How to Commission and Structure a (High-Performing) Sales Team

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Neil Patel here for another Q&A Thursday video. I’m here with Adam LoDolce from

This one’s from Jason Valasek, and he wants to know what compensation structure looks like for commission salespeople vs. task-oriented people and how to blend in 1099 contractors.

With commission-based salespeople, typically the best salespeople are the ones who get a base. Yes, you can do commission only.

In general, is if you pay your salespeople a base they’re much better off than if you only pay them commission. So look for salespeople that are experienced. They’re hungry, not too experienced and when you look at their base plus commission. In general, when you look at your whole sales department because there are other costs. There’s a VP of sales, and there may be a Sales Director.

You may have some of your fulfillment people or other people within the organization having to help the salespeople close some deals. In general, whatever you’re closing in revenue, sales should not cost you more than 10%. If it starts costing you more than that, it’s just going to eat away at a lot of your margins. Which means you won’t be able to provide amazing results or invest as much in products or services.

You’re in business, whether you like it or not, to also make a profit. I’m not saying you shouldn’t pay people well because you have to keep in mind that without the people on your team, you will not have your business. The people on your team will determine how good or big of a company you build. Elon Musk doesn’t build Tesla, and it’s all the people around him. Yes, he’s smart, but it’s the team that has helped him get to where he is, more than just himself.

I learned that from Richard Branson, we were speaking at a conference together and he’s like, “It’s all about your team. You’re not gonna “build anything big without an amazing team.” So, pay them well. That’s why I recommend you don’t do commission only, and you pay them a base. They’re much higher quality sales reps, and in general, your total compensation for your whole sales department should be around 10%. If it’s lower than that, increase it. Treat them right. If it’s higher than that, you need to figure things out.

Because you need to invest in product, support, engineering, software, what other divisions you have, and still have a healthy profit margin so you can take that money, provide amazing perks to your team members. And of course, you can also use that cash to expand more, dump it into marketing and growth. So, that’s how I look at sales. As it comes to other tasks, I don’t look at it as “Hey, here’s how I pay my contractors. “Here’s how much it should be.”

It’s not about just getting the cheapest people in Upwork, it’s about getting the people who are qualified, and you’re getting a good bang for your buck, so you need to look at quality and price and have some balance there. And just make sure that, whatever you’re paying, it’s worth it for you. And then, after a while it may get so expensive, you’re like wait if I just hired someone full-time it would be cheaper, and that’s when you need to start moving people into being in-house within your office versus just being virtual and contractors.

Steve Jobs always said when you’re hiring people, it’s not about hiring people who have the best resume It’s about hiring people who are hustlers, people who just hustle hard and get stuff done and are passionate because if someone’s passionate, they’re willing to put in the time, the energy, the hours, whatever it takes to succeed and accomplish their goals. And they’ll be there for the long haul versus someone who keeps hopping around every six months or every year looking for a new job.

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24 thoughts on “How to Commission and Structure a (High-Performing) Sales Team”

  1. I am producer and I paying 40% for sales hero , I never tell to Sales hero’s what to do. I’m just say : do your way , try what ever you like – you get 40% from Product price ( sample wrist watches over pc. 250€ )

    But why 40% ?
    /-My risk is production and warranty’s , branding , product service and shipping.
    /-Your risk is your time , experience and marketing invest. No risk – No Champaign 🌼🤓🌼
    Later … your job is good ? You get the chance to invest a lot of your own or bank credit money’s and be a partner.😉

  2. When you speak of 10% or more of commission, are you referring to the gross sale or the profit? I have had sales people in the past the try to sell by low price and the winners are the customer and the salesperson but not the company. What is your thought on that?

  3. Sir I want to make money by affiliate marketing but I don't have any idea how to start I read your blog affiliate marketing but I don't understand properly everything

  4. Can you Tell How to rank in google news top stories. Our site is in google news and we follow all the guidelines too but we and many other websites fail to get google first's page for news stories.

  5. Hi Neil love your work. I have created a new blog for the first time and didn't invest in a premium theme. I want to know that can I start affiliate marketing on my existing blog or should I make a separate website or blog for it. I am asking at initial stage(to start affiliate marketing).

  6. Hey Neil. Amazing. You are the Best person for marketing. Thursday now always reminds me of you.
    Now my question for you is at time of updating an article, if there is a change in the permalink. will it effect rankings and what about backlinks?? like if I have a permalink of best e books and now I want to change it to e books. What do you suggest.

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