Commission only sales, the right choice?

Forewarned is Forearmed!

Many businesses have historically used the services of self employed sales teams, predominately in the B2C market, and they have worked very well, But if not approached in the right way, with the right attitude and a well thought out plan, it can just as easily end in tears.. YOURS!?

The number one mistake businesses make is in assuming that commission only sales people are just like employed ones, just paid differently. If going down the freelance route is going to work for you and your business, you need to radically rethink, and the best way to start that process is to put yourself in a freelancers shoes.?

He/she (from now on I i will use the he and his just for ease of use!) has a mortgage to pay and children to feed, just like you. They also need to provide the tools for the job, which in their case means a phone and a laptop and a decent reliable car, along with a continuing supply of petrol.??He is about to take a risk on you and your business. He is taking a leap of faith (after due diligence) that you will pay him on time and not go bust in the meantime, that you will provide the service promised to the clients/customers he finds for you, not leaving him to answer the angry after sales calls, and most of all, that there actually is a market for your products at the prices you are asking him to sell at. He may well be able to sell coal to Newcastle, but only if it’s a different sort of coal, or the service is better, or the price is cheaper.. there must be SOME advantage that he can get leverage with.?This may seem like common sense, but being in the business of providing referrals to freelancers, I would love just £1 for every time I am approached by a business expecting a miracle. If you haven’t been able to sell more than 2 widgets in 3 years, it is very unlikely even the best freelancer will be able to sell 2000 in the first week. So ....

Rule 1

Be realistic and honest. If you have found selling your product yourself difficult, or it has a long lead time, tell him so. A professional sales person will be able to tell you straight away what the problem is, and if they can find a way round it, (by discussing margins, adding value, or any other improvement to your sales strategy) they will. At the end of the day if you choose to ignore their advice, don’t be surprised if they walk within a week. It’s their phone bill, shoe leather or petrol remember.

Which leads on to Rule 2.......Learn from success stories

Learn from businesses who have successfully used self employed sales people for years. They know you have to keep your people busy, by providing leads, appointments or data to work with (depending on the type of business). Expecting a freelancer to provide all his own leads, with no data provided to get him off and earning quickly will mean you loose them very quickly.??In addition, here is a direct correlation between the length of time a freelancer will go hungry and how good he is... the better the sales person, the quicker he will leave, because the good ones are always in demand. If it’s not working with you, he will find somewhere else which will work better.

Rule 3. Pay Quickly!

The quicker you pay his commission the more loyal and hard working he will be. Pay weekly on income you have received through his sales. An employed sales person who has all his expenses paid, and who has a basic to rely on will be willing to wait to the end of the month following, or indeed to accept a quarterly bonus. A freelancer doesn’t have that luxury. They need their commission this week to put petrol in the car to see YOUR prospects, to bring in MORE sales. Hold their commission up and it will bite you, holding up your sales.

Rule 4. Motivation rules!

Sales people are a complicated breed, and freelancers the most complicated of all! They spend their lives motivating themselves, and get a group of them in one room and usually there’s a party! They are as a group the most “up”, optimistic, enthusiastic people on the planet. BUT, when the bubble bursts they can bomb with a speed known only to Newton! Think bi-polar!??To keep a freelancer motivated and on task, you need to be aware of your role in managing him. Anything you do, any process you have, any communication (or lack of it!) could affect whether you are the parachute, the soft place to land, or the trampoline which will get him bouncing back up again, this time even better than he was before and doubling his sales. Become a Sales Manager par excellence, and if you can't, hire one!

Rule 5. Remember he is NOT an employee!

Do not expect him to work under the same terms and conditions, or to have the same relationship with him as an employed sales rep.. this is worth repeating again and again. He is his own man. Whilst you can expect him to represent your business in a professional way, you do not own him or his time. He doesn't earn money by filing reports, so don’t expect him to (or at least keep them very simple and infrequent) If your business demands them, then pay him for his time to complete them

Rule 6 Train Train Train!

Give him the best product and product related sales training possible. Even if he is experienced in selling a similar product, he still needs to know yours inside out. He also needs you to tell him who to sell to (see Rule 2) If you don’t know who your potential customers are, or how to target them, don’t expect him too either.

Rule 7. Do NOT confuse marketing with sales.

What you have on your hands is a hungry sales machine, not a marketeer. Sales mops up where marketing leaves off. He needs you to provide him with the marketing tools, presenters (and pitch) , leaflets, business cards and back office support. Give him that up front support and then you can watch him fly (I repeat, do not expect miracles!)

Rule 8. Think of recruitment as ongoing.

Freelancers rarely stick around long. They can be the “ladies of the night” of the sales world.. off to ply their trade with a better beau at the drop of a hat. If you factor this in at the beginning of your journey, much frustration and disappointment will be avoided!. Take the attitude of “Well it was great while it lasted” and be prepared to move on too!

Rule 9 Always recruit more freelancers than you think you need.

The drop off within the first month of contracting with a freelancer is very high. The reason is simple. Just as you aren’t needing to commit to them long term, so they aren’t needing to commit to you.??Many businesses offer a freelance sales job to someone they aren’t 100% sure about, on the basis of “Oh well, it doesn’t cost us anything to give him ago...” (not true, but that’s another article!) the same is true for the freelancer! Many times they will accept a role during a “resting” period despite reservations as to whether it’s right for them. “Something is better than nothing” or “Well, I’ll give it a go and see”... and then very quickly they realize it isn’t for them and move on.. sometimes as quickly as at the end of their training...

And the golden rule, Rule 10. Budget for Success.

If you think the word freelancer, when written in front of the word “sales” means you can enjoy the benefits of having a highly skilled experienced sales professional pulling in the punters for you and making you wealthy all for FREE, then you really do need need therapy (which, coincidentally, Physis can also help with!)

There are 3 main areas to budget for, recruitment, training and management costs. My next blog will look at these costs in detail.?

Remember “free” means, not “tied”, not “no cost”! You are not tied to them, and they are not tied to you in any traditional sense. But set it up right, treat your freelancers with respect, and as equals, be prepared to go the extra mile for them when necessary, and you could find the perfect partner for your business, who stays with you for many many years, helping your business flourish.??

Liz Sparkes
?Physis Consulting