Sales Compensation: What Is The Definition Of A Sale? by Alan Rigg

I recently received the following question from a website visitor:

"I have a question about the definition of 'a sale.' I would like to hire an outside, non-exclusive salesman that works on an 8% commission. I now need to determine what constitutes 'a sale' for the job description. How do I go about this? Does it mean he got me in the door and I have to do the rest, or does it mean he has to do all of the work and close the deal? If my outside salesperson gets in the door of a prospective customer, performs the initial sales pitch to capture their interest, but then the rest falls on me to close the deal, who's 'sale' is it? I see this being a very gray area and would appreciate some assistance."

Here is how I responded to this question:

When a salesperson is new to working with a company, it is common for them to have to rely on expert resources to help them manage sales cycles and close sales. In this scenario it is common for the salesperson to receive full credit for the sale, regardless of the fact that they are receiving assistance.

Of course, the goal over time is for the salesperson to become increasingly self-sufficient, at least from the standpoint of dealing with the "business" aspects of managing the sales cycle. Personally I don't care whether salespeople ever learn all of the technical details of their products and services. I'd rather have them focus on becoming experts at the things that only salespeople do: finding and qualifying opportunities, managing sales cycles, managing expert resources, and closing sales.

Your situation is different because it sounds like you are looking for a non-exclusive salesperson who is willing to work for 100% commission. I don't usually recommend 100% commission compensation plans for the reasons that are outlined on the following website page:

http://www.8020sales.com/sales_compensation.html

With that said, if you are going to look for a non-exclusive, 100% commission salesperson, it would be worth your while to look into manufacturer's representative firms. To find these firms, go to your favorite search engine and type in the phrase, "manufacturers representative association". This search will bring up some association websites that provide some pretty useful tools for searching for manufacturer's rep firms based upon criteria such as geography, types of products and services they sell, etc.

You can also consider paying different commission percentages based upon how much of the sales cycle the salesperson manages. For example, if they get you in front of a good prospect, they might get 2%. If they qualify the opportunity and manage the sales cycle and only use you as an expert resource, they might get 5%. If they perform the entire sales process all by themselves, they might get 8%. Just some food for thought.

©2009 Alan Rigg

About the Author

Sales performance expert Alan Rigg is the author of How to Beat the 80/20 Rule in Sales Team Performance, and the companion book, How to Beat the 80/20 Rule in Selling. His 80/20 Selling System™ helps business owners, executives and managers end the frustration of 80/20 sales team performance, where 20% of salespeople produce 80% of sales. For more FREE sales compensation information, visit http://www.8020sales.com/sales_compensation.html.

NOTE: You are welcome to reprint this article as long as it remains complete and unaltered (including the "About the Author" information at the end), and you send a copy of your reprint to

alanrigg@8020sales.com .