Hi Everyone,
I am seeking help on whether it is beneficial for a company to have salesmen on payroll or just hire them on a commission basis only. I understand both have their pros and cons; our company is exploring the various advantages of having salesmen on a commission-only basis.
Please help me with things that we may have to consider in the process, such as what kind of commissions should be set to motivate them to get us more closed deals. We are into Network Operations Center, Offshore Development Center, Telecom consulting, etc.
I am open to different views and opinions.
With Regards,
Nithya
From India, Bangalore
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I am seeking help on whether it is beneficial for a company to have salesmen on payroll or just hire them on a commission basis only. I understand both have their pros and cons; our company is exploring the various advantages of having salesmen on a commission-only basis.
Please help me with things that we may have to consider in the process, such as what kind of commissions should be set to motivate them to get us more closed deals. We are into Network Operations Center, Offshore Development Center, Telecom consulting, etc.
I am open to different views and opinions.
With Regards,
Nithya
From India, Bangalore
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Hello,
How about employing salesmen on payrolls, creating a different salary structure, providing them with indirect and retirement benefits, giving them an identity within the organization, and yet compensating them with commissions so that together they earn handsomely?
This approach fosters accountability, credibility, and helps in building strong customer relationships. Your customers will be assured that they are dealing with dedicated individuals who consistently attend to their needs. A salesman on payroll is committed to representing your organization at all times, enabling them to offer focused attention to customers.
This is not out-of-the-box thinking. Similar systems have been implemented before, and I have experience in managing such a setup. I am confident that many others have also successfully utilized this system to their advantage.
Regards,
Samvedan
June 2, 2011
From India, Pune
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321How about employing salesmen on payrolls, creating a different salary structure, providing them with indirect and retirement benefits, giving them an identity within the organization, and yet compensating them with commissions so that together they earn handsomely?
This approach fosters accountability, credibility, and helps in building strong customer relationships. Your customers will be assured that they are dealing with dedicated individuals who consistently attend to their needs. A salesman on payroll is committed to representing your organization at all times, enabling them to offer focused attention to customers.
This is not out-of-the-box thinking. Similar systems have been implemented before, and I have experience in managing such a setup. I am confident that many others have also successfully utilized this system to their advantage.
Regards,
Samvedan
June 2, 2011
From India, Pune
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Dear Nithya,
This is a common problem with the sales function. Due to low returns on investment, in other words, high expense ratios and the commercial non-viability of salesmen, management is forced to consider the sentiments expressed in your letter. This is acceptable if you have MLM type marketing where perhaps 20 percent generates 80 percent of the business.
However, if the company aims to build a better corporate image and brand equity in the segment, they must maintain a stable sales force and consistently groom them through training and motivation to achieve organizational objectives.
In sales and marketing, nothing is inherently wrong or right. It is a matter of success. So, keep an open mind and explore various options.
Regards,
Dhiren Vyas
9327637474
dhirenvyas23@yahoo.co.in
From India, Ahmadabad
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This is a common problem with the sales function. Due to low returns on investment, in other words, high expense ratios and the commercial non-viability of salesmen, management is forced to consider the sentiments expressed in your letter. This is acceptable if you have MLM type marketing where perhaps 20 percent generates 80 percent of the business.
However, if the company aims to build a better corporate image and brand equity in the segment, they must maintain a stable sales force and consistently groom them through training and motivation to achieve organizational objectives.
In sales and marketing, nothing is inherently wrong or right. It is a matter of success. So, keep an open mind and explore various options.
Regards,
Dhiren Vyas
9327637474
dhirenvyas23@yahoo.co.in
From India, Ahmadabad
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Hello Nithya,
As Samvedan mentioned, it has to be a combination model. Like you mentioned, every option has its own set of pros and cons. So, you need to figure out the best combination that works for your situation.
In a way, it may need some amount of experimenting too - with different combinations over a specific timeframe and in a limited geographic area - and judging the results - and then refining and freezing the final model before expanding to cover the whole company's sales force.
Regards,
TS
From India, Hyderabad
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As Samvedan mentioned, it has to be a combination model. Like you mentioned, every option has its own set of pros and cons. So, you need to figure out the best combination that works for your situation.
In a way, it may need some amount of experimenting too - with different combinations over a specific timeframe and in a limited geographic area - and judging the results - and then refining and freezing the final model before expanding to cover the whole company's sales force.
Regards,
TS
From India, Hyderabad
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Hello All,
Firstly, thank you to Samvedan, Diren Vyas, and Tajsateesh for your prompt replies and valuable guidance. I apologize for the late response, as I was unwell and off track for a few days.
Valuable points that cannot be forgotten include: Accountability, Company image, uninterrupted attention, control over their activities, etc.
I will present these points in the forthcoming meetings and suggest a combination of fixed and variable pay structures that will motivate and also keep the salesmen on their toes.
I would like to seek help again. Is there a guideline or rule that needs to be followed when deriving a suitable combination of fixed and variable pay scales? What should the breakup be like?
Thank you once again.
With Regards,
Nithya Mehta
From India, Bangalore
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Firstly, thank you to Samvedan, Diren Vyas, and Tajsateesh for your prompt replies and valuable guidance. I apologize for the late response, as I was unwell and off track for a few days.
Valuable points that cannot be forgotten include: Accountability, Company image, uninterrupted attention, control over their activities, etc.
I will present these points in the forthcoming meetings and suggest a combination of fixed and variable pay structures that will motivate and also keep the salesmen on their toes.
I would like to seek help again. Is there a guideline or rule that needs to be followed when deriving a suitable combination of fixed and variable pay scales? What should the breakup be like?
Thank you once again.
With Regards,
Nithya Mehta
From India, Bangalore
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Hello Nithya,
I suggest having a brainstorming session where the key people in sales are present and asking them to generate ideas. Before the start of the session, make your bottom lines clear - as you mentioned [Accountability, Company image, uninterrupted attention...].
This method would be better in two ways:
1. They will have a chance to establish the policy - from the HR perspective, it's their rule now. So the tendency to put it into practice is much higher [basic human psychology].
2. Since they are the ones who face the consequences, they will be better positioned to identify practical areas within the ideas generated and those that are not.
However, in such a modus operandi, please remember that there will always be a tendency to downplay or avoid the challenging aspects concerning their efforts. Therefore, someone senior in the session may need to assert authority whenever suggestions could potentially lead to built-in loopholes.
Regards,
TS
From India, Hyderabad
Acknowledge(0)Amend(0)
I suggest having a brainstorming session where the key people in sales are present and asking them to generate ideas. Before the start of the session, make your bottom lines clear - as you mentioned [Accountability, Company image, uninterrupted attention...].
This method would be better in two ways:
1. They will have a chance to establish the policy - from the HR perspective, it's their rule now. So the tendency to put it into practice is much higher [basic human psychology].
2. Since they are the ones who face the consequences, they will be better positioned to identify practical areas within the ideas generated and those that are not.
However, in such a modus operandi, please remember that there will always be a tendency to downplay or avoid the challenging aspects concerning their efforts. Therefore, someone senior in the session may need to assert authority whenever suggestions could potentially lead to built-in loopholes.
Regards,
TS
From India, Hyderabad
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