Written by Sean McPheat |
Here are some of the major problems that arise when you choose to compensate telesales representatives (TSRs) with commissions on closed sales.
Problems When Paying TSRs on Closed Sales
These serious issues are so difficult to quantify, that they often prove detrimental to a sales organisation. While the loss of qualified prospects, sales revenue and even good sales people may be clear, the harmful deterioration in the unity of the sales team may not be as evident.
Pay TSRs For What They Do—SELL Appointments
The answer is simply to pay the TSRs for what they sell. Pay TSRs the same way you pay the FSRs. You pay the FSR to sell the product or service. Pay the TSR for the selling of THIER product—the appointment.
The Value of a Qualified Appointment
Of course, you know the value of the average sale and the gross revenue the FRS will generate. So, you need to figure out the value of the TSR’s sale, and here is an example of how to do that:
First, take the value of the average sale and compute the overall closing average of the entire sales team, and you will arrive at the value of the average appointment.
Average sale gross revenue = £3,000
Closing average of all FRSs = 20% (one out of five)
Therefore, it takes your FSRs five appointments to close one sale. So, five appointments equal £3,000. Thus, each appointment is worth £600. The TSRs average sale is £600. Does that make sense?
Now, how do you pay the FSRs? Let’s say you pay the field sales people a commission of 20%. Thus on a £3,000 sale, the commission is £600.
Perhaps you pay the TSRs 10% on their sale. The TSR’s sale is £600. Thus, a 10% commission is £60. The TSR earns £60 for every qualified and completed appointment—period.
Therefore, when a TSR sets 10 successful appointments, the following (on an average) should result:
10 appointments with a 20% closing average, produces two sales, generating £6,000.
TSR is paid = £600
FSR is paid =£1,200
Adjusted gross = £4,200
“Do the Math”
Of course, that is a generic example. You can work with these figures and make adjustments to fit your cost structure and other parameters, and adjust the commission when a base salary is involved. The point is that you can and should pay the TSR for what they sell.
You can add some small stipend for closed sales, but make sure it is not a significant portion of the income. Instead, add bonuses by further helping the TSR perfect his or her area of responsibility. Perhaps a small bonus for the most appointments set in a certain targeted area. Award TSRs who set more appointments to run during the slowest times of the day or day of the week.
Are you having difficulty getting in the door with prospects that use a particular competitor? Make it a TSR contest!
A True Win Win
TSRs will have control over their own incomes and will know exactly what they need to do to be successful. Since TSRs are not over qualifying, they set significantly more good appointments and thus earn more money.
FSRs are ecstatic with the overabundance of good appointments, and thus close more sales and earn more money.
As for management, I have found that when sales are high and consistent and the money is flowing…well, they’re pretty happy too.
Please check out our Telesales Training Course for further information on how to improve the number of appointments that you set. You’ll learn how to sell the appointment and not the product or service and how to overcome all of those excuses and objections that you hear on a daily basis!
Originally published: 7 December, 2011
Search For More