Wednesday, September 29, 2010

Who Gets The Sales Comp?

What a GREAT question! This dilemma has been going on for many, many years in the world of sales. Does the sub-agent get paid for subsequent sales, regardless of his involvement level?

Let me give you a for instance?

ABC Telecom Sales President Chris Producer brings your company a new customer, Eagle Machinery, with a signed contract in hand to purchase 5,000 widgets per month for 2 years. Under your existing agent contract, ABC Telecom is compensated 15% of the monthly purchase price on the duration of the contract. Standard business, right? Right!

Two months after the contract is executed, Eagle Machinery contacts your company directly and asks for pricing on a new product line of sprockets your company has just begun advertising. Your Sales Department sends Eagle Machinery the pricing, it’s accepted, and a new contract is signed to purchase 10,000 sprockets each month for 2 years. Who gets the sales comp? Your Sales Department, ABC Telecom’s Chris Producer, or both?

Over my 20+ years in sales, I have experienced many scenarios just like this one. I believe there is ONLY one answer. The agent, in this case, ABC Telecom, absolutely gets comp’d. Your sales department should be compensated on all sales made by the agent channels to begin with, thus eliminating the need to take comp away from the agent to pay your sales group. As long as proper profit models are followed, allowing for the costs of both comp to the agent and the internal sales department, it shouldn’t matter who sold the subsequent business. Everyone should be comp’d.

Establishing an honest, reliable agent channel is perhaps the greatest way for a salesperson to increase their production. Each trusted sales agent working underneath a trusted Sales Manager, multiplies the opportunities brought to the company with very little overhead.

Remember my first rule of a successful sales philosophy….. it doesn’t matter who physically received the signed document, the business was won because of the relationship of the initial contacting party, in this case Chris Producer from ABC Telecom. Without the initial sale, there likely would not have been the subsequent close…..

Remember, always pay your agent channel appropriately…..and watch as the agent feels obligated to you and brings you more business opportunities as your reward. Short change the agents and watch not only your business returns, but also your business reputation head south. And quickly too….!!!

Check out the link below from Phone + magazine for some additional insight on sales and sales ethics…

I’d love to hear from all the sales professionals and agents out there on this…..How do you feel about this topic?


  1. I cant imagine a successful company who would do it any other way. The only thing I would suggest here that when ABC Telecom received the information request from Eagle Machinery (after the initial contract) their sales departmetn should immediately call Chris Producer and let him know of the inquiry, and probably ask Chris to follow-up. This sets a clear message to the customer that ABC values their relationships with their agents and work together to sastify the customers needs.

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