Best of the ISP-Lists

Rewarding Your Fans

Members of the ISP-Marketing list discuss rewarding sales reps and others who refer business to your ISP by recommending it to prospective customers. Risks can be difficult to forsee but the reward is obviously more business.

[August 23, 2001]

On the ISP-Marketing list in August, JM inquired,

"What are the typical commission rates for a sales rep who sells hourly consulting time? For example, if ten hours of consulting is sold at $150 an hour, how much of that $1500 should the sales rep make?"

A number of respondents suggested that there are many factors to consider:

[FY noted] "It depends if they are working for themselves or on behalf of a consulting firm."

[CD added] "It depends on whether they're commission-only or salary plus commission. If they're commission-only, I pay 25 percent. If they're salary plus commission, I pay 10 percent."

[KP advised] "I've always used a percentage of profit instead of just the gross sale. Gross sale commissions don't take into consideration any discounts that the rep made to get the deal. If they had to cut prices deeply to get the deal, then that shows more accurately in their paychecks if they are only paid on the profit they are making for the company. I've seen sales reps sell at below cost just to make it look like they are meeting their numbers; if they were only getting paid off of profit, they would think twice before making such a terrible sale."

[BH offered] "Not all salespeople are completely motivated by money. Money is important, but even a huge commission may not be enough for some salespeople. I would suggest that you contact your local headhunter and ask them what kind of wage and benefit package attracts a top salesperson in your market."

[MS recalled] "We used to give our reps 10-15 percent of the ticket. But if the project did not go smoothly due to a rep inaccurately representing our services or something, we'd pull that from their commission."

TJ took the question one step further:

"Along these same lines, do you offer referral fees? We're starting to offer small referral fees to people who send business our way. We're debating what percentage to offer and when to pay (all immediately, half now, half after x months, etc.) Any thoughts?"

Again, there were a number of different perspectives on the issue:

[CD offered] "We do it but, we issue the referral money after the new customer has paid 100 percent."

[KP explained] "I always offer a fee to anyone outside who brings in business. It's usually 10 percent of profits, and it gets paid when we receive the money from the customer."

[MS countered] "Referral fees on things like consulting and development can be tricky, so be careful. We once attempted a program like this for project development and spent a few months working for near zero profit; we did not think on paper enough when planning. Even on a one-time payment it can be challenging; you don't want to go around town disclosing your profit margins, do you? I'd say just offer something like a $50 'thank you' fee, and keep it really simple."

— End

 

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