Commission compensation for Manufacturer Representatives, Commission only agents and Distributors offers a creative compensation plan for sales results.
The most common questions associated with first considering commission compensation for Manufacturer sales representatives or distributors pertains to structuring an equally rewarding compensation plan for both the manufacturer sales representative and the company.The following are the TOP most common questions related to Commission compensation for Manufacturer Representatives and Commission Only reps:
- “How will we pay our independent manufacturer’s reps?”
- “Are we offering an aggressive payment method for Manufacturer sales representatives?”
- “What is the average commission compensation for Manufacturer Representatives?”
- “I’ve heard the average commission is 5 percent.”
Answer:
There is absolutely no industry standard commission rate and there is no specific commission percentage as an industry standard. Therefore, there is no easy answer for compensating your team of manufacturer sales reps. The industry standard for successful sales results depends on compensating well for the sales reps’ efforts. Furthermore, it is very important to recognize the value of the sales reps’ relationships and their access to your buyers. Managers of companies that feel the rep simply has to make an introduction to the product for sales to be closed needs to rethink the value of their sales force.
Common Misunderstanding when deciding commission compensation:
Reality to commission compensation:
- Nothing inspires sales better than a creative commission compensation schedule so carefully consider increasing your compensation benefits.
- Offer a great product and pay the manufacturer representatives a commission that will encourage them to introduce your product over another manufacturers’ product.
- Remember, manufacturer reps only have a few minutes with a potential buyer. The product that will capture their customers’ attention and compensate the sales rep will be the manufacturer sales reps’ focus.
- The Manufacturer sales representatives on commission only must close a sale to receive compensation and it does not matter if commission is a high percentage if there are no sales closed. 50% of 0 sales closed equals 0 income.
- The manufacturer or service provider aligning with commission only reps is not paying a salary or base to the manufacturer rep so be sure to compensate sales reps creatively to encourage their attention on introducing your products.
- Commission compensated reps choose products that generate income for them.
- It is critically important to remember, just because your product is in the sales rep’s bag does not mean they will introduce it.
- Selling with Independent Sales Reps paid by commission for sales results is an alternative to hiring salary reps