It seems like a long time ago when what we used to think of as “good jobs” abounded, those that offered solid pay, bonuses, and good benefits.
These days, especially in sales, you’re more likely to check job listings and see “direct commission” compensation schemes. Essentially, these are pay-for-performance opportunities.
If you act, you get paid; if not, then no.
It’s Darwinian, a survival of the fittest atmosphere. Still, commission jobs tend to offer above-average potential, and if you can hold out until the tap flows, then you can thrive.
Here are 10 questions to ask any employer offering a direct commission pay plan:
(1) How long have you been in business? Beware of start-ups, because nobody really knows if their business concept will be successful.
(2) How well is your top salesperson doing financially? Key question, this is it. If you hear a solid number, cut it in half and that’s what you’re likely to earn for the first couple of months.
(3) How long did it take him or her to get there? This is a vital cash flow issue. Can you survive until you start seeing regular paychecks? You may not have the time to invest to get from A to B.
(4) How long did it take for your best salesperson to make their first sale? Did you get lucky and shut someone down the first day or the first week? However, did he fight? If the best salesperson had problems, multiply the time spent on the first sale by a factor of at least two or three, for yourself.
(5) Commission plan specifications? What percentage are they paying? Is there an appropriate incentive? Possibly, you can trade this to make it more attractive and valuable enough for you.
(6) How well is your worst person doing? If they let people fight for weeks without substantial rewards, that’s a bad sign. There should be competition to earn a place on your team, and the worst players should be eliminated quickly.
(7) Is this a timed sale and can I merge it with mine? If they have a script and it’s a proven success, this will save you a lot of time, assuming you follow it. If they don’t allow themselves to deviate from it, they have either sold themselves to a science or are unnecessarily strict. Especially if you’re on commission, they shouldn’t care HOW you sell, as long as you sell, and do so honestly.
(8) Are the hours flexible? If you are an independent contractor, this means you can come and go, with some general limitations, as you see fit. Some companies have a set start time and want everyone to be there for announcements, updates, and the like. But if they try to set the working day specifically, unless they are paying for their TIME, they are overstepping the bounds. By doing this, they deny you one of the advantages of being a commission salesperson, setting your own pace.
(9) At what intervals are commissions paid? This is significant. If they don’t pay weekly, a flag must be raised. You shouldn’t be their bank, which is what you become with shorter payment intervals.
(10) Are there reserves for chargebacks? When are they released? Chargebacks, or reductions in your commissions paid, can occur when orders are canceled or not paid to the company, as agreed. Naturally, companies try to protect themselves against paying a commission for a deal that fails. As a result, they may retain 10-15% of your check. Ask them, when are these funds released to you, and if you leave the job, will they continue to pay you your bookings after you leave?
A commission sales job can be a fantastic opportunity. It offers the prospect of great rewards with flexible hours, and is perhaps as close as you can get to being in your own business without a lot of hassle.
But be sure to ask these ten questions before you jump into the fray. It could mean the difference between making or missing an important payment!