First note that I did not title this “how much should I compensate my sales hunters?”. What you pay will vary based upon your geography, industry, availability of quality candidates, and the experience of your hunter. This post will focus on how to structure what you pay them to gain the best performance and results.
Let’s start with why these folks are called hunters; because they like the thrill of the hunt, and the kill. Remember that if they are true hunters, then they are competitive and should be motivated that way. Set goals for them and hold them to those goals. Measure them regularly and publicly . They will love it when they are recognized for hitting their goals and try harder if they miss them. A true hunter will thrive on this. If you have a system that could show real time progress of their goal achievement, use it and display it on a screen in the office.
To set good goals you need to figure out what they want or need to make in a year. The commission they receive when achieving their goals should get them there when combined with their base salary. If their base salary is $35,000/yr and they want to make $100,000/yr they will need to earn $65,000 in commission. If they make a 10% commission, they will need to sell $650,000 of your product or service.
One mistake sales directors often make is now that they know what necessary sales are they simply divide by 12 for the monthly quota. Unfortunately if you have a new sales person you need to account for a ramp up period and you want them to get early wins because if they miss their quota too many times early in the process, they will no longer feel like it is an achievable goal. The other consideration is whether or not the business has any seasonality. If most of the new sales are made in the 1st and 3rd quarters of the year, make sure to spread the annual quota appropriately so they don’t fall too far behind and have the same problem as above or get too far ahead and get complacent just when the lull hits.
You can make your comp plan more motivating and complex with accelerators for over achieving and kickers for special types of sales that you want to promote, but the basic concept is that the plan needs to motivate the salesperson to earn their keep and reward success when achieving the desired behaviors.
Michael Giuffrida from Southington CT has been operating businesses since 1997. He is an experienced entrepreneur in business management, profitable growth, business valuation, mergers and acquisitions, and information technology managed services.