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CHiPs25
Atlanta Falcons Fan
ATL
Member since Apr 2014
1369 posts

Business Owners with Sales Reps question
Looking for some help as we're struggling to come up with a solution. We own a $5m small business that employs 3 sales reps. We're a design/build architectural sign company that typically sells large project oriented jobs rather than transnational business. Our sales reps will sometimes make mistakes on a job that could cost us $1,000 or $5,000 on a job. For instance, if the sales rep tells us incorrect sizing information we could make a sign that is 10' x 10' when it actually needed to be 10" x 10". This is a basic mistake and there are some more complex mistakes that is 100% on the sales rep.

We have discussed making the sales rep pay for their screw up. If the job was $100,000 and we lost $5,000 then their compensation would be on $95,000. Is that fair?

Anyone have experience with something like this?


Mingo Was His NameO
LSU Fan
318
Member since Mar 2016
2458 posts

re: Business Owners with Sales Reps question
Just tell them to stop messing up. If they can't, find a new sales rep. If you can't or won't fire them if they keep making mistakes implement some sort of approval system. This may be a good control anyway. Have them write it up and be essentially done and they can give it to a manager to review and then finalize with the client. I can't imagine signing a contract without more than one person looking over it before hand.


CHiPs25
Atlanta Falcons Fan
ATL
Member since Apr 2014
1369 posts

re: Business Owners with Sales Reps question
Finding good sales reps in this industry is extremely difficult. EXTERMELY difficult.

Hypothetically, sales rep brings the job to a manager and the manager looks over it and they don't see anything wrong. They see measurements on the drawings which came directly from the sales rep but haven't seen the existing signage to know if it is correct or not.

We actually have 4 different people that touch a project once it turns from a quote to a sales order.


Barneyrb
Arkansas Fan
NELA
Member since May 2016
1202 posts

re: Business Owners with Sales Reps question
I am an engineer (by degree) that is a sales rep in my industry. Our commissions are based on the profit of the job/materials we sell and if we make a $5k mistake that lowers the margin then our commissions go down also.

If your sales rep is ultimately responsible for signing off on the completed drawing/plans and getting the scope correct then he is responsible for a loss of wages.

My work goes through a series of check offs (by different people) and it's my responsibility to make the final check and give the "green light".


LSUFanHouston
LSU Fan
NOLA
Member since Jul 2009
9776 posts

re: Business Owners with Sales Reps question
Do the clients sign off on the specs? Seems to me this is somewhat on the client.


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CHiPs25
Atlanta Falcons Fan
ATL
Member since Apr 2014
1369 posts

re: Business Owners with Sales Reps question
What are you selling? We struggle with realizing the true profit on a job due to the complexities of some of the work. If we were making the same widget 100 times then it would be much easier but every job is truly a made to order job.


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Retrograde
LSU Fan
TX
Member since Jul 2014
1670 posts

re: Business Owners with Sales Reps question
How are your sales reps paid? They need to have skin in the game in the form of commission or bonus on a sale by sale basis.


LSUnGA
LSU Fan
Buford, GA
Member since Jun 2009
1565 posts

re: Business Owners with Sales Reps question
Wouldn't you have a project manager who confirms most of the specs before the production begins? Internal or external signs, or both?


CHiPs25
Atlanta Falcons Fan
ATL
Member since Apr 2014
1369 posts

re: Business Owners with Sales Reps question
They are paid on revenue. We tell them the price to sell it at and then they are paid based on their overall revenue number. For example, our top sales rep has a quota of $2.5m and if she hits that then she get a 1% bonus. The percentage is tiered based on how much she brings in so if she brings in $1.5m she may get 7% instead of the 10% that she would get if she hit's $2m.


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Lou
LSU Fan
out here in the middle
Member since Aug 2005
7121 posts

re: Business Owners with Sales Reps question
I think you would likely lose sales reps that way. Not sure about the labor laws, as to whether you can dock someone's pay for making a mistake. I think you should approach it by offering a lower base salary, then bonus is based how mistake-free their work is.


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CHiPs25
Atlanta Falcons Fan
ATL
Member since Apr 2014
1369 posts

re: Business Owners with Sales Reps question
quote:

Wouldn't you have a project manager who confirms most of the specs before the production begins? Internal or external signs, or both?


Yes, but it's not always possible for them to confirm everything. Sometimes our job is out of state and we cannot send someone out of state to double check everything. Other times we're working off architectural plans so there is nothing to review.


BLM
LSU Fan
ATL
Member since Oct 2011
388 posts

re: Business Owners with Sales Reps question
In the construction world shop drawings are generated and approved by the owner or designer (who works on behalf of the owner). If there’s a mistake after full approval has been received it’s on the owner and you go get additional $ to cover the mistake. Naturally you’d want to have some sort of contract or at the very least spell out in your proposals that no signage will be fabricated until sign off on shop drawings has been received which indicate material types, colors, sizes, fonts, etc. You get the gist. You’re a small company so I know it’s hard to do all of these things but you could be a big job or two away from disaster which kind of means you need to implement some checks and balances to protect yourself.


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baldona
Auburn Fan
Florida
Member since Feb 2016
4671 posts

re: Business Owners with Sales Reps question
Yeah that's certainly fair way to cut commission, if they screwed up and made a $100,000 sale a $95k sale why wouldn't they take a commission hit? They should have skin in the game.

But I agree, if this happens very regularly then you absolutely should implement some sort of process to prevent errors.

I mean how much are you losing a year on these mistakes?

I agree I don't understand why you wouldn't have the customer sign off on the size.

To give you an example, my wife does marketing. The other day she ordered postcards and the size was off by 1/8th of an inch too big. Therefore it couldn't be mailed as a post card. The company they ordered from had a warning, and my dumbass wife misread it. She had to pay to order a completely new set (she works for herself). But the point, is that you need to put some burden onto the customer or someone else to confirm sizes.


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