How To Hire Commission Only Sales Reps For Your Business - CommissionCrowd

If you've seriously considered hiring commission-only sales representatives for your company but aren't sure how to go about it, you're in the right place.

There's a lot to cover however, read on and we'll give you everything you need for when it comes time to find top quality commission-only sales and Manufacturer's representatives for your company. By the end of this guide, you'll know exactly what to expect so you're best positioned for long-term success.

Table of Contents

1. Introduction: Our experience within the commission-only sales rep industry
2. Dispelling the myth of Commission-Only Sales Representatives
3. Benefits of hiring Commission-Only Sales Representatives
4. Why top performing Sales Reps choose Commission-Only sales jobs
5. Pros and Cons of hiring in-house Vs. Commission-Only Sales Reps
6. What Key Factors attract Commission-Only Sales Representatives
7. What deters Commission-only Sales Reps from working with a Company?
8. How to qualify and Interview Commission-Only Sales Representatives
9. How to find and hire B2B Commission-Only Sales Reps & Manufacturer's Reps

The trend of hiring B2B commission-only sales representatives, and Manufacturer's reps is rapidly gaining traction globally as a more economical, cost-effective, and faster approach to securing new business and boosting profit margins.

While you don't want to get left behind by your competitors and it can be tempting to rush in head-first, there are some very important factors to consider first.

Since the inception of CommissionCrowd in 2015, our mission has been clear: to revolutionize the way companies connect and build long-term win / win partnerships with B2B commission-only professionals globally.

Our award-winning platform has not only set a new standard in sales industry innovation but has also empowered thousands of businesses worldwide to assemble top-tier independent, commission-based sales teams quickly and easily.

Hiring commission-only sales representatives can seem overwhelming at first however, that's where we come in. Drawing on our extensive experience working with companies across the globe, we're here to guide you through the process.

Though this article is comprehensive, stick with us. By the end, you'll have a solid grasp of the industry's ins and outs, as well as strategies to sidestep the common pitfalls encountered when hiring commission-only sales reps.

Once you're ready to start hiring commission-only sales representatives CommissionCrowd.com is the place to be. Feel free to stop by and chat with us using the live chat on the website and we'll be more than happy to help.

Companies that utilize independent, self-employed sales representatives to sell their goods and services are referred to as 'Principals'. Company Principals can range from manufacturers and suppliers to providers of various services and encompass any business entity with products or services to offer both online and offline.

Independent sales representatives work with businesses of varying sizes, from small-scale or solo enterprises to large domestic firms and global corporations with a network of local sales agents across multiple countries.

Dispelling The Myth Of Commission-Only Sales Representatives

We think it's important to start this guide by first dispelling the common stereotypes and myths that can sometimes surround the commission-only sales rep industry. This will help you to understand how commission-based sales reps operate and what they expect from the companies they choose to work with. Getting into the right mindset is vital to ensure long term success with your new sales rep partners.

1. Independent, commission-only sales reps are not unemployed or so desperate for work that they are willing to work for free. Like any business owner, they have come from a long and successful background in their profession and have made the carefully thought out decision to set up in business for themselves. The only difference being that the service they provide is sales. If you think about it, every business owner works on commission as there is nobody to pay you a salary. The number one rule is to treat these highly experienced sales experts as partners in your business. They are not cheap or free labour.
2. B2B commission-only sales representatives like those found on CommissionCrowd.com are not the same people who visit your home at 6pm to sell you a new vacuum cleaner while you're eating dinner with your family. These sales professionals generally only sell B2B products or services and have extensive knowledge of their industry. They have come from a long and successful background as sales employees before starting in business for themselves. One of the most powerful aspects of hiring commission only sales representatives is that they likely already have vast networks of company contacts they have built up over many years in business.
3. Hiring commission-only sales representatives is not only reserved for startup companies who can't afford to hire sales staff. In fact, it's quite the opposite. Some of the largest companies in the world augment their existing in-house sales teams by partnering with remote workingm self-employed sales reps who can efficiently reach potential customers where they don't have an existing presence in a territory or existing relationships with their ideal target customers.
4. The level of commission a company is willing to offer isn't the only thing that commission only sales reps take into consideration when choosing which companies to work with. Our sales agents consistently tell us that they place huge value on the following points. We've also expanded on each of these points later on in this guide:

• Honesty & Integrity
• Communication
• Management attitude towards independent reps
• The reputation of the companies they work with
• The ability to effectively service the clients reps bring to you
• Potential commission earnings
• Company Marketing efforts
• Support for reps
• Commission payment terms
• Customer Service provided to their clients

What Are The Benefits Of Hiring Commission-Only Sales Representatives?

Hiring commission-only sales representatives is quickly becoming the new standard for companies who are looking to expand their presence in existing territories as well as penetrate new regions, and increase overall market share at a faster rate and more cost-effectively than their competitors.

Opting to work with commission-only sales representatives and Manufacturer's reps brings several benefits, including access to a broader pool of sales talent and improved cash-flow management, making it an appealing strategy for businesses looking to scale efficiently.

1. Scalability – Utilizing independent, commission-only sales representatives affords your business unmatched scalability, enabling swift expansion of your sales force across different regions or even internationally with minimal overheads. This approach bypasses the need for significant investments in new offices or staff in uncharted territories.
2. Enhanced Cash Management – The commission-only payment model ensures that expenses directly correlate with sales success, offering a streamlined approach to cash flow management. Unlike fixed salaries, this method eliminates financial outlays during non-productive periods such as training or leaves of absence.
3. Global Talent Reach – Partnering with independent sales experts grants you access to premier sales talent worldwide. These professionals bring extensive expertise and an invaluable network of contacts, circumventing the limitations of geographical or relocation-based hiring constraints.
4. Industry Acumen – Commission-based representatives bring a depth of industry knowledge and connections, facilitating immediate access to new or existing markets. Their extensive experience and success in previous roles equip them to effectively navigate and penetrate markets, leveraging their established networks for rapid client acquisition.

Why Do Top Sales Reps Give Up Their Salaried Sales Jobs To Work On A Commission-Only Basis?

An increasing number of sales professionals are shifting from traditional salaried positions to embrace the autonomy of working as independent, commission-only sales contractors. What's driving this trend?

Traditionally, companies provide a fixed salary to their sales staff in return for their undivided attention and dedication to selling only the company's products or services. This arrangement requires salespeople to commit exclusively to one company, limiting their ability to represent or sell for others.

However, the allure of potentially higher earnings is enticing sales professionals to go solo. Independent sales representatives have the freedom to curate a diverse portfolio of complementary products and services, enabling them to significantly boost their earning potential beyond what a regular salaried job could offer.

Nowadays, experienced sales professionals and Manufacturer's representatives are increasingly choosing to forge their path as independents or to establish their commission-based sales collectives. Leveraging their deep industry knowledge and established networks, they can outearn what they previously made on a fixed salary by a substantial margin.

3 Reasons Why Commission-only Sales Reps and Manufacturer's Reps Are Rapidly Transitioning From Employment To Self-Employed

1. The evolution of online meeting Technology has transformed remote selling and the way companies conduct business. It's now easier than ever to meet with potential clients without traditional geographical restrictions being an issue.
2. Sales professionals and Manufacturer's representatives now have access to online platforms like CommissionCrowd which enable them to build diverse yet complimentary portfolios of companies they can represent. This, in turn, significantly increases their commission earnings by selling a variety of products and services that complement their networks.
3. With remote working becoming normalised and more commission-only sales opportunities available, the independent sales industry is seeing an unprecedented boom. Self-employed sales agents are more aware that they can earn significantly more by giving up a salary which restricts them to working for one company in favour of building diverse portfolios of products and services and managing their own time.

The Pros and Cons of Hiring In-House Sales Staff Vs Hiring Commission-Only Sales Reps

When deciding the best approach to increasing your company's sales, you're faced with a few choices: bring on full-time, in-house sales employees, partner with independent sales professionals who work on a commission basis or use a hybrid of both outsourced commission-based sales agents and an in-house employed sales department.

At CommissionCrowd, we find that a hybrid model works extremely well for companies that are in the growth stages and are looking for the most cost-effective way to gain a significantly larger share of the Market.

Advantages of Hiring Full-time In-House Sales Reps

1. Direct Oversight: You have the power to monitor your sales team's daily tasks closely and witness their interactions with clients firsthand, especially if sales are conducted on-site. This setup allows for immediate feedback and coaching opportunities.
2. Goal Alignment: You can set clear sales goals and strict expectations, ensuring your team is on track to meet your company's sales objectives.
3. Consistent Presence: Having a team in-house means you can build a steady sales culture and team dynamic. This in turn adds a certain competitiveness among your sales staff and should see them strive to outperform each other.

Challenges of Hiring Full-time In-House Sales Employees

1. Recruitment Hurdles: Finding top-tier talent can be daunting, very costly, and time-consuming, particularly for smaller or newer businesses. The competition for skilled sales professionals is fierce.
2. High Costs: The financial commitment starts from day one, covering salaries, commissions, benefits, and the necessary tools and space they need to work effectively, without immediate assurance of a return on investment.
3. Training and Ramp-up Time: New hires without experience in your industry may need extensive training to understand your industry, target markets and build a client base, which can delay the impact of their sales efforts. During this period you will be expected to pay their salary.
4. Geographical Limitations: Expanding your sales reach geographically means potentially opening new offices in multiple locations, which adds significant costs and complexity. In addition, unless your ideal hire is willing to uproot and move closer to your company headquarters, you'll find it difficult to bring on the sales staff you really want.

Advantages of Hiring Commission-Only Sales Representatives

1. Cost Efficiency: You avoid the upfront salaries, paying your sales agents only after sales are made. This significantly reduces your risk and improves cash flow.
2. Motivated Sellers: Commission-only sales reps are self-driven; their income is directly tied to their performance, leading to potentially higher levels of motivation and productivity.
3. Experienced and Well-Networked: Bearing in mind that the majority of commission-based independent sales reps have come from long and successful backgrounds in sales prior to becoming self-employed, they tend to have extensive sales experience and well established networks of companies they already do business with. This offers a quicker path to market and broader reach in a shorter period.
4. Flexibility and Reach: Partnering with independent reps allows you to tap into a broader talent pool without geographical constraints, making it easier to enter new markets. There's no need to open new offices in territories you're looking to penetrate.
5. High Levels of Exposure: Independent sales reps build diverse yet complimentary portfolios of companies they represent. The reason they do this is to give them the ability to sell multiple product or service lines within their networks and earn greater commissions as a result. Being a part of a sales rep's portfolio gives your company much greater exposure on a more frequent basis.

Challenges of Hiring Commission-Only Sales Representatives

1. Potential Earnings Concerns: It's not uncommon for highly successful sales reps to end up earning significantly, sometimes more than company leadership, which can lead to internal tensions.
2. High Competition for Talent: Attracting top independent sales professionals can be highly competitive. By reading the rest of this guide you'll be in a much stronger position to be able to position your company ahead of others competing to hire top commission-only sales talent.
3. Less Control: While agreeing on goals and setting expectations are essential, you can't exert the same level of control as you would with an employee. Expecting the salesperson to work from your company offices or demanding strict set working hours are not how sales agents operate.
4. Higher Commission Rates: To compensate for their risk and effort, independent reps often command higher commission rates than you might pay in-house staff. Remember, they don't enjoy any of the perks that employees command, such as paid time off, sick or maternity pay, company cars, phones, benefits or contributions. They are responsible for all the costs of running their business.

Ultimately, the choice between in-house sales employees and independent commission-based reps depends on your business's specific needs, growth strategy, and resources. Each option offers unique benefits and challenges, so consider what aligns best with your long-term objectives and market approach.

What Factors Are Most Important To Commission-only Sales Representatives?

While you should now have a better understanding of what commission only, freelance sales reps expect from the companies they work with, let's take a second to look at what they find most attractive in a company.

The key is to always put yourself in the sales rep's shoes and understand that they are highly experienced and have the luxury of choosing which companies they work with. You will be up against other companies who are competing for the attention of the top independent sales talent within your industry.

The following are all important aspects of what makes a commission-only sales job attractive and have come directly from commission-only sales representatives who find companies to work with on CommissionCrowd.

Honesty & Integrity

Honesty and integrity was top of the list when we conducted a survey asking commission-only sales reps on CommissionCrowd what the most important attributes they look for before deciding to work with a company are. It's always incredibly important to be upfront and transparent about the challenges your company is facing and the goals you are striving to achieve. Remembering that sales representatives ultimately wish to be viewed as partners in the businesses they represent, you should avoid sugarcoating the responses to the questions they will have for you.

Communication & Support

Effective communication and support are of the utmost importance to reps who work remote-working sales jobs. There's nothing more frustrating than broken communication channels, especially when the sales rep is not operating from your company offices. Always make sure you or someone within your organisation are reachable when needed.

Management Attitude Towards Commissioned Sales Reps

We've already covered this above however, it's important to stress the attitude that Management within your organisation has towards your commission-based sales reps must be positive or you'll lose your new sales partners as quickly as you found them.

Bearing in mind that self-employed sales reps are generally highly experienced and well connected, independent reps can quickly start to earn commissions that very often exceed the salaries of middle management within an organisation over time.

This can sometimes lead to resentment and poor treatment of reps which is the fastest way to losing great salespeople who are seriously increasing your company's bottom line. Management must be shown the value of working with independent sales reps and understand that they can sometimes command a premium over the commissions that in-house sales employees are paid.

Reputation Of The Companies They Choose To Work With

Putting yourself in the shoes of a seasoned sales rep who is deciding between two companies with similar products or services, the reputation of those companies is a factor that could sway your decision. Sales agents will always look into a company's reputation.

How are your online reviews looking? Do you have client case studies and testimonials? Are they appearing on your company's website? If not, then we suggest making sure you reach out to your happy clients for feedback prior to starting your sales recruitment efforts.

And it's not just about gaining the trust of your prospective new sales partners. Reps will want to be able to access great reviews to use in their prospecting efforts while they build their pipeline.

The ability to effectively service the clients reps bring to you

Given that sales agents only generally transition to self-employment after many years of experience and success within the sales industry and can open doors to new business very quickly, they need to know that the companies they choose to work with can effectively service an increased number of clients they bring you.

Again, putting yourself in the shoes of a sales agent, which company would you choose to dedicate your time and resources to? A one-person company that can only effectively work with a handful of clients at the same time, or a well established firm with the resources to handle an increase in new business and the ability to scale quickly?

That's not to say that sales reps won't work with startup companies, but you should have a plan in place of how you'll be able to scale your operation and handle a greatly increased number of clients in a relatively short period of time.

Potential Sales Rep Commission Earnings

Being competitive with your commission structure is very important if you want to attract top independent, commission-only salespeople to work with you. Remember, self-employed sales agents are not unemployed. They build diverse portfolios of complementary companies to work with and have the luxury of comparing and choosing which companies to represent.

While it's entirely up to you how much you want to offer as a commission remuneration, please always bear in mind that you should be as generous as possible. Commission-based sales representatives enjoy none of the benefits that a company employee does and in addition, they incur their own costs and expenses while prospecting for new business.

Below is only a guide to commission levels and there will always be a negotiation between companies and sales reps before agreeing to work together. So, don't worry about getting it perfect as it's just a starting point to get sales representatives interested in speaking with you.

Sales Rep Commissions For Physical Products

Typically, we see sales commission levels for physical products, sold by Manufacturer's Representatives, sit somewhere in the region of around 5% - 10% on the total value of the sale. Although each company will vary depending on their margins.

Sales Rep Commissions For Service Based Companies

On average, service-based companies tend to be able to pay a more substantial commission due to the cost of delivering their services being much lower. We typically see commissions of anywhere between 10% - 25% (sometimes higher) especially when the service is delivered online in the form of SaaS (Software as a service) for which expenses incurred per sale are significantly lower.

Offering Residual Sales Commissions

Residual commissions are usually expected by commission-only sales reps. This means that the company pays a commission when the client either places a repeat order or is on a subscription of some kind. While it's up to you for how long you decide to pay a residual commission, it will make your company that much more attractive to sales reps if you offer them.

You can decide to reduce the residual commission percentage after a period of time (say one or two years) however, many companies happily pay residuals for the lifetime of the client as it also means the sales rep is motivated to maintain a relationship with the client and nurture future business.

Touching on The Topic of Commission Retainers

We want to stress that while paying a sales agent a small retainer can be fairly common within the independent sales industry, we never encourage starting your relationship this way. A retainer is usually agreed upon further down the line if the company and commission-only sales representative have enjoyed a profitable working relationship for a period of time.

If a retainer is being paid, it's usually because the sales rep has been successful selling the company's products or services and have expressed an interest in dedicating a larger portion of their time specifically to a company and even reduce the size of their existing portfolio to do so. Again, we do not encourage companies to start the relationship this way and a sales rep should have proven themselves over a good period of time prior to this being considered.

Company Marketing Efforts

It's important to remember that self-employed sales professionals are not your company's Marketing or Social Media department. Their role is to concentrate on generating sales for your business.

Your company should be on top of your Marketing game which in-turn helps sales reps to do their job. They are acutely aware that potential clients not only check out a company's reviews, but on many occasions also their social presence.

• Your company website is up-to-date
• Your Social Media channels are active and sharing valuable content
• Writing and publishing high-quality, industry-related blog articles
• Your Marketing collateral is up-to-date and looking good (brochures, Pricing sheets, etc)
• Presence at industry trade shows (if applicable)

What Deters Commission-only Sales Reps From Working With A Company?

It's crucial to acknowledge that commission-only sales reps have the privilege of choosing the companies they wish to represent. This makes it vital to cover some of the key reasons why some organizations fail to attract them.

To start with, one of the most important things to understand is that a sales representative's role isn't to build your business from the ground up. For startup companies, it's essential to have a solid product or service offering, along with evidence of market demand and a good product-market fit.

Reps will typically expect a company to be able to provide case studies and testimonials from happy clients to give them confidence in your ability to properly service the business they bring to you.

Consider the perspective of a sales agent. When entering a saturated market with numerous competitors offering similar products or services, the choice becomes clear. Would a sales agent prefer to partner with an established company that can show evidence of satisfied customers, testimonials, and case studies, or a newcomer lacking these credentials?

Furthermore, they require confidence in your company's ability to service the clients they bring to you. Small businesses or one-man bands that cannot demonstrate the potential for rapid scaling are often passed over in favour of more established entities that are capable of handling increased business volume as a result of their sales and lead generation efforts.

Companies seeking inexpensive or unpaid labour are unlikely to attract successful independent sales representatives, and such strategies are not viable solutions for reviving struggling businesses.

Here's a list of some of the elements that typically deter commission-based sales representatives:

• The company is a brand-new startup with no current evidence of product/market fit
• Expecting the commission only sales rep to essentially build your business from the ground up
• Not having the ability to effectively service the clients that reps bring you
• Breaching your independent sales rep contract
• Treating reps like cheap, disposable or free labour
• Viewing commission-only sales representatives as a stop-gap until you can afford to hire in-house sales reps (they look for long term, mutually beneficial working partnerships
• Not investing in the Marketing of your company
• Having an outdated website or Marketing collateral
• Poor training, support and communication
• Offering non-competitive commissions
• Not fully appreciating the rep's autonomy

How To Qualify And Interview Commission-Only Sales Representatives

Qualifying and interviewing commission-only sales representatives require a nuanced approach to ensure you're bringing on board individuals who can thrive in a performance-based environment. It can be tempting to bring anyone who works on a commission-only basis onboard but remember, there will always be an investment in time so it's important to find candidates who are best suited to hit the ground running.

While many seasoned self-employed sales professionals come with years of experience under their belt and a large network of clients they already do business with it's important to note that those newer to self-employment and are only just starting to build their sales portfolio won't be suited to working with every company.

Seasoned Commission-Only Sales Reps

Seasoned independent sales representatives have generally been self-employed for a good period of time and have got over the initial hurdle of supporting themselves while they build their portfolio and sales pipeline. These reps tend to have large networks of business contacts and are invaluable for generating referrals and quickly opening doors.

Newly Self-Employed Sales Reps

Then, there are those newer to self-employment, who may excel in environments with shorter sales cycles due to their hunger and adaptability. Recognizing these differences is key to tailoring your interview questions and expectations.

High Ticket Closers

High-ticket closers (a relatively new breed of commission-based sales representatives) are adept at sealing deals with significant value, though they typically prefer to work with companies that provide a steady stream of leads. High Ticket Closers best suited to companies that are in an early growth stage whereby the founders of the business are well versed in lead generation but not closing sales when speaking to prospects.

The Interview Process: Key Areas to Explore

1. Experience and Portfolio: Begin by assessing the candidate's experience in sales, particularly in roles similar to what you're offering. Inquire about their current portfolio—what industries they've worked in, the types of products or services they've sold, and their success rates. This information provides insight into their suitability for selling your product / service and target market.
2. Lead Generation Strategy: Understanding how candidates plan to generate leads is crucial. Do they have their own networks to tap into, or do they have a strategy for reaching new prospects? For those selling technical products, it's essential to determine if they possess the necessary technical knowledge or have a plan to acquire it.
3. Financial Stability: Given the commission-only nature of the role, inquire about how they plan to support themselves financially while building their sales pipeline. This question can be delicate but is critical to ensure they can sustain their efforts long enough to succeed. This generally only pertains to sales professionals who are newer to self-employment as they will likely need to sell products or services with a fairly short sales cycle and residual commissions which will enable them to quickly earn enough to stay afloat in the early stages.
4. Remote Work Capabilities: With the possibility of hiring globally, assess their ability to work independently, their language proficiency, and whether they can align with your company's timezone (if working with reps in other countries). This flexibility can significantly widen your talent pool and doesn't limit you to only hiring sales reps that reside in your target country.

Finding the right commission-only sales representative involves a careful balance of assessing skills, experience, and fit for your sales strategy. By focusing on their ability to generate and close leads, adapt to the technical demands of your product, and work within the framework of a commission-only role, you can identify candidates who are motivated to grow alongside your business. Remember, the goal is not just to fill a position but to forge a long lasting partnership that drives mutual success.

How To Find and Hire B2B Commission-Only Sales Reps & Manufacturer's Reps?

If you're ready to hire B2B commission-only sales or Manufacturer's reps for your business simply visit CommissionCrowd to start connecting with the world's best commission-only sales professionals.

Since launching in 2015, we've gone on to become the world's fastest growing, award winning online platform that connects companies and B2B commission-only sales reps and Manufacturer's reps globally and recognised by the likes of Forbes and even winning the top award for Innovation in Sales at the Sales Innovation Expo, the world's largest Sales Expo.

CommissionCrowd empowers you to attract, train, manage and inspire a profitable commission-only sales team all in one place. You’ll be able to network with a global community of professional commission-only agents, view detailed profiles to effortlessly identify ideal candidates and leverage powerful all-in-one functionality to manage your team efficiently.