Help me set a fair commission for qualified lead gen in advertising
June 28, 2014 12:01 PM   Subscribe

I run a small media company with a staff of five (two people on sales, two editors, one social media person). The salespeople have a low salary, high commission salary structure, and advertising deals are generally in the low-mid 5 figure range. Our social media person is interested in getting into sales, or more specifically, getting compensated for introductions that eventually turn into sales. We're happy to accommodate her but have no idea how to structure things.

Our goal is to set up a structure that rewards her for making a genuinely valuable contribution to our ad sales, without incentivizing her to send off 10,000 form emails and claim in 3 year's time that one she should get a cut of a sale.

Possibly relevant info:
-The website is B2B in a niche area (sustainable business)
-Sales pipeline is generally long (in the 6 month-1 year range), many repeat clients
-most successful sales come from personal relationships developed over many months
-social media person mostly meets people online (obviously). Her introductions will be a great start, but there will be a lot of work to convert her leads
-Many buyers are also readers of the site - we don't want to look spammy by sending off lots of crappy, ill-conceived emails to our network of supporters
-Link is in profile if you want to check it out and see current sponsors and editorial content

I come from the editorial side of things, so I have very little experience setting up fair compensation structure for sales. Any advice or thoughts are greatly appreciated!
posted by paddingtonb to Work & Money (11 answers total)
To be clear, the social media person will be doing exactly the same job she is now, but if she starts bringing in more good leads than she is currently, she wants to be paid more?
posted by michaelh at 12:24 PM on June 28, 2014

I assume this commission is on top of whatever her normal pay is? I would probably lean towards a flat finders fee. You'll have to do the math on what is a reasonable number, but something like $100 for a qualified appointment (you and sales decide it if was qualified) and then another bonus if it turns into revenue within 12 months.
posted by COD at 12:27 PM on June 28, 2014

Make the current "lead generation" average the baseline.

In order for this person to draw a commission, they have to bring in more leads that turn into dollars, than what they are doing now.

Find out how much the company will actually profit from this. Give that person a percentage of that, which won't get the salespeople all salty and jealous.
posted by hal_c_on at 12:28 PM on June 28, 2014

Another angle - a company or sales wide bonus pool on new business, of which she gets a cut. At my job the sales team equally splits a year end bonus, which is calculated as a small percentage of total sales for the year.
posted by COD at 12:29 PM on June 28, 2014

Thanks for the excellent answers so far, this is exactly the sort of stuff inspiration we need!

michaelh - right now she doesn't really bring in leads, in that she talks to people who could be clients, but she doesn't talk to them about sales. Her point is that she could be talking up the value of advertising with us, and she should get a bonus if that results in a sale. We agree, and we love her initiative, we're just not sure how to structure it.

COD - yes this would be some kind of bonus on top of her normal pay.
posted by paddingtonb at 12:40 PM on June 28, 2014

I don't know how big your engagements are, but I work with an agency and frequently send pre-qualified leads to the agency principal. However, since we're in Canada (people outside of Alberta are pretty penny-conscious) and we go after smaller, shorter engagements, there is not a lot of overhead for me to make a commission.

However, it's intrinsically good for me to try to bring in sales. It's also intrinsically good for me to understand if existing clients are interested in expanding the engagement, because I get more work (I am a contractor).

I also look at from the perspective of how much value I add to the conversation, and whether or not I'm giving my agency my own social capital.

If I am discussing a business problem with someone and provide them with some generic advice, with a suggestion they contact the principal of our agency, there is on need for me to charge a finder's fee, since the principal of the agency does the hard work of landing the client by writing a proposal and negotiating the engagement. All I have done is spent 20 minutes developing the relationship, and also pre-qualifying by doing a sanity check, and a check for budget.

If I leverage my own social capital to make a sale, that's a different story. However, I guard my social capital (ie, my web of contacts who are decision makers) as much as I can, because once I make an introduction of a contact to the principal of my agency, then I have lost that social capital. And I need the social capital for all sorts of things (I may go independent in the future) and don't want to give it away.
posted by KokuRyu at 1:42 PM on June 28, 2014

To be clear, though, I am paid on a project basis, and am not on salary, so there more work we bring in the more money I get.

Depending on the scale and scope of the engagements you are going after, more than $100 it would be very nice if you could help with this person's professional development, and teach her to fish. A lot of organizations talk about personal and professional development, but never follow-through.

By promising her training and perhaps a greater role in business development in the future, and following through sooner rather than later, and in a sustained way, you will be setting her up to massively increase her earning potential and job security. That's worth a hell of a lot more than 100 bucks a qualified lead.
posted by KokuRyu at 1:45 PM on June 28, 2014

Many people whose work is helpful to sales (including Sales Marketers, which this person is) are bonused on the overall performance of the sales teams they support. Give her a multiplier of +x% on a set fee bonus if she brings in y# of leads in a [quarter]. The more she brings in, the bigger her bonus gets.
posted by Potomac Avenue at 2:05 PM on June 28, 2014

I agree with COD's approach with the possible addition of further bonuses if they become one of your top-quality repeat clients, or maybe are of a certain size -- whatever means "wow, nice job with this one" to the business.

I don't think there's a need to build disincentives into the program. It's better to train her on what a good lead looks like and what kind of tactics are acceptable/professional/consistent with the brand of the editorial side and of the business side. You can also have the account managers train her on working with them so she's not pushing them or wasting her time. This kind of training is consistent with what it appears her pay structure will be - majority salary with a varying percentage of commission.

As she develops as hybrid social media and lead sourcer, you and the account managers can be working on ways to increase her participation in developing these accounts and increasing her potential commissions accordingly (assuming she has interest.)

P.S. If you weren't already to wanting a more formal arrangement, I'd suggest an informal program of giving a referral bonus to anyone who brings in a new qualified lead -- no need to define edge cases and avoid problems until there's a problem, usually. (The same goes for vacation policies, but I digress.)
posted by michaelh at 2:33 PM on June 28, 2014

Work with your existing salespeople. If their sales are going to be funding her new sales compensation, they'll really care.
posted by MattD at 9:46 AM on June 29, 2014

Thanks guys! All these answers were really helpful. I've favorited the ones that we'll incorporate into the new arrangement. I appreciate your help! AskMe is the best!
posted by paddingtonb at 1:14 PM on June 30, 2014

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