If I Were Paying Salespeople, I'd Do a 50/50 Split — Transcript

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1. 0:00base pay for sales people help reduce
2. 0:02commission stress,
3. 0:05but also plenty of success in
4. 0:06commission. What is your view on comp
5. 0:07structure? I'm looking to start
6. 0:10recruiting and not just sell myself.
7. 0:11Good question.
8. 0:13>> [sighs]
9. 0:14>> I see compensation, there's I'd say two
10. 0:17types of sales people. We have
11. 0:19self-gen sales people, meaning they're
12. 0:21actually getting the business and
13. 0:23bringing it from click to close. So, if
14. 0:25you have somebody who's a true hunter,
15. 0:26who's knocking doors and just bringing
16. 0:27business in, that is where more upside,
17. 0:30more performance makes the most sense.
18. 0:32And the people getting into that make
19. 0:33the most money because they own the
20. 0:35entire process and they're absolutely
21. 0:37directly revenue generating.
22. 0:39The other setting are sales people that
23. 0:41are getting some element of acquisition
24. 0:43taken care of for them. So, that you
25. 0:44have a marketing team or you're
26. 0:45generating leads or you're paying for
27. 0:46conferences or whatever it is, right?
28. 0:47Like, you are doing some of the steps in
29. 0:49the sales process for them and you're
30. 0:51bringing them leads, etc. In those
31. 0:53situations, I prefer to reverse
32. 0:56engineer compensation from market value.
33. 0:58So, what does that mean?
34. 1:00If I think the level of skill that's
35. 1:02required for this person is $200,000 a
36. 1:05year, then I like to have a 50/50 split
37. 1:08between base and performance. So,
38. 1:10they're going to make 100 grand a year
39. 1:13or 80 grand a year and they're going to
40. 1:15have variable that's going to be another
41. 1:1680 or $100,000 a year if they're hitting
42. 1:19the goals that they that they should be
43. 1:20hitting. And so, for me it's kind of
44. 1:22like uh
45. 1:23too hot, too cold, just right. If you're
46. 1:25below the KPI to a degree where
47. 1:28somebody's making 120 thousand with a
48. 1:30hundred half thousand dollar base,
49. 1:31you're not going to be on the team long
50. 1:32cuz you're just below KPI.
51. 1:34If you're at 160 and you have, you know,
52. 1:38an 80K base, then you're doing great.
53. 1:39You're right where you need to be. If
54. 1:40somebody's got even more variable on
55. 1:42top, then it means they're just knocking
56. 1:43it out of the park. But I then just
57. 1:45reverse engineer
58. 1:47how many deals I think that a reasonable
59. 1:50salesperson with the correct skill set
60. 1:52should be able to accomplish given the
61. 1:54lead flow I'm feeding them. And the
62. 1:56reason it has to be split is because
63. 1:58some element of their success is not up
64. 1:59to them. If your ad account gets shut
65. 2:01down and they don't have any more leads,
66. 2:03like that's not on them, right? Whereas
67. 2:04a self-gen guy, he can just go knock on
68. 2:06more doors. And so, I if it's inbound or
69. 2:09you're feeding them sales, I like the
70. 2:1250/50 split and I make sure the added up
71. 2:14number is relative to the skill for that
72. 2:17specific job.
73. 2:19If it's self-gen, then it's basically
74. 2:22whatever you could afford. Um and then
75. 2:24the you know, the bigger the comp, the
76. 2:25more more absolute savages that you will
77. 2:27bring in.
78. 2:29Um
79. 2:30I'll I'll give you a great analogy for
80. 2:31this though that I think's really good.
81. 2:34If you want to build a sales motion, and
82. 2:36so as somebody who's built a lot of
83. 2:37sales motions and I think I'm really
84. 2:38good at it. Uh it's one of my most
85. 2:40valuable skills.
86. 2:41Is you
87. 2:44want to think about it like golf, okay?
88. 2:46So, imagine Imagine we have this, you
89. 2:47know, green behind us.
90. 2:49If I need somebody who's going to be
91. 2:50able to play on a pro level and hit par,
92. 2:53right? They've got to be able to to to
93. 2:55drive, they've got to be able to hit
94. 2:56irons and woods and chip shots and out
95. 2:58of sand dunes and you know, over water.
96. 3:01Uh and then when they get on the green,
97. 3:02they got to be able to putt, you know,
98. 3:04for big greens and lots of land. So,
99. 3:05there's a lot of skills there that I
100. 3:07need somebody to do.
101. 3:09Now, think of the other extreme. Let's
102. 3:10imagine I've got somebody who's 6 in
103. 3:13away from the hole and I drop the ball 6
104. 3:16in away from the hole and they just have
105. 3:17to learn how to do this. Just 6 in putts
106. 3:19all day long. How much skill is required
107. 3:21for that second guy versus the first
108. 3:22guy? Way less skill. How How long do you
109. 3:26think it takes me to train that person?
110. 3:27Way less time. How hard do you think it
111. 3:28is for me to find that person? There's
112. 3:29way more people who could do 6 in putts,
113. 3:31right? And so, when you have a properly
114. 3:33designed sales process, you've already
115. 3:36brought the ball 6 in away from the hole
116. 3:38and you're dropping it in front of them
117. 3:38for them to just chip for them to just
118. 3:40tap in. And so, typically, you have When
119. 3:43I see sales as a very high percentage of
120. 3:45revenue, it typically means that there
121. 3:47is an underdeveloped sales motion, sales
122. 3:49training, and sales process within the
123. 3:51business. So, they have to
124. 3:53overcompensate by spending way more to
125. 3:54get these pro golfers when if we just
126. 3:57had the motion dialed, we could get
127. 3:58people who could play putt-putt and
128. 3:59still win. And that's a much more
129. 4:00valuable business. It also drives more
130. 4:03margin because this team is more
131. 4:04scalable. You can ramp reps up much
132. 4:06faster.
133. 4:08Um and ultimately
134. 4:09uh you can sell and have total sales
135. 4:12compensation be a smaller percentage of
136. 4:13total revenue, which drives
137. 4:14profitability.
138. 4:16You guys want an advanced answer? It's
139. 4:17an advanced answer. All right.
140. 4:19Amen.
141. 4:21We talk about sales motion. It's not
142. 4:22beginner So, this is this is
143. 4:23actually a lot of fun for me. I don't
144. 4:24really get to talk about this. If you
145. 4:25like this video and you're a business
146. 4:26owner who wants to break through your
147. 4:27current revenue ceiling, I distilled
148. 4:29every lesson from scaling 10 businesses
149. 4:30past 10 million and three businesses
150. 4:32past 100 million into a completely free
151. 4:34scaling road map that I've used to go
152. 4:36from zero to one, zero to 10, and zero
153. 4:38to 100 plus. And so, you can click here
154. 4:40and you can check it out. Again,
155. 4:41absolutely free. And since you're a
156. 4:42business owner, I appreciate you and
157. 4:44enjoy.