What commission rate do you pay your reps?

[carvan]

We have been growing our company mostly online and sales have tripled last few months. We are being approached by customers and non-customers to sell our products. Some are even asking to become partners but we are not considering that at moment. This is our first time creating sales team and we are reaching out to those who currently pay commissions or have worked for health beauty company and received commissions.

My father was in business and what they would do is offer a higher commission rate to reps on new customers initial purchase. After that they would go to fixed commission rate unless they were big performer and thus get higher commission rate.

for example:
Rep would get 30% commission on new customer first order. After that initial purchase, the rep would get 15% commission. The rep could max out at 25% if he was top sales performer.

thoughts?

 

[Marilyna]

I used to use sales representatives to sell my products.
My structure was this:

For orders under $100 retail, my rep would get 30%.
For orders over $100, the rep would get 40%.
They also got 10% of the retail price of orders generated by their recruits.
I didn't reduce their commissions on subsequent orders.

If they found a wholesale client, they got 15% of the wholesale price.

I wanted to keep it simple, otherwise it would have been too hard for me to keep up with. And it was plenty hard anyway!


I would give gifts of products to the rep who sold the most and the rep who recruited the most each month.

We had our own Yahoogroup and I would do surprise freebies (samples or products). It was a lot of fun and the freebies generated lots of sales, plus the reps would rave about the products on the group, thus making the other reps want to order.

 

[carvan]

thanks Marilyna,
You must have had fairly expensive items to offer 40% commissions. That number would be difficult for us. We are going to take two approaches and see which works better for us. We are hiring social media administrator part time and will pay sales reps. With growth of ecommerce I will not be surprised if Social Media Administrator is better bang for the buck at fraction of cost we would pay to reps. I enjoy the testing part of marketing efforts. Thanks again for sharing your information.

 

[Trxflyer]

Hi Carvan,

We are also in the beginning stages of searching for a social media administrator. I was wondering where you were concentrating your search, we are reviewing contractors through oDesk currently.

Thanks

 

[Marilyna]

Yes, it's difficult to pay that much and you need to price high to afford it. I aimed for my net price to be about what wholesale would be after paying all commissions.

Unfortunately, I wasn't in business long enough to know for sure if this model would be profitable enough. I had to close after about a year due to personal reasons.


I did like it because I could do everything from home on my computer. And it worked well since I had small children.

I'm not sure if this is the same type of rep program that you're considering. I've heard of companies paying sales reps to go to stores and sell their products on a wholesale basis and I believe they pay them about 15%. Mine was mostly just reps selling retail to their friends and families. Kind of like Avon.

 

[carvan]

TRXFLYER,
We simply posted ad on craigslist. We received over 30 responses and to filter it down we posted links to all of our social media sites and asked each of them what three things they would change to improve it. We got some really good ideas and one particular person stood out. Turns out she had her own business last year but husband became ill and she couldn't continue. We snatched her up quickly and we are really excited about her and hope she can stay with us thru growth period - which is always the most exciting part.

 

[Trxflyer]

TRXFLYER,
We simply posted ad on craigslist. We received over 30 responses and to filter it down we posted links to all of our social media sites and asked each of them what three things they would change to improve it. We got some really good ideas and one particular person stood out. Turns out she had her own business last year but husband became ill and she couldn't continue. We snatched her up quickly and we are really excited about her and hope she can stay with us thru growth period - which is always the most exciting part.

I like your approach. Thanks for the feedback & best of luck!

 

[shunt2011]

Carvan,

I am just curious if you had to have your products tested ect in order to sell them as acne products and skin whitening products. That too would help with your selling and having reps sell more too as most of us aren't able to make any claims on our products as they haven't been tested and approved by the FDA.