Question

Topic: Other

Shared Territory And Sales Commisison Structures

Posted by Anonymous on 11/6/2009 at 12:40 PM ET 250 Points
I need advice on how to structure a commission model to compensated my salespeople. This is all about splitting commissions and mixed territories.

My company 'leases' employees to clients with job sites through out my state. I have sales offices statewide. My salespeople contact clients both new and established, take orders, fill orders and provide customer service. The commission model needs to provide for shared commissions if the order taker and the order filler are different salespeople. An example: sales person from the office in Capitol City contacts one of his established clients for a local job site order. He can fill this order at 100% commission. BUT the client also needs an order filled at his Bay City location. How would the Bay City salesperson who will fill and service the account split the commission with the Capitol City salesperson who took the order?
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RESPONSES

  • Posted on 11/6/2009 at 4:10 PM Accepted
    You probably need to split the commission based on the amount of value you attach to the sales function and the fulfillment function. If, say, the sales function is worth 25% of the total sales revenue, and the fulfillment function is worth 15% of the total function, then the commission should be split in that proportion.

    The challenge will be in quantifying those amounts. Do you have any sense of what your salespeople would find fair? Would it be possible to ask them each to come up with their idea of a fair split, then structure a commission split based on their collective input? They might actually appreciate someone asking this ... as they each have potential to be on both ends of a split, and they will be able to reflect on how THEY value the two components.
  • Posted by michael on 11/6/2009 at 5:54 PM Accepted
    Ah...the age old question. To sell or to service. Who is more valuable? And, should I service YOUR account with my limited supplies or save in case MY account needs it?

    I like the idea of service being PART of the sale. So, I service your accounts for free and you service mine for free. It creates a better team.

    Michael
  • Posted by telemoxie on 11/7/2009 at 9:48 AM Accepted
    this sounds similar to real estate sales, where one person receives a commission for a listing, and a separate commission is paid (sometimes if the same person, sometimes not) to the person who sells the house. Years ago, I believe the standard was a 3% commission for the listing agent and a 3% commission for the selling agent, but you could certainly establish different percentages for each function as described above.
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