Sales Assistance

[blufftonsignguy]

I would like to find out a little about the industry and how you handle paying a sales rep for your business. I am assuming (yes i know what that means) you pay a base salary and then commissions on t he jobs they sell. my more detailed question is do you pay commission based on the total job amount less any taxes? DO you pay commissions on just the material side or do you pay on the material and labor? The other part of my commission is what is the industry standard (or range) for the commissions. I've heard the percentage is based on a range depending on the cost of the job. Any information you could give on t his matter would be greatly appreciated. It doesn't matter to me if you answer here or if you want to send me a message.

Thank you in advance!!

 

[equippaint]

Its better if you back into an annual salary to determine rates and what you will pay a rep on. Will it be on everything, only what they bring in, residuals, or some other combo?
Figure what you can afford and need to pay to get a decent rep. Then tailor an offer around that.
Say its 100k. You do 500k now and expect a rep to bring that to 1m. If it were me in this example Id make a base of 15k plus 8% and pay on all revenue. Theyd start with a decent secure amount, be responsible to keep you at 500k and drive to get you to 1m so they can make what they expect.
Watch your expectations though. If you cant support the additional work, a good rep will leave faster than if they werent getting paid enough.

 

[colorforgeprinting]

Well were I currently work this is how I am paid. I am 100% commission, don't sell don't eat. However, I am paid 50% of the profit the job makes. So I have a huge incentive to make high margins on each and every jobs. I make over 6 figures, I am a hungry salesperson. With the other 6 salespeople that work here, some not as hungry as others, our production crew of nearly 40+ works overtime all but about 2 months of the year and our owner makes a very pretty penny. Can every shop work this way I cannot say, but I do feel that putting a salesperson on salary is one of the worst things you can do. However, most people are not willing to take the risk in a 100% commission job. I do suggest 6 month of non-recoverable draw that is also a probation period for the salesperson in deciding if you want to keep them as an employee.

For this to work you do have to arm your salespeople with the knowledge needed to figure the job cost when quoting a client.

Ever job I have had I make sure I know every part of the job, from assemble, creation, printing and installation. I know .psd, .ai and our ripping programs like the back of my hand. Also I have been in the fabric business since I was 16, so I 26 year of experience with decoration, environmental graphics and apparel. I do feel that with what is often a must higher margin that most of my competitors I am able to sell the value of using the company I work for.

 

[Rick]

Just questions to ask yourself...
What kind of sign shop are you?

Do you have a process already in place that would include an efficient use of a salesperson, including ways to quantify the efficiency and progress of the salesperson? (sales/contact sheets, reporting progress that is trackable)

Can your shop handle adding 2-3 times the workload you currently have (equipment, design, production, fabrication and installation)?

Do you already have quality marketing and collateral in place to get a salesmen up and running?

Looking for experienced? Or newbie?

If new to the business, do you and your staff have time to train someone?

If the Salesperson is new to the business, do you have a list of prospective clients and a way to maximize returns on cold calling? (Dodge Report, construction leads, media outlets that report new projects, construction and real estate managers contacts)

I am used to the slightly higher end of the sign business (wayfinding, environments, projects in the 100k+ range) and as a designer and project manager role. I deal with salespersons constantly. After having discussions with quite a few, knowledgeable salesmen get 15% of the complete job (before taxes) and get transportation cost and communication reimbursed. The salesmen usually project manage the project through the entire process. Updating the client, and all the players. These guys come in with clients already in there pocket... the only problem is, they can take the clients with them too. Most of these guys bring in a min. of a million a year.

I have a few sign shop clients where they are full service. Monuments, channel letters and miles of vinyl are their specialties. One guy I recently talked to seems to be the norm around here. He started out 3 years ago. He gets travel and communication paid for, he handles only the client communication, knew nothing of the sign business prior to coming on board and started with a tiny salary (I think he said 2k a month) and gets 10% of the complete project (before taxes). He was supplied a microsite so they could track his progress, cell phone, a laptop and iPad, and brochures to hand out. I supplied him the prospective client list and ways to find local clients needing signage so that way it maximized his cold calling prospects. The guy is a nightmare to work with (he thinks he learned the business in a matter of weeks, he art directs, he attempts to understand codes and fails miserably, he does not have a full grasp of the process) but he has an excellent work ethic and is bringing in enough work to eek out a modest living. He started out stumbling at first till he understood the product, now he's getting larger apartment projects in the 50-100k range and the occasional monument and electrical sign. I estimate he's selling just shy of 4-500k a year now from the looks of the drawings I am sending out. This is Orange County, CA... You can not live on 60k here if you have a family to take care of so your percentages may differ depending on your profit margin and cost of living.

 

[ams]

I have quite a bit of experience with sales people. They can help you or ruin you. Here are some issues I ran into with different people.

1. Going out for the whole day and not coming back with any business cards, new information or anything.
2. Saying they are going to blah blah business which is 5 minutes away and coming back in two hours.
3. Chatting with other employees and talking about current jobs and not going out for new ones.
4. Would rather visit in person than to email or call customers.
5. Harassing customers and keep visiting them, etc.

I set it up at a base of $10/hour and then started at 5% commission (based off of only the sign and materials, don't give commission on permitting, trip charges, etc it will sink you)
I would do amounts like $1,000, $2,000, $3,000, $5,000, $7,500, $10,000 $15,000, etc. This way when they reach the next level they get the commission for that level. So if they sell $1,700 worth in a month, they only get $1,000 at 5% commission. Of course I raise the percentage, the more they sell. So like at $5,000 they get 5.5%, at $15,000 they get 6%, etc. It makes them want to sell more.

I highly recommend getting a vehicle gps tracker for sales people.

 

[equippaint]

I have quite a bit of experience with sales people. They can help you or ruin you. Here are some issues I ran into with different people.

1. Going out for the whole day and not coming back with any business cards, new information or anything.
2. Saying they are going to blah blah business which is 5 minutes away and coming back in two hours.
3. Chatting with other employees and talking about current jobs and not going out for new ones.
4. Would rather visit in person than to email or call customers.
5. Harassing customers and keep visiting them, etc.

I set it up at a base of $10/hour and then started at 5% commission (based off of only the sign and materials, don't give commission on permitting, trip charges, etc it will sink you)
I would do amounts like $1,000, $2,000, $3,000, $5,000, $7,500, $10,000 $15,000, etc. This way when they reach the next level they get the commission for that level. So if they sell $1,700 worth in a month, they only get $1,000 at 5% commission. Of course I raise the percentage, the more they sell. So like at $5,000 they get 5.5%, at $15,000 they get 6%, etc. It makes them want to sell more.

I highly recommend getting a vehicle gps tracker for sales people.

Sales people by nature have some free bird in them. You can gps them and treat them like an hourly employee but chances are they wont last, even the good ones that work their butts off. If you dont want them screwing off or running off with your clients id suggest a couple of things.
1. Make them use a crm program and log all of their sales calls. Set minimum standards for quanity and types of calls. Meet weekly to review
2. Break their territory into 5 quadrants -1 for each day- and stay in those bounds so theyre not aimlessly driving around. Especially if youre paying fuel.
3. You supply the cell phone and require them to use a company email. This and a crm database will minimize clients leaving with them.
4. Consider at least a non solicitation agreement or possibly a non compete (although I would not sign one and dont care to debate this here again)
5. Pay a small base and tell them on the frontside that you may have things come up outside of sales from time to time. 100% commission turns many people away, its a scary proposition for most.
Coming from another industry, Id say to pay sales on total gross revenue Business costs and your efficiency running the business is out of their control. Theres also no arguing what gross revenue was, profit is very sticky.

 

[Rick]

Sales people by nature have some free bird in them. You can gps them and treat them like an hourly employee but chances are they wont last, even the good ones that work their butts off. If you dont want them screwing off or running off with your clients id suggest a couple of things.
1. Make them use a crm program and log all of their sales calls. Set minimum standards for quanity and types of calls. Meet weekly to review
2. Break their territory into 5 quadrants -1 for each day- and stay in those bounds so theyre not aimlessly driving around. Especially if youre paying fuel.
3. You supply the cell phone and require them to use a company email. This and a crm database will minimize clients leaving with them.
4. Consider at least a non solicitation agreement or possibly a non compete (although I would not sign one and dont care to debate this here again)
5. Pay a small base and tell them on the frontside that you may have things come up outside of sales from time to time. 100% commission turns many people away, its a scary proposition for most.
Coming from another industry, Id say to pay sales on total gross revenue Business costs and your efficiency running the business is out of their control. Theres also no arguing what gross revenue was, profit is very sticky.

Trust is a big issue and making a process that allows the salesperson to do their job, while the owner is knowing whats going on is a big deal. Micromanaging would kill the process. I agree with the above. (except for having them sign a non-compete - I would never sign one either)

Personally, if I had to constantly keep an eye on someone, I probably made a poor hiring choice. A salesmen is representing you in your absence. If you do not think they could do that correctly, they should not be working for you.

In a team environment, we are all counting on each other to do our job. If I come in as a designer or salesperson, and the team or boss can't do their job correcty, my chance of making more money is at risk. I think salesmen have more to risk, the higher the commission and lower the base pay, the better the sign shop should be to support them.

Each area has a built-in system to get contacts. Construction organizations, qualify for contractors bid list, real estate organizations, chambers, business related groups, media outlets announcing store openings and construction, open bids on municipal websites. The more the sign shop has in place before hiring, the better chance the salesmen has in getting sales in right away. It takes a while to build relationships. Going after the occasional channel letter, single wrap or monument may be ok for a while, but you are hoping to get a client that also brings in larger projects and constant stream of work.

Handing a salesperson a cell phone and gas card and letting them loose is probably not going to yield good results.

 

[blufftonsignguy]

I want to thank each of you for responding. All is very helpful information. AMS your information is most beneficial to what I am looking for. I would like to hear more and from others. I understand different areas geographically things are different and different size companies. I am a small company doing under $1mil a year. I have a sales person already in place and I am just trying to see what kind of industry standards are out there in this subject.

Thank you again!!

 

[Emd2kick]

We give a draw and pay 50% of the gp. Typically I’ll give our salesman the cost and allow them to markup how they see fit. I do give guidance on sell price to help give a baseline, but if they feel they can get more for the job then go for it.

I don’t monitor there activity, because they eat what they kill.

 

[blufftonsignguy]

We give a draw and pay 50% of the gp. Typically I’ll give our salesman the cost and allow them to markup how they see fit. I do give guidance on sell price to help give a baseline, but if they feel they can get more for the job then go for it.

I don’t monitor there activity, because they eat what they kill.

I agree on not monitoring the activity. Do you pay the commission on the mover all job or just the material?

 

[Emd2kick]

I agree on not monitoring the activity. Do you pay the commission on the mover all job or just the material?

We pay commission on the entire job. So if the sales rep markups our install cost / delivery / etc that all goes towards his commission. It kind of allows the salesman to control his own micro company within mine.

 

[blufftonsignguy]

We pay commission on the entire job. So if the sales rep markups our install cost / delivery / etc that all goes towards his commission. It kind of allows the salesman to control his own micro company within mine.

Gotcha. Thank you for your input. Everyone's input has been greatly appreciated!