Just my opinion.
OP | Post 4 made on Monday August 6, 2018 at 09:36
simoneales
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Thanks guys,
I think we have come to the conclusion that commission only reps are probably out. In the case of this guy, if heís not full of it, we should be sble to come to an arrangement.
I guarantee I'll tell you the truth and I guarantee I'll tell you what you need to know but I can't guarantee that I'll be telling you anything you want to hear.
Post 5 made on Monday August 6, 2018 at 12:09
sirroundsound
Senior Member
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1,000
Just scale the numbers up as he hits various volume targets.
If he is a flake, you have paid him for what he sold.
If he really does have all the contacts and can generate high volumes of sales, he can make a lot more and you both are happy.
Post 6 made on Monday August 6, 2018 at 12:41
tomciara
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My son worked for commission only for a glass whiteboard company, so yes, it can be done that way. I agree with some of the others, that you could give him different tier levels, and he can make as much money as he wants to. If he canít be happy with 2 to 300K and up, then youíre probably never going to make him happy.
"Men occasionally stumble over the truth, but most of them pick themselves up and hurry off as if nothing ever happened." - Winston Churchill
Post 7 made on Monday August 6, 2018 at 16:16
Jeff at Zektor
Active Member
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540
Most true professional sales people won't work for commission only. It's not about confidence of their ability to sell, it's about their value.

You could begin with a guarantee of X dollars for the first 3 months then scale it down over the next 3 quarters to a base salary / commission / bonus / benefits / car allowance package.

Like MNTommy Boy stated, if they generate millions in profitable sales, and you end up paying them $200K, then it's a win for everyone. I would go back a couple jobs ago to check their stated performance as well as their references.

Additionally, you could offer a period of employment of six months and follow that up with long term employment.
Jeff Haynes
The Big Kahuna
Zektor Inc.
OP | Post 8 made on Tuesday August 7, 2018 at 01:07
simoneales
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I think we will probably still look at commission reps, but probably with a retainer to start that diminishes over a 12 month period.

We still don't want to give this other guy a salary or retainer but will try to come to an arrangement with him that works for everyone.
I guarantee I'll tell you the truth and I guarantee I'll tell you what you need to know but I can't guarantee that I'll be telling you anything you want to hear.
Post 9 made on Tuesday August 7, 2018 at 01:44
g007
Regular Member
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Zektor

It seems to me that reps do two basic things, rep your company and your products and generate increases in sales volume.

If they increase sales volume, great, thatís what that are suppose to do and the commissions reward them so. That is the primary goal. But if they just keep sales the same, why have them, especially if they live off of existing sales volume, which you should not allow! If your company is not known then some base money needs to be given to cover the reps efforts in promoting your company. Ultimately the value they give is measured in sales increases.
Post 10 made on Tuesday August 7, 2018 at 12:59
Trunk-Slammer -Supreme
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On August 7, 2018 at 01:44, g007 said...
Zektor

It seems to me that reps do two basic things, rep your company and your products and generate increases in sales volume.

If they increase sales volume, great, thatís what that are suppose to do and the commissions reward them so. That is the primary goal. But if they just keep sales the same, why have them, especially if they live off of existing sales volume, which you should not allow! If your company is not known then some base money needs to be given to cover the reps efforts in promoting your company. Ultimately the value they give is measured in sales increases.

Actually, while increasing business is a definite part of the rep position, the best value a rep has is to retain business.

What do you do when the market becomes somewhat saturated, and there is no way to increase for a period of time? Fire the rep and watch as sales rapidly decline?


There is ALWAYS the inevitable lull in new business, so you cannot have a hard line position. You MUST allow for this.
Post 11 made on Tuesday August 7, 2018 at 14:45
Jeff at Zektor
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g007,

Very different scenarios between hiring an employee and deciding the type of package to offer vs hiring a rep firm. Good reps are hard to come by. Great reps are even harder to get. Good reps are always hunting looking for new opportunities. It can be tempting to be complacent and comfortable. That is when your competitors start picking off your business.

Independent manufacturers reps put out a lot of effort in many cases long before commission dollars start coming in unless they are walking into a book of business in a given territory. What's really lousy for many reps is that when they are generating large commission checks, some companies decide to put a direct employee in place of a rep firm. That rarely works out.

We are fortunate to have some great reps, but these are completely different models; reps vs direct employees.

Last edited by Jeff at Zektor on August 7, 2018 22:37.
Jeff Haynes
The Big Kahuna
Zektor Inc.


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