Sales guys: Need advice

[motion]

I've spent the last 6 months working on an internet site that offers specialty website templates for residential property managers (www.pointwide.com). Its to the point now where I have customers, the bugs have been worked out, and I'm ready to start with a sales effort. I've been relying on postcard mailings to this point.

So, I'd like to hire a salesperson to do telephone sales. I will provide a database of telephone numbers and a VOIP telephone. They will work out of their home.

Questions: What is a reasonable base pay? Would it be a draw or salary? Recoverable or non-recoverable? (I have no idea what those mean). If my product is sold for $49 per month with a 12 month contract ($600 gross, over 12 months), what would a reasonable commission be? I'm guessing that a decent salesperson would expect to make $4k-$5k a month? Would the person be an employee with tax withholding, or can they be 1099?

Any and all comments and insight appreciated! This is new stuff for me and I want to go into it with open eyes.

[Rikao4]

Cannot help with your ?..but , I think you just made a sale.
Rika

[motion]

??? Are you a realtor, Rika?

[Rikao4]

PM in your mail slot
Rika

[Sonic dB]

Hey motion... nice site...you know that Im in this business now too and I have considered setting up a similar situation for clients in another industry. However I have not done this because I want the clients to have to pay me $thousands of dollars to do a customized-website...

So, if you dont mind... my question for you is: Did you create this specifically for this realtor market because they are less likely to spend money on a customized website, and therefore they want the cheapest cost solution with reasonably good results.

I mean, your templates will certainly be fine for them...but is this fine for you to get such low $ out of the deal?

Anyway...on to your questions:

Questions: What is a reasonable base pay?

For phone sales of this type, Id pay hourly to equal out a base of perhaps $14-16 per hour + bonus for every sale that they land.

Would it be a draw or salary?

Draw kind of sucks at this level of inside sales. Sucks for the rep. The reason is that anyone who would be doing this type of sales, typically would either be new in sales, or a retiree looking to earn some extra money to live on. Giving them at least an hourly rate or small salary can be a real incentive for them to stay on board with you, because they would be confident in that they will always be earning "something" and therefore can budget their lives and expenses accordignly. If you gave some recent college grad $14 per hour, for example... he/she could equate that out to a starting salary of $29120 based on a 40 hour work week.

Id keep it hourly, not salary because at this level of inside sales... you want to keep them motivated to work + there may not be enough work to do to keep them busy for 40 hours (no one wants to be in phone sales for 40 solid hours per week trust me!)...but maybe they could do some other work for you to fill the time and do 30 hours on the phone and 10 doing something else.
Anyway, Id keep it hourly + a % based bonus.

Since they will be working from home, hourly rate and also work habits will be essential to track. Consider tracking them by the number of calls and time of calls made. You should be up front with them about this....they get to work from home, which is nice...but they are expected to actually work and you will be tracking them.

People that work from home, tend to sluff off alot.


Recoverable or non-recoverable?

Non recoverable.

If my product is sold for $49 per month with a 12 month contract ($600 gross, over 12 months), what would a reasonable commission be?

I think your prices are a bit too low....Id charge at least $75-99 per month for this type of service. Dont cheapen the product or cheapen your value of service for that amount. Keep your prices higher and your customers would respect you more as well. $75-99 is certainly reasonable for website and hosting services done professionally each month.

Aside from that, 8-10% of the gross of each sale is sort of a standard sales commission for any industry. This would be fair, if you are providing a reasonable hourly or salary rate. However I think you should pay slightly hire %, maybe up to 15%.

So, for example, you are going to pay a rep 15%, and the government 35% in taxes, therefore I think the gross needs to be higher, just my opinion.

I'm guessing that a decent salesperson would expect to make $4k-$5k a month?

Sure, people would love that, particularly inside sales people. A person would need $45K salary to live on in So Cal. $4k per month would be a reasonable goal for a gross sales income for inside sales.

Would the person be an employee with tax withholding, or can they be 1099?

Employee tax withholding...it has to be that way.

Forgive me for interjecting my opinion on your pricing. But if you are going to hire a rep, then they need to be higher, imo.

[einreb]

Originally posted by Sonic dB
However I have not done this because I want the clients to have to pay me $thousands of dollars to do a customized-website...

I mean, your templates will certainly be fine for them...but is this fine for you to get such low $ out of the deal?

Motion is selling widgets with very little overhead. You are selling a limited number of your hours.

I'd also suggest looking into promoting some form of affiliate sales program.

[Vipergrün]

Nice site Richard! I did notice that the sample tenant application is not https, which could be an issue with all of that personal info, just a thought. I also think your montly rates are low, unless you do a base per month + listing fee per listing or something. As far as paying a sales person, base + commission so they are motived to perform. You'll know quicky if they are doing their job and the commissions should be based on done deals, not per call. Finally, you've got one side of the equation, getting listings for properties. How will you drive potential renters to your site?

[motion]

Sonic DB, excellent info. Thank you, sir!!! This is very helpful.

I initially tried $79 per month, but some test marketing showed me that it was too much. While I agree that it is still a small price for the value, I've met with better success at $49 per month. Perhaps I can look into upgrade features in the future (ala carte) to increase the monthly fees for some.

I'm looking for long-term reocurring revenue, as opposed to building one-off, custom websites. I'm getting out of that game Getting lazy, I guess. I had built a property management website for my own purposes, then realized how much value it held for others and decided to market it. I think its a great idea and hope it will gain a lot of traction in the future. Hoping so, anyway.

OK, for pay structure, here's what I'm thinking:

$1,000 per month base pay
$60 commission per sale (10%) - 2 sales per day works out to $2,400 per month
So, that's $3,400 per month for 2 sales per day, or $4,600 per month for 3 sales per day.

Regarding the employee/independent contractor issue, I think I can get by with 1099s. Check this out: http://www.entrepreneur.com/humanresources/hiring/article29988.html Sure would relieve a lot of the overhead burden from me.

Since the person will be working from their home, I really need them to do ONLY sales for me. Perhaps they can also be working on selling other companie's products to add a little variety. I'm looking here at a VOIP solution that I think offers online reporting of call activity, so I can track the calls to make sure they're happening: http://www.simplesignal.com

[motion]

Originally posted by bb80sc
Nice site Richard! I did notice that the sample tenant application is not https, which could be an issue with all of that personal info, just a thought. I also think your montly rates are low, unless you do a base per month + listing fee per listing or something. As far as paying a sales person, base + commission so they are motived to perform. You'll know quicky if they are doing their job and the commissions should be based on done deals, not per call. Finally, you've got one side of the equation, getting listings for properties. How will you drive potential renters to your site?

Brad,

Thanks for the input. Realtors are pros at driving traffic to their websites. Most rely on sign advertising, local newspapers, rentclicks.com, craigslist, etc. Is that what you were referring to?

[Sonic dB]

Hi Richard,

I initially tried $79 per month, but some test marketing showed me that it was too much. While I agree that it is still a small price for the value, I've met with better success at $49 per month. Perhaps I can look into upgrade features in the future (ala carte) to increase the monthly fees for some.

Oh, I understand now... also you may be able to pick up residual marketing business such as more comprehensive websites, brochures, logo designs, dvds etc. via establishing an entry level relationship with these clients??

* you mentioned that you are getting out of that, but if you get any referrals that you dont want to handle....send them to me and I will take care of the larger stuff and throw you a commission for the referral. Seriously though, I dont want to tread on your turf but my guys are really top notch so anyone who wants to go deeper than you want to, send me a PM and we will make an financial arrangement if you want to

** Regarding your pay arrangement.... I think that sounds pretty good + it motivates the employee to go for that sale.

*** Regarding 1099s... I spoke to my accountant about this and she felt that anything that is regular payroll stuff should be handled with W2s. Thats just her take on the situations, but if you can get away with setting the employeee up as a contractor then go for it....! (maybe check with your accountant too though)

****Regarding VOIP, I use something called www.voipyourlife.com Their prices are decent but the customer service is very good. The owner of the company even called me.

One thing to note, my call quality on VOIP is good but the problem is that the upload speed on my current Cable Modem line is pretty slow, which sometimes results in some feedback or echo problems.

My Cable provider recently switched to Time Warner, who has Road Runner service which is supposed to correct this.

So, the VOIP is also at the mercy of the internet providers speed... overall though, Im pretty pleased with Voip Your Life...

[Rick Lee]

I can offer a few ideas on what NOT to do. My last job, while it had TONS of perks, paid a base salary and then 15% of the revenue I brought in ABOVE my set quota. I always doubled or tripled it, but the problem was that the quota went up every January, while the commission cut stayed the same 15% as did my base salary. So each year I had to bring in about 30% more revenue than the last just to make the same amount of money I made that last year. It drove me nuts, though I always managed to outpace it and did well. But in theory it really bothered me.

Current job pays $1000 a month salary, $500 expense account and 40 bps. on the loan amounts I close each month. Relatively speaking, it's been a short ramp-up period and I'll be making bank this month. But I've had a lot of help from my boss, who's one of my best friends. In any other sales job, the ramp-up period usually sucks big time. If you can make your employee's ramp-up a little easier or more lucrative, AND you have the right guy, he'll be a good worker for you.

[JeremyD]

Nice website - is that lili on the pricing page? and 1099 is much easier with sales folks - do something to eliminate the monthly - call it a draw and it makes it even easier to 1099.

[M.D. Holloway]

Phone sales are about as tough as you can get - low overhead but very low closure rate. On a good run maybe 4%. The only thing less is catalogue sales.

What I think your question really refers to is compensation. Avoid salary for a rep at all costs. Look to straight commission rates. Salary reps do not work. Trust me. I have done it for 20+ years in many capacities - full commission is the only way to fly and get any sort of profitability.

That being said, your channel to market is gonna be tight with phone sales. You may want to think in turns of another angle.

I can fill a room with 100% qualified buyers, teach them something and walk out with a case full of orders and repeat business. The cool thing is it isn't like the kitsch pitch that the multi-level market airplanes fly, it is actually built on a very time tested approach combining credibility marketing practices with consultive selling principles.

The concept works well – PM me if your interested.

[M.D. Holloway]

I looked at your site - very well done. You may noy know it but you already have a boat load of reps at your disposal.

Your client is apartment complexes. Think dude, think! Who calls on those one a daily basis? Who calls on the property manger that is a DM/QB? Without giving you the answer right off...that is the person that will sell for you - face to face with a demo on their desktop. They already have the realtionship established (which is the key my friend).

That is your vehicle to sales. They are pitching other stuff why not yours? Most independent reps (sales agents) make 15% to 30% commission depending on the line. Contracts are a cash cow for reps. They only have to renew and not re-close.

make room for some more Italian steel cuz daddy gonna be swim'n in da loot!

[competentone]

Nice site, though I would suggest you might make the sales pitch from the nice lady a click-able link -- I was bombarded with her speech ever time I hit the back button to look at another page off the main page.

You might want to explore not just marketing to "property managers," but real estate agents generally -- everyone in the business I know handles both sales and rentals. Some of the larger real estate agents have their own employees who handle rentals.

There is a huge "vacuum" of quality when it comes to real estate agents' websites -- or at least that is my reaction to most of them, but some of that may be from the agent's behavior and not from any template they may be using with their online marketing efforts. (I can't get over things like multi-million dollar properties being listed online with only one or two poor quality photos!)

Don't the multiple listings services and major franchising firms already have a pretty good lock on the business of providing "website solutions" for individual agents/property managers? Are you competing with or providing additional online "web presence" to the existing business? Or is your focus on reaching the smaller independent agents currently without a web presence? Is your focus strictly on the retail market or do you offer solutions to the commercial property managers?

As for marketing your product/service, do you really need to be giving a sales person a cut? How effective is your website in doing the "selling"? Are you going to find that you need more of an "order taker" or an extra "tech support" person rather than a sales person if your website itself is strong enough on its "selling"?

I guess I have more questions than comments, though the two can be pretty connected.

Good luck with the venture.

[Paul_Heery]

Richard,

I'll add my 2 cents in response to your question about compensation for sales. Keep it simple and pay only a commission on a 1099 basis.

The reason that I say this is that in my experience in selling to the real estate market (mostly agents, not property managers), is that they are an easy touch. Your price point, which seems to be right on, is something that any competent salesperson should be able to use to convince a prospect that it would be a "no brainer" for them to sign up. The right salesperson, with the right prospect list, should probably be closing 6 to 10 of these packages a day after they have had the opportunity to polish their pitch.

In response to competentone's comment above about your website doing the selling, I strongly disagree. You need to go outbound and actively engage your prospects. My experience is that people in the real estate market will always answer the phone when it rings.

I don't know what you have in mind, or in place, to support your customer base, but that is going to be key. Your customers will need some hand-holding. Make sure they can always reach someone.

[competentone]

Originally posted by Paul_Heery

In response to competentone's comment above about your website doing the selling, I strongly disagree. You need to go outbound and actively engage your prospects. My experience is that people in the real estate market will always answer the phone when it rings.

There will be a certain number of "early adapters" who may respond to the sales pitch from the website itself. You will be effectively "giving away" the commission on these "easy" sales if you turn over all selling too early to a sales person.

Additionally, if your sales out-pace your abilities to provide the service and tech. support associated with it, it could affect your long-term business negatively.

My comment about your website doing the "selling" isn't meant to imply that a sales person wouldn't be more effective, I just mean to raise the question about what is really needed at this point in your business development. If you can grow to a certain level by marketing just through the web site, then growth levels off, that might be the time you look to partner with a sales professional.

[motion]

Originally posted by LubeMaster77
Phone sales are about as tough as you can get - low overhead but very low closure rate. On a good run maybe 4%. The only thing less is catalogue sales.

What I think your question really refers to is compensation. Avoid salary for a rep at all costs. Look to straight commission rates. Salary reps do not work. Trust me. I have done it for 20+ years in many capacities - full commission is the only way to fly and get any sort of profitability.

That being said, your channel to market is gonna be tight with phone sales. You may want to think in turns of another angle.

I can fill a room with 100% qualified buyers, teach them something and walk out with a case full of orders and repeat business. The cool thing is it isn't like the kitsch pitch that the multi-level market airplanes fly, it is actually built on a very time tested approach combining credibility marketing practices with consultive selling principles.

The concept works well – PM me if your interested.

Lube,

Yes, I know straight-commission sales will be tough. I'd imagine that I'm going to have a hard time getting someone to last more than a couple of days if things aren't going their way...

Are you talking about seminars? I think that would be a good idea if I was getting $5k or $10k a sale... but $600? Seems like a lot of time and expense to get 20 people to show up, pay for lunch, refreshments, room, etc. and have only a few of them sign up. If not, enlighten me!!

Jeremy, yes Lili pops up all over the website.

[motion]

Originally posted by LubeMaster77
I looked at your site - very well done. You may noy know it but you already have a boat load of reps at your disposal.

Your client is apartment complexes. Think dude, think! Who calls on those one a daily basis? Who calls on the property manger that is a DM/QB? Without giving you the answer right off...that is the person that will sell for you - face to face with a demo on their desktop. They already have the realtionship established (which is the key my friend).

That is your vehicle to sales. They are pitching other stuff why not yours? Most independent reps (sales agents) make 15% to 30% commission depending on the line. Contracts are a cash cow for reps. They only have to renew and not re-close.

make room for some more Italian steel cuz daddy gonna be swim'n in da loot!

Hehe.... you make it sound so easy. OK, who calls on property managers on a daily basis? I have no idea, sorry. Plumbers???

[motion]

Originally posted by competentone
Nice site, though I would suggest you might make the sales pitch from the nice lady a click-able link -- I was bombarded with her speech ever time I hit the back button to look at another page off the main page.

You might want to explore not just marketing to "property managers," but real estate agents generally -- everyone in the business I know handles both sales and rentals. Some of the larger real estate agents have their own employees who handle rentals.

There is a huge "vacuum" of quality when it comes to real estate agents' websites -- or at least that is my reaction to most of them, but some of that may be from the agent's behavior and not from any template they may be using with their online marketing efforts. (I can't get over things like multi-million dollar properties being listed online with only one or two poor quality photos!)

Don't the multiple listings services and major franchising firms already have a pretty good lock on the business of providing "website solutions" for individual agents/property managers? Are you competing with or providing additional online "web presence" to the existing business? Or is your focus on reaching the smaller independent agents currently without a web presence? Is your focus strictly on the retail market or do you offer solutions to the commercial property managers?

As for marketing your product/service, do you really need to be giving a sales person a cut? How effective is your website in doing the "selling"? Are you going to find that you need more of an "order taker" or an extra "tech support" person rather than a sales person if your website itself is strong enough on its "selling"?

I guess I have more questions than comments, though the two can be pretty connected.

Good luck with the venture.

I'm definitely marketing to realtors, although they do have access to many companies that provide good-quality, affordable realtor websites. Tons of offerings out there. The property management offerings are very thin, that's why I'm going after that segment. My focus is PMs both with and without websites. If they do have a website, chances are its pretty much crap and home-grown.

The website isn't really doing much of a job selling on its own, due to the challenges of getting traffic to the site. "property management website templates" isn't a very popular search term on Google Yes, I can count on slow, incremental growth, but I really want to get the operation jump-started with a sales effort.

Thanks for the comments and questions... keep them coming. Really valuable.