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Looking for a Job in Sales? Basic Salary or Commission-Only: Which is best?

Looking for a Job in Sales? Basic Salary or Commission-Only: Which is best?

Posted by admin on Dec 3, 2012 4:15:03 PM

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So you are looking for a direct sales job?  Maybe you are at the beginning of your career and hungry to advance in a field that typically has room for rapid and sustained career progression, high earning potential and a fast-paced, challenging environment. Perhaps you are transitioning to sales from another career path, having decided you have the resilience, personality and ambition to build your own sales success story. However, it can be difficult to determine which type of sales job and associated payment structure is going to best meet your needs.  Here, we offer an insight into the benefits and disadvantages of sales and payment models.

Most sales jobs will operate one of two different payment models.  A straight commission or ‘commission only’ sales job is one where the individual is only paid for what they sell, this is usually a fixed price per sale or a percentage of the monetary value of the sale.  A base salary sales role will provide a fixed regular base sum to an employee, and a smaller amount of commission or performance-related bonus on top of this.

Both sales models present different incentives and challenges for the Sales Representative.  But which is best?  Below we examine the advantages and disadvantages of each type of model.

 

Commission Only Sales  – What are the Advantages?

On the face of it, commission only sales positions do possess a couple of advantages and many sales representatives perform well within this demanding and often pressurised arrangement.  Perhaps the most notable advantage is that it can offer higher earning potential than the basic-salary model.  This is because typically the commission structures are more generous to mitigate the lack of a basic salary. Thus a high performing skilled sales rep may earn more that the same rep would bring in with a salaried job.

Another advantage connected with a Commission-Only Sales model is the freedom to sell multiple products.  Commission-only sales operations usually have the individual functioning as an agent, enabling the sale of a number of products from a variety of companies. This usually means operating as a self-employed agent and therefore not tied into a contract with a particular company or provider.  In most cases, selling multiple products can allow you to maximise your earning potential by gaining multiple sales opportunities from the same customer base.

 

Commission Only Sales Models – The Disadvantages

There are however, notable disadvantages that exist with a commission only sales setup.  There are no financial guarantees with this model.  If you sell nothing, you make nothing and if you sell very little, you get paid very little.  This can be difficult, especially for inexperienced sales reps that have yet to learn how to maximize their productivity in the field.  Even for experienced sales reps, external, environmental influences such as the time of year and location in which you are selling can mean your earnings can fluctuate extensively.

Secondly, 'commission only' sales people are often expected to generate and manage their own leads base of sales prospects through cold calling, networking or referral generation.  This can be quite difficult. Depending on the product the individual must clearly identify the target market or customer, map or chart their journey plan or call file and equip themselves with the tools required to manage, retain and ultimately capitalize on a pipeline of quality leads. This can often include use of your own phone, laptop vehicle and insurance for business purposes.

Finally, if you are operating as an agent, you will be required to possess all the necessary paperwork and licenses to operate as self-employed and this arrangement usually requires you to keep track of and file your own taxes.  Similarly, if the worst happens, that is, if the client or company you represent decides to disband or reduce their direct sales force and are forced to terminate your employment, you may not be entitled to redundancy pay or similar compensation afforded to those with employee status within the company or an outsourced provider.

The Basic Salary Model - Advantages

Perhaps the biggest and most obvious advantage of the basic salary mode is tied to the reliability and security of receiving a fixed, regular income on a month-to month or week-to week basis.  The piece of mind that comes with knowing you will always have a paycheque at the end of the week or month and can therefore eliminates any concerns you may have around paying your bills or mortgage from month to month.  This anxiety is both undesirable and counter-productive and has often been found to impair sales performance and can sometimes lead to the pushy desperate salesperson.

Along with the steady pay cheque, most jobs offering a base salary generally want you to remain in employment with them for the long-term. In fact, longevity of a potential salesperson is usually highly scrutinized during the job interview and selection process. Companies will expect you to stay with them for at least a few years, and they assume that you view them as a long-term, if not permanent, employer.  This means as a salaried employee, you can take advantage of extensive training opportunities and other benefits and reimbursement for business expenses such as mileage or parking.  The employer-employee relationship means you are afforded all the necessary protections and rights associated with existing as an employee.

Furthermore, most basic salary structures lend themselves to having their sales reps responsible for the sales of a single product range or package.  Therefore, you can immerse yourself in the features and benefits of the particular product or service which you are selling which ensures you achieve maximum sales results.

 

Our View

CPM chooses not use commission only sales models, preferring to operate a base salary sales model.  We believe it offers the most sustainable model to support our employees and our clients.

Unlike many of our competitors, we offer a guaranteed basic salary plus performance related commission structure as standard with all our direct sales jobs.   From the beginning CPM places a certain degree of trust in our sales representatives to achieve the required number of sales to cover their basic salary.  However, our recruitment process means we only hire individuals who are the right fit for the job, possessing the competencies, personality, drive and resilience to succeed in a target-driven, direct sales environment.  It is then our responsibility as a company to equip our reps with the knowledge, skills, technological and operational resources to enable them perform to the best of their potential. This is supported through our best in class training, coaching and management structures which ensures we achieve a return for our clients and their investment.

Finally, we combine our Basic Salary model with impressive commission structures that reward high-achievers.  We offer uncapped commission with scaled accelerations as standard across all of our accounts.  This means the more you sell, the significantly greater your earnings become.  This affords employees the perfect balance of job security and regularity of pay as well as the potential for high-income afforded by a career in sales.

Interested?

If you like the sound of the above, are hungry to advance in a field that typically has room for rapid and sustained career progression combined with high earning potential and have the resilience, personality and ambition to succeed in sales, we want to speak with you!

Mail recruitment@cpmire.com with your CV today and a member of our recruitment team will be in contact to discuss current opportunities.

For a list of all our sales jobs, please click here

Topics: Commission only Sales, Direc Sales Job, Door to Door sales, Field Sales, Marketing, Recruitment, Sales, Sales Career, Sales Model