# Salesperson percentage & Marketing plan?



## ironhead (Dec 28, 2005)

Hi, I would like to hear some input on a marketing strategy that I'm thinking of putting forth.

My partner and I are in the screenprinting business part time (5 months now). We have been fairly succesful getting some orders and such, but as everybody does, we'd like to get even more accounts. We both have other fulltime day jobs but would like to make screen printing become a regular job instead.

It's hard to promote ourselves on a regular basis because we are so busy during the day with work. However we have this friend that is a real good (people person), and we are thinking to ask him if he would like to become a sales person for us. He has much more free time on his hands than we do.

Our plan is to give our buddy his own business cards and he would go around on his own time and try and sell 10 shirts on consignment to local places that get everyday customer traffic (night clubs and etc..) 
Me and my partner front the cost and labor for 10 shirts and when the local business sells out we make them buy a larger quantity with no more consignment deals.
I like the consignment deal upfront because it would make the customer less worried to buy, I think, and 10 shirts would sell quickly we think.

We'd like to pay our buddy a commision on the sales he makes.
What we wonder is, How much of a % should we pay him? Does 10% sound reasonable for each new account he finds? (Ex. Sell 10 shirts for 100.00, he makes 10 bucks.)
Also should we be required to keep paying him a percentage on re-orders from the same account that he initially found us for each time that they order more shirts. Even if they go straight threw me and my partner next time?

Any thoughts or advice is appreciated
Thanks


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## binsky5 (Mar 23, 2007)

From being in sales for years if you want a long term relationship with this person then anything that comes from an account he opens up he should continue getting paid on. It will not be in his interest to open an account for 10% unless he gets to contine earning from that account. The plus to you is that he will continue to maintain a relationship with that client and bring new things to them. It really is more win win that way. You want him to have the potential to make a lot of money as well. More money means more selling at all ends.


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## ironhead (Dec 28, 2005)

That makes much sense. Thank you.

Any input on what a fair percentage may be to the sales person involved?


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## htt117 (Aug 31, 2006)

I agree that you want to keep the salesperson in contact with existing customers that they have developed and keep locating new customers at the same time. In one of my careers, I sold industrial chemicals. Our commission system had tiers. There was a rate of 10% for new orders and reorders for a six month period. The rate dropped to 5% after that and 1% after three years. Orders for new or different products at one of the existing customer plants were treated as new orders. This kept the sales staff interested in devloping new products with their customers.

The key is to make the compensation plan act as an incentive for exactly what you are trying to achieve. For example, if volume is your goal, base the commission on the total value of the sale. If increasing margin by upselling to key products is your goal, then base the commission on margin not total sales amount. The sales staff then has more incentive to move toward higher margin products with the customer.

It's a good plan, just tweak it to match what you want.

You may also want to consider a non-compete agreement with your salesperson. If they get good, they (and your customer list) will be recruited by your competitors.

Jim


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## Rodney (Nov 3, 2004)

ironhead said:


> That makes much sense. Thank you.
> 
> Any input on what a fair percentage may be to the sales person involved?


While you're waiting for answers in this thread, if you check out the search, there have been some recent topics with some percentages shared. I think if you search the forums for sales rep, you should find some good info.


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## htt117 (Aug 31, 2006)

If your margin is 50% then every dollar of sales should give you $0.50 in incremental margin. At 12.5% commission on total sales, you are paying 25 cents for every dollar of incremental margin. I'd pay someone a quarter to bring me a dollar as often as he can do it.

Jim


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