"Is a 50-50 Split Fair to My Sales Rep?" — Transcript

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1. 0:00Let's all see what it is. Uh we just
2. 0:01signed a client who pays us only when we
3. 0:03close a sale. All right. The client
4. 0:05sells a $2,000 course. For every sale we
5. 0:08close, they pay us $200, which is 10% of
6. 0:10the price. We split that with our
7. 0:12salesperson. He gets 100 and we keep
8. 0:13100. Questions. Is a 50/50 split fair to
9. 0:17the salesperson? Is a 10% a reviewable
10. 0:19rate to charge to the client? Okay,
11. 0:21great questions.
12. 0:22So
13. 0:22>> what you're going to say.
14. 0:24>> You know what I'm going to say?
15. 0:26>> I hope.
16. 0:28>> What if I say something you're just
17. 0:29like, that's not I feel like I don't
18. 0:30even know I don't even know where that
19. 0:31came from.
20. 0:33>> I think I know what I mean I know what I
21. 0:34would say.
22. 0:35>> What do you I wonder if it's what I'm
23. 0:36going to say.
24. 0:37>> Go first.
25. 0:38>> All right, fine. I'll go first. So, all
26. 0:41whenever you're talking about pricing,
27. 0:42which is fundamentally what this is,
28. 0:44this is a supply demand question, which
29. 0:46is how much skill is required for me to
30. 0:48attract a level of salesperson who can
31. 0:50close the sale. And so the compensation
32. 0:52has to be relative to the skill required
33. 0:54to make the money. And so if it's a very
34. 0:55skilled salesperson, we might have to
35. 0:56give a higher percentage because there's
36. 0:58a certain amount of activity that
37. 0:59requires more skills in order for them
38. 1:00to make more money. To the same degree,
39. 1:01supply demand in terms of how much you
40. 1:03charge your customers. If you've got a
41. 1:04line out the door, you can charge
42. 1:04whatever the hell you want. Right? If
43. 1:05you're if you're if you're begging for
44. 1:06business, then you might have to charge
45. 1:08less. Now to be clear, if you're begging
46. 1:10for business, I still wouldn't charge
47. 1:11absolutely zero unless you're really
48. 1:12getting started and you need case
49. 1:13studies. Um
50. 1:14but at some point, we all want to
51. 1:15continue to march our price up. And you
52. 1:17can tell by the way as as a as a total
53. 1:19through line on this,
54. 1:20your
55. 1:22duration of time in an industry in a
56. 1:23service-based business should be
57. 1:25directly correlated with your price.
58. 1:27Because if you've been in business a
59. 1:28long time and you're in services, your
60. 1:30price should consistently go up because
61. 1:32you've gotten better and better. You've
62. 1:33got more and more reviews, more and more
63. 1:34case studies, more and more word of
64. 1:35mouth, and that spins the supply and
65. 1:37demand in your favor, which means price
66. 1:39can go up disproportionately. All right?
67. 1:41So you can almost always tell how high
68. 1:43quality of a service provider by their
69. 1:44price, which is why price is a very
70. 1:45strong signal for quality. Now, what did
71. 1:48you think I was going to say?
72. 1:50>> [sighs and gasps]
73. 1:50>> I was going to say for a sale like that,
74. 1:52typically the sales agency would take
75. 1:5420%.
76. 1:55>> Yeah.
77. 1:56>> And that
78. 1:57for the rep
79. 1:58it could make sense to split 50/50 only
80. 2:01if
81. 2:02um you're getting compensated in some
82. 2:04other way besides just on the sale. Like
83. 2:06there's some kind of continuity, there's
84. 2:07some activation fee, there's something.
85. 2:10Because if you're getting the leads
86. 2:13>> Well, they're probably not getting the
87. 2:14leads. They're probably just doing
88. 2:15sales.
89. 2:15>> Just doing sales. Okay. Well, if if
90. 2:17that's all you're doing, then maybe
91. 2:1850/50 makes sense. But, I think 10% is
92. 2:20low.
93. 2:20>> With the rep?
94. 2:21>> 10% is low.
95. 2:23>> Well, 10% for the
96. 2:24for the agency is low.
97. 2:25>> 10% would be
98. 2:26>> For the agency it's very low.
99. 2:27>> Yeah. 10% would be like what you pay the
100. 2:29sales person.
101. 2:30>> Yeah, it's I mean, I'm not a big fan of
102. 2:31fractional sales. Obviously, that's why
103. 2:33most of our sales are in-house. Um
104. 2:35but, I if I'm in-house, I want total
105. 2:38cost of sales to be like 12%.
106. 2:40>> [snorts]
107. 2:40>> Um or less and that includes management,
108. 2:42software stack, comp, everything. Um if
109. 2:45we're
110. 2:47if you have an outsourced, like that
111. 2:48means that call it 12% is your cost and
112. 2:50you've got 8% which give you a 40%
113. 2:52margin.
114. 2:53Right? But, you still have like the org
115. 2:55of like how do I get those customers?
116. 2:56How do I sell them? Like you have the
117. 2:57internal parts. So, basically you're
118. 2:59you're it's a thin margin business. Um
119. 3:02>> Yeah, cuz the thing I'm thinking is like
120. 3:03how much does it cost you to run those
121. 3:05sale fractional sales agents?
122. 3:06>> Yeah, and and typically
123. 3:08and typically businesses like that are
124. 3:10very offer heavy, offer driven, direct
125. 3:12responsy and usually that means that
126. 3:14it's very boom or bust. So, there's lots
127. 3:17of volatility in terms of the sales
128. 3:18team. You also tend to attract mercenary
129. 3:20sales reps. So, it's not like it's not
130. 3:22my favorite type of business.
131. 3:23>> No. But, if I were
132. 3:25>> You know, I would take more money.
133. 3:27>> If I had to do that
134. 3:28>> It's my life.
135. 3:29>> like I'd need more money for this.
136. 3:30>> This is my life. Hold on.
137. 3:32>> It's also like not easy thing to sell. I
138. 3:34mean, people think that it's easy cuz
139. 3:35it's common.
140. 3:37>> What?
141. 3:38>> Well, there's a lot of people who do
142. 3:39like, you know
143. 3:40Oh my god.
144. 3:41>> Is that better?
145. 3:42>> Yeah, yeah. It's in my face. Um
146. 3:45>> What? Oh, jeez. It's on me now. My bad.
147. 3:47>> Dude, you're [laughter] talking at this.
148. 3:49>> I know. I I it. I'm a professional
149. 3:50streamer. Are you kidding me?
150. 3:52I do this for a living. Here we go.
151. 3:53>> Uh
152. 3:56What were you talking about?
153. 3:57>> Oh Jesus. All right.
154. 3:58>> [laughter]
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