Basic Math on Sales Commissions

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Basic Math on Sales Commissions

Yesterday when I wrote about what the channel is selling, it was mainly bigger deals. Obviously, there are many more transactions taking place.

When I work with VoIP providers, the thing that always gets said is that it is just as much work to get 150 seats as it is to get a 15 seat sale. Think about that.

Then I read some survey comments to see that agents would rather sell cable. It has to be because it is a faster sale. It isn't easier. There is the site survey form to complete with all of your information about your customer. Then there is the 25-30% fallout of orders that can't be delivered due to network availability. All to sell a $200 broadband pipe. That's $25 per month approximately in commission. If it takes you 5 hours to do the paperwork* and close the sale, that's $25 times 36 months = $900 for 5 hours work collected over 3 years. Or is it $25 per month, which means that you are making $5 per hour, and to build a book of business you have to sell a lot of modems.

If it takes 5 hours to sell one deal, you could sell about 8 per week, which would be $200 per week in new commission. Is anyone selling 8 deals per week? 8 per month?

*Now if you aren't doing the paperwork, but letting your channel manager handle everything (and I hear that there is a fair amount of this), then it is probably just 90 minutes of your time. Meanwhile, however, you are making it very hard on the channel heads to justify the channel budget since as the sales agent, you aren't completing your end of the deal.

Now some of you will say that for such a small sale, it isn't worth doing the paperwork. Then why sell it? Why not go bigger?

I hear this all the time too: Peter, you don't understand, I am in a rural area or there aren't any big businesses around here or it's a depressed economy. I hear this a LOT!! Just to point this out, but these are what sales trainers call Excuses. Excuses are just sales reluctance, because you aren't thinking big enough.

If you are going to sell the bandwidth, why wouldn't you be trying to get everything on top of that bandwidth? The Retail bundle of video surveillance, credit card processing, PCI compliance, VoIP, IM/chat, cell phones, managed router, hosted email, yadda yadda.

Why not turn that $25 per month commission into $100 or at least add some spiffs on top of it to make that customer more valuable?

There is a rise in OTT traffic, take advantage.

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