Commercial Sales- Pay Plan

[Shane Deubell]

Yeah, EVERY market is hard.

But it is definitely challenging for these guys that live in small towns.
In a metro area we just have many more options.

 

[Steve Toburen]

But it is definitely challenging for these guys that live in small towns.
In a metro area we just have many more options.

Agreed. However, even though he may not admit it I think Richard is in the "sweet spot". Topeka is big enough to provide "Critical Mass" (well over 100,000 people and the State capital to boot) but small enough to dominate the market.

Steve

PS You want tough? Try running four TM's and 16 employees in a total market base of 30,000 people! (I wouldn't want to do it again.)

 

[Desk Jockey]

You're right just big enough without being too big but we have a Servicemaster, Servpro, Paul Davis, Rainbow plus all the smaller guys and then KC is just 50-miniutes down the interstate where are all the heavy hitters are.

We survive by fighting harder for work than they do. Because they are vendors they get it spoon fed, while we have to hunt it down. I agree with Shane, its hard in every market.

 

[Shane Deubell]

Its a different era steve.

For the commercial market, just the 3 janitorial franchises have 600 franchisees here. ALL of them are trying to sell carpet/tile cleaning.
Add in 1000 independents and 200 carpet cleaners, plus all the prison guards, firefighters and cops that need side work.

Its become ridiculous, truly.

Not complaining BTW, it just is.

 

[Chet]

Just so you know we have had our salesperson for almost 2 years now. We have been in business for 29 years and have an outstanding reputation in the residential market. We always did commercial cleaning but never went after it with any real commitment.
So about 1 1/2 years ago we put our Marketing Director full time toward increasing commercial business. We kept his salary the same and his bonus was the same percentage of net profit of all sales.
We increased sales last year commercially from a pitiful $89,000 in 2013 to $154,000 in 2014. The years prior 2013 hovered around 80,000. While this is good growth nearly 100%, I feel an old business like ours with the foundation and reputation we have that a full time salesperson should generate more of an impact than this. I paid $55,000 In salary plus expenses and only increased sales by $65,000. So we are loosing a ton of money going after this market, and I think I have the wrong person selling, but either way I need a compensation package that will help draw the right person and compensate them properly when they are successful.
I may be wrong, but by now I think we should have been seeing much better results from this investment. I do know it takes time for commercial to get going with contract repeat business but I think a change needs to come.

 

[Desk Jockey]

I may be wrong, but by now I think we should have been seeing much better results from this investment. I do know it takes time for commercial to get going with contract repeat business but I think a change needs to come.

Years ago when I was complaining to Ken Snow about my poor results, he told me I needed someone hungry. Someone that would be driven by the money he was making on commission.

I've never been able to find that person and I think Shane and Tom have hit it on the head for us anyway. We can't afford that person.

 

[Lee Stockwell]

Commercial and Residential are not two separate universes.

We are in a relationship business. Low bidder doesn't always win.

I would start by asking my residential customers where they work, who cleans there, and who the gatekeeper may be.
Already having a good reputation and relationship in cleaning in their homes has opened up previously invisible commercial work.

It also works, but differently, for the flip side of that.

 

[Steve Toburen]

Losing money going after the market, Chet? Absolutely.

Wrong person? Maybe. I'm late to an appointment right now but let me ask you: "Do you (or someone else) go over their results for the week every Friday? Do they fill out a sales route sheet for each day listing the sales calls they have made, the result and the next step needed?"

Then on Monday, "Do you meet with your salesperson and review their projected sales calls for the week ahead, make suggestions and changes as required along with add your goals and stops to be made?"

Yes, this stuff IS "management intensive". But once again, all salespeople need constant direction, support, guidance and accountability. (Management.) Frankly, if you find someone who is TOTALLY self-motivated and self-managed we call this person your "future competition"!

Gotta run- will check in on the combined wisdom of this board later.

Steve

PS Before you let your salesperson go, Chet, (and go through the agony and expense of hiring someone else who may be even worse!) I would sure try to holding your current person's "feet to the fire" and stepping up your sales management efforts. (Or you may have already done this.) Chet, Chuck Violand has released a bunch of new sales management forms to our SFS program. Drop me a line to stevet@jondon.com and I'll send them to you.

 

[bensurdi]

You're gonna want to establish a lower base salary of 30-40K per year. Any sales job needs to be commission focused. Do 5% of all contracts he signs and 2.5% on one off work he sells. The commercial contracts pay him residual on the monthly payments that come in so he is motivated to build his book of business up. There is no cap on this type of pay scale for him so if he's good... which he better be. He can make some good money doing this.

 

[Desk Jockey]

We considered $20K base and 15% of sold and 5% of those maintained. It would offer huge potential (provided your market is large enough) for someone that can sell.

However I'm afraid someone that can't close or hates rejection would be canned or starve.

 

[Lee Stockwell]

Do you know of a car or real estate salesperson who gets a $20k or $40k base pay?

 

[TomKing]

Everyone keeps talking about what the person is going to make.

So lets start there. Hungry guy that can be a rain maker $100,000 plus your side of insurance and taxes $120,000 for a top sales person.

Lets say you are going to try and keep this person cost to 15% of your billing there sales must be $800,000 annual.
$800,000 minus the $120,000 cost of your sales person gives you $680,000
Labor costs to do the work fully loaded at 40% $320,000 now you have $360,000
Cost of doing business 20% $160,000 now you have $200,000 This is your 20% profit you need to make you company more attractive to a buyer.
$200,000

We all know murphy will enter in $800,000 worth of work is 3-5 trucks depending on your model. Who knows that number we will loose.

Can you manage that much growth? Can you staff it? Is your area big enough to sell that much work?

If all your looking for is $200,000 their are a lot better ways to get $800,000. That number is larger than most guys on this board. Are you larger than this?

What percentage of growth would that be for you?

Water, Rugs, a permanent protector, deck refinishing, stone would a be a quicker way to get $200k without that Rock star salesman.

What makes commercial look good for a prospective buyer is the regular monthly billing.

If you are 3-5 truck you could build about $15-20k in monthly sales.

I will tell you your one problem if you figure out the numbers. Staffing it is hard to keep 2 guys who want to work nights and even harder to get people to swing shifts to accommodate your goals. I have friends who manage big ships and they work off of volunteer and kickers to the pay. If you are 3-5 trucks everyone will have to help regardless and everyone will not like it.

Maybe if its not broke you shouldn't fix it.

One last question? Do you currently take more than $150k so some one could buy your business take $100k per year and pay you $50 for the next 5-7 years. Can your business currently run for a month without you there? Is your business systematized is it in your head or on paper?

If both of those answers are not yes you don't have much to sell?

Not really asking for the original poster to feel obligated to have answer or defend these ? on a public forum just thoughts I have for others to consider.

Good luck running a business is hard. If it where easy everyone would do it.

 

[Desk Jockey]

Damn, unpack the bags.

There really isn't money on the ground over there waiting to be picked up.

 

[Lee Stockwell]

Trying to make the tail wag the dog.

 

[Lee Stockwell]

I remember, perhaps Bill Yeadon does too, one time Bane had a hot-shot young saleman featured at a convention and school session. Didn't last but a few months. I felt sorry for him, I saw how it was going to end there...

 

[Shane Deubell]

Chet the base seems too high to me.
He makes $50k a year doing nothing basically. Not enough incentive to haul a$$

The base is to cover marketing tasks, making cold calls and managing the database.
You want this guy to be collecting information as he is meeting people. Names, emails, sqr ft, materials, employee size, industry.

Waste of money to be calling on a company that the brother in law does it or is in house for last 20 years.
These leads are unqualified and should be called on much less frequently.

Or calling about carpet to a business that doesnt have carpet...

If the goal is to sell 3-5 years then you want to build cashflow of course BUT also want to build a database.
People will pay good money for that information.

Really want them to be selling fixed contracts, monthly,quarterly, semi-annual. That is where the incentive should be, IMO.
1x jobs are expensive to sell and PIA to manage.

 

[Mikey P]

However I'm afraid someone that can't close or hates rejection would be canned or starve.

Hire a JW..

 

[Shane Deubell]

Hire a JW..

Thought that was mormons ...

Always get the two confused

 

[Mikey P]

Oh.

Easy to ID..



One wears black pants and button down white shirts

The other wears seconds from Ross.

 

[FB7777]

Everytime I read one of Tom Kings post I realize just how truly blessed I am to own a modestly successful business

And that he isn't in my backyard

 

[Chet]

We do have weekly meetings, but I'm guilty of not holding him accountable for all his time. But on the other hand he had a sales and sales management background and had made considerably more money selling cars. He came to us when the auto industry was struggling and we thought it would be a good fit. So I thought he would be hungry enough to motivate himself.
I will be changing his pay plan to more closely resemble the ones above. Lower base salary with bonus tied to sales. I only need to somehow tie it to profit of the commercial division so we don't under bid jobs just to get the numbers. We are in very large market and we only need a small piece of the commercial market to make a big difference.

 

[Shane Deubell]

Can be confusing but a sales job in auto industry is a completely different skill set. See in a dealership they spend $50k month (or whatever) on lead generation, so the salespeople just close and follow up. In THIS job he has to generate his own leads, see the difference?

I'm sure if you gave him 5 estimates a day he could close 4 of them easy. BUT can he generate 5 estimates a day himself, that is the hard part.
Closing in this industry is relatively easy, getting to the closes is the challenge. IMO

 

[Steve Toburen]

Can be confusing but a sales job in auto industry is a completely different skill set. See in a dealership they spend $50k month (or whatever) on lead generation, so the salespeople just close and follow up. In THIS job he has to generate his own leads, see the difference?

I'm sure if you gave him 5 estimates a day he could close 4 of them easy. BUT can he generate 5 estimates a day himself, that is the hard part.
Closing in this industry is relatively easy, getting to the closes is the challenge. IMO

Whole lotta wisdom in this thread, Chet.

Steve

PS So let me build on Shane's comment. How can we do effective "lead generation" to the commercial contract cleaning side (specifically carpet and tile) without being "face-to-face" (Which is far from "cost effective".)

 

[Shane Deubell]

Any and all steve, all the basics work to some degree.

For me the primaries are phone/door to door/networking
Then secondaries of mail/social media/intronet

The key is repeated contact, 3-4 times year. Often with commercial its "not right NOW".

 

[Brian H]

You know Chet, you could always save yourself the hassle and just forward all your commercial contacts to us.