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Commission for Appointment Setters?

Commission for Appointment SettersCommission for appointment setters is a common question when setting up the sales processes for new organizations.

"What is the best commission model when hiring a sales person to sell digital marketing services to small businesses?" was asked on an expert platform I'm a member of.

The asker went on to explain that the owners of the business will handle the consultation and closing. So it wasn't a "sales" role...it was phone prospecting...appointment setting.

I've set up agencies for commission sales teams in the management consulting field.

Issues with Commission for Appointment Setters

[I wrote the following in 2015] Finding people to work entirely on commission was possible pre-2008, but nearly impossible after 2011. The level of skepticism, coupled with people holding PhDs and psychiatry degrees realizing they shouldn't be trying to duck into being telemarketers until their practices pick back up, lead to a huge drop-off in the number of candidates.

I also hired firms specializing in finding commission sales candidates, and they were unable to provide me more than a couple of resumes of people who did not stick. To be fair, this was in 2012-13 and their situation may have changed by now.

However--with the minimal buy-in, loyalty and typically abysmal investment in training the hiring company provides, it is in my opinion not worth traveling down that path.

The candidate doesn't really have a reason to stick around. Any time a regular wage job is put in front of them, they'll jump. And most never wanted to be making calls in the first place.

I know several business owners who run "boiler room" type operations and they are constantly juggling and struggling with staffing. Callers go to lunch and don't return. They don't show up. And this is when paying the callers a wage! From my perspective, it wasn't worth the hassle.

Perhaps you'll find someone who has the commitment, the drive, the energy and the talent to be a good commission appointment setter. As far as I'm concerned, that would be like winning the lottery.

Two more thoughts.

First, to attract someone into a role like this, you really have to be paying an hourly rate. I'd skip commission entirely. Your retention will be much better, depending on how well you screen candidates.

Second, if you're going the commission route, the rate has to be big enough to be worthwhile. Yes, maybe 5% IS an appropriate *percentage* of the sale to give an appointment setter--but is it a significant-enough amount of *money* to be worth the person's time?

You'll have to figure this out with your own numbers and see if a person can really make a livable wage out of your numbers.

After all, they don't get paid unless the owners do their job, too. If they don't sell, the setter doesn't make anything. Personally, I would not want to hand my financial fortunes over to someone else like that.

Is Your "Game" Rigged for the Setter to Fail?

Can the setter really make the number of dials necessary to succeed?

Let's say your service is priced at $5000. 5% of that is $250.

I don't know what the livable wage is in your area--in NY and LA it's going to be much higher than, say, Portland, OR or where I am in Wilmington, NC--but let's say the setter needs a good $2500 a month to scrape by.

That's $2500/250 = 10 sales.

10 SALES.

Not 10 appointments set.

We still have to back into that number.

Now if you're the owner, or the person doing the selling, how good are you?

Most people overestimate their competency level. They believe they're going to close almost all of the prospects who come their way. Not so!

Not even half.

Let's say, generously, 1 in 3.

Maybe your setter does a bang-up qualification job (Secret: that's what you're really paying them for) and you really can close 1 in 2. But let's go 1 in 3 and I still think that's generous.

So now your setter has to bring you 3 X 10 = 30 leads every month.

An Overlooked Factor in Commission for Appointment Setters

How long's your sales cycle?

Hadn't thought of that, had you!

Will Your Setter Survive Month One?

That means you're going to have to back out the final of these 30 leads to the date that leaves enough time to finish that cycle before the month expires and our poor setter runs out of time to make their revenue target.

See what I'm saying?

What this translates to, in English, is your setter's probably going to have a pretty bad first month.

Why?

Because they're filling the funnel.

Unless they go nuts, like aiming for 60 or 90 or 100 leads to cram into that funnel, the odds of enough getting through the sales cycle and closed and paid so they can be paid is low.

So let me ask you this:

If you work hard for a month and at the end things look terrible and you didn't make the money you expected--despite your effort being "on target"--

how do you feel?

Like you want to quit, right?

Unless you want a rotating door of setters, I strongly suggest you set up the equation to it supports your hire and gives them the time and financial reward they need to succeed. Which means they HAVE to survive through to that second month...keep putting in the effort, and seeing the good results appear.

Number of Dials Needed to Earn Commission for Appointment Setters

Back to the math...

To get those 30 leads (and remember, that is when the sales funnel is FULL, and your setter is continuing to load more leads into it to keep it full, and you have many prospects at various stages of the pipeline--not just at the beginning), how many people does your setter have to call?

We know, on average, that only 1 in 4 prospects dialed will be ready and available to talk today.

So 30 X 4 = 120 is your setter's ultra-basic, bare minimum number of dials. And really, I bet it will end up being double or triple that.

Does your setup, and your setter's situation, support them being able to make those dials?

And remember, this is with a decently mid-ticket offer of $5000. If your price is actually lower, the number of leads and dials are going to be much higher.

These calculations will of course vary depending on your situation. My intention here is to give you a sense of what's involved and where the perils are.

Just remember: Dials >>> Leads >>> Sales

2021 Update:

The original post was written in 2015. The current update for commission for appointment setters as of 2021 is this... the same rules apply. An organization I did some work for recently hired a returning-to-work mother to do what I would call luke warm calling—the calls were not cold, but they were not quite warm, either. Lead reactivation was the focus. She was highly skilled and "overqualified" for the role. Also, she had little phone experience.

The Outcome of This 2021 Appointment Setting Hiring Decision

I was not much involved in this decision and provided some scripting assistance. The fact is that she did not last one day in the role. No better example of the principle, "Perception Is Reality" than this has come up in the past while: to her, these were cold calls. She was not prepared for what she perceived as the loneliness of the role. The takeaway for you in 2021 is: filter for people who understand what they're getting into here, and like it. Do not take people who come along, even if they look good from a skills point of view. "They'll grow into the role I imagine at a step above this one" is not something to bank on. And the simple math we discussed above continues to apply.

>> Jason Kanigan is a worldwide authority on cold calling. Want his help? Visit the corporate services site here. <<

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How Much Time Should You Spend Prospecting?

How Much Time Should You Spend ProspectingHow much time should you spend prospecting? Nearly any sales trainer you ask will answer, "More than you are now." And they're right. But in a quantifiable number, what does that mean?

[first published April 9, 2014]

Two approaches spring to mind. One is more scientific than the other, but they'll both work.

An Easy Approach To Answering How Much Time Should You Spend Prospecting

First, an easy-to-apply system of dividing up your time depending on the maturity of your business. Prospecting is the act of picking up the phone or going to networking events or doing anything that can directly get you into a qualifying conversation with a prospect. Fulfilling is doing the work you promised to do so you can earn your revenue. Marketing is writing free reports, setting up autoresponder systems, sending direct mail, and anything else that is passive in its approach to attracting prospects to you.

Maturity Prospecting Fulfilling Marketing
New (0-12 months) 75% 15% 10%
Established (12-24 months) 50% 30% 20%
Mature (24 months+) 35% 35% 30%

Surprising? Consider: in the beginning, no one knows you exist. You have yet to develop the reputation as "The person to talk to about X." No referrals will be coming in.But 12 months into the business, should you survive, the situation will have started to turn. People you have never directly spoken to will have been sent to you by someone who heard about your business from a past customer. You will get some orders more easily; it won't be necessary to spend as much of your time prospecting.

However, you can never, ever, cut prospecting activities out entirely. You must always be talking to new people.

And in the beginning, what else do you have to do? Don't stop just because you got an order.

Keep filling the funnel.

The Precise Method for Determining How Much Time Should You Spend Prospecting

Second, we can determine the number of dials we must make to reach our revenue target. And it will always be more than we had vaguely thought. A lot more. But that number will come down as we move forward. We'll become more competent, and sales will come in from referrals, direct marketing, talks and other lead generation methods.

We covered the exact method for figuring this out in How To Succeed In Sales.

You'll be shocked to learn that hitting your revenue target will likely require 5 hours of your day at the beginning. Again, though, what else are you doing? You don't have projects. Marketing is passive and slow. It won't get you the conversations you need to make sales and earn that revenue. Waiting around will only produce month-end panic and, sooner or later, failure.

How much time should you spend prospecting is based on the maturity of your business. If you are well-known, have great brand awareness in your marketplace leading to a ton of inbound leads, are receiving a bunch of referrals every month, and have money in the bank to cover upcoming expenses, then you can afford to ease back on the prospecting gas pedal. Otherwise, slam that pedal to the floor and it's Full Speed Ahead!

2021 Update on How Much Time You Should Spend Prospecting

Reality hasn't changed for prospecting activity in the seven years since this post was first published. Whether you're a business founder or salesperson, you must commit to finding and developing your own leads. You cannot rely on magic thinking or the company to do it for you. Not taking responsibility for prospecting will lead to an empty funnel. And failure to focus enough time to it, which is always more than you think or would rather be doing, will result in the long term failure of your business or role.

Many people believe their employer will provide enough leads. But we have seen over many years the constant mismatch of prospect leads provided by the marketing department with the requirements of the sales department for what makes a qualified lead. Frankly, we have discovered marketing leads hidden under the keyboards of salespeople at their desks: not a fit, and pushed away.

The salesperson is running a mini business-within-a-business, a founder of their own destiny just as the founder of an entire business is. You cannot leave lead generation and filling your funnel to chance. Set enough time aside for prospecting starting today.

>> Jason Kanigan is a sales force developer. Ready for a real, proven sales training program? <<

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Why You’re Afraid to Raise Prices

Afraid to raise pricesAfraid to raise prices? You're not alone. Especially if you are a consultant, you will encounter several symptoms indicating you should increase your rates such as:

  • overwork and exhaustion
  • disinterest in current projects
  • concern that the future will simply be more of the present
  • experts at a higher level telling you to raise them
  • desire for more money and dissatisfaction with current revenue.

I have been there. And I have done what I'm about to share with you several times in the past few years--and am about to do it again.

When you develop any sort of competency at fulfilling a product or service, you need to raise your rates. If you don't, you won't be able to leverage that competency into more money. And you deserve more money!

Afraid To Raise Prices? Here's Why

This is typically the first barrier to increasing your prices. You do not truly believe you're worth it. It's head trash: one or more limiting beliefs you have that are blocking you from growth. These beliefs are hidden. When you bring them out into the sunlight, they vanish; but their power comes from operating in the darkness of your subconscious. So explore these recesses: Why do you feel you're not worth more? Who told you that? Roll it around until you have the answer--and it will melt away.

Having to serve many clients is exhausting. You split your energies among too many projects, and don't accomplish any of them spectacularly. Let me tell you from personal experience: when money is off the table and you are relaxed, your performance is much higher. So if you keep your prices low, the kind of customer you attract will remain one who needs a ton of hand-holding and will split your effort in so many directions you won't do much good for anybody.

By increasing your prices, you reduce the number of customers you need to meet your revenue target. You can laser focus your energy and effort. And that is what gets you and your client transformational results.

But you're afraid to raise prices.

Even though you intellectually see the sense and value of doing so, your mind and gut scream, "NO! Get me out of here!" Even if your belief system allows you to feel you deserve the increase. So what the heck is going on?

It's all about your comfort zone.

Afraid To Raise Prices: How Your Comfort Zone And RAS Combine To Stop You

Bleah. Comfort zone. Probably one of the most poorly understood and least favorite of business and self-help phrases.

This is the problem, though: you have to shift your comfort zone. Right now, as a competent fulfiller of products or services in a certain niche, you are comfortable. You know the people in your marketplace. You know their features. You know the indicators that say, "Yes! I am a candidate for help from you!" You know their jargon. You are familiar with solving problems at their level.

Frustration quickly sets in when you do realize the price increase is necessary, but in your quick glance around for better customers you don't see any.

Of course you don't!

You still have your blinders on.

Yup, blinders. We all have them. Me, too. We unintentionally get caught up in a comfort zone, and our blinders come on so we don't see anything else other than the kind of thing we're looking for. This is our Reticular Activating System (RAS) in action. You can use Google to find out more about the RAS and business. The RAS is constantly filtering zillions of bits of data about the world around us down to a handful we have told it, consciously or more likely unconsciously, are important to us.

This means your brain is filtering out everything that doesn't match the ideal customer profile you've been building up this whole time! You literally do not see anything else.

So OF COURSE you feel fear! You look around for better customers--but your RAS does what it's been trained to do, and filters out 100% of everything that doesn't fit your current client profile--and that pit of doom opens in your stomach because your handy dandy brain feeds you back a platter of Zero Results!

Once in awhile the blinders slip for a moment. You have a conversation with an expert and get a glimpse of something else. Another market. Somewhere else you could use your skills for better results. A book you read gives you an idea. You see another service provider doing what you do--but for a different group of people, and making a lot more money.

That's one way of stepping up.

Another way is to consciously engineer it.

RAS filters millions of bits of information every second down to two thousand. Think you're seeing "everything"?

 

I'll bet your current ideal customer profile was developed in a haphazard, reactive, "take it as it comes" kind of way. You probably fell into the comfort zone you're in, without a whole lot of thought about it. WHO would you work for...WHAT would you do...HOW would you provide value? These questions were answered unconsciously.

What if you went about it consciously?

At this point you've realized you are going to have to find a new kind of customer--and you have no idea where to look.

Your RAS has let you down (but it's not the RAS' fault...you programmed it!).

Don't stop here.

While this realization causes even more fear and panic, this is the signal you have arrived on the leading edge.

You are right on the forefront of development for your business.

Don't stop now.

Yes. You are going to have to find:

  • new people to talk to--a new ideal client profile
  • a new language to speak with them
  • new problems and symptoms to understand.

This is all outside your current comfort zone, and that's why it feels so uncomfortable to contemplate. But it's exactly what you did in the first place as you grew your business.

There's nothing crazy or truly scary here--beyond the giving up of what you already have.

My Own Experience In Being Afraid To Raise Prices

Again from personal experience, what you have now is a pale shadow of what you deserve. If you have any true competency at all, business owners who are flush with money and used to handing over larger sums than you can contemplate at this time are desperate for your help. Just ONE of these customers will reward you more than TEN of your current crowd. Imagine what that would do for your business...your peace of mind...and your results.

I developed competency in a discount marketplace. I got good at playing that game. This was stupid! I was earning half of what I made at a corporate salary. That game topped out at a few thousand dollars a month for me, but I knew how to produce money from it and it worked for me. Even though after awhile I experienced all of those symptoms listed at the top of this post, I grimly held on. I could get that money. And I couldn't see other kinds of customers. Every time I tried to look around--every few months or so--I'd see a big open sea of nothing. Scary! Yes! Scary! And so I was angry, but I held on to what I had.

This was a huge mistake. I could be a year ahead of where I am now, if I had known and done what I know and do now in 2013. Instead, I spent that year shuffling back and forth between struggling in the discount marketplace and vainly looking for a better class of customer. I asked people for help. If there was any provided, my RAS filtered it out.

Finally, I made what felt like a brutal choice.

I stopped talking to my original marketplace.

I quit communicating with those people. I used my realizations about Pricing to come up with a four-figure minimum acceptable as a revenue target. And then I went looking full time for that new marketplace.

It was like grinding gears. I was tempted to run back to the old marketplace, because I understood it. Fear stalked me every step of the way for weeks.

But then the blinders started to slip. Since I was consciously trying to reprogram my RAS, it began feeding me new data. Things I hadn't seen before. Opportunities that had been out there the whole time...but because of my RAS and my limiting beliefs to that point, I had filtered out and literally not seen.

I got a few clients at my new number--and each one took the place of FIVE past customers.

Over the space of four months, I went from being reliant upon a desperate, low money marketplace to a much more relaxed, moderately cash rich client profile whose needs and situation I began to understand.

I learned that language.

I learned those problems and symptoms.

I learned what to look for to spot the profile of someone who was in this better position to make use of my services.

And it really didn't take very long.

Suddenly I was offered the chance--on the back of a smaller initial project--to run a launch. From that one client I made more than I would have from FIFTY customers in my original marketplace. And I got transformational results.

Since that time, I have raised my minimum price again and again. The second jump was not as dramatic as the first, but was prompted by this thought: "Hmm...this number doesn't excite me anymore. ...What number does excite me?" And the most recent increase, a doubling of the previous number well into the mid-four figures, is starting to feel like "Not enough" now.

And each time I have gone and found that new customer profile.

I'm about to go do it again. And this time, the market is completely different from any I've been working with in the past five years.

The good news: it's easier to do than your fear is telling you right now.

That first jump is the hardest.

After that, the process gets faster and easier...because you have a process! And most importantly, you believe you can accomplish it.

Your Plan To Overcome Being Afraid To Raise Prices

So here's the plan.

Note that you are in a comfort zone, likely unconsciously and haphazardly arrived at, concerning your current marketplace.

You have your RAS blinders on. You literally cannot see better opportunities yet. But you can consciously reprogram your brain to see them.

You must stop talking to your current market to make room--this is just like throwing the clothes out from your closet you never wear so there's room for new garments. You do not have to cut them off utterly like I did...a phased reduction would work. But you must deliberately pursue identifying this new ideal customer: a considerable percentage of your time must be invested in doing so.

Remember the payoff for learning this new marketplace and commanding these higher prices is a huge one.

Constantly keep in mind that it gets easier as you go. You cannot unlearn what you learn. Once you figure out what these new people look like, where they are at, and how you can work with them, you can never lose that knowledge.

The sense of power, relaxation and ability built through this process destroys timidity and makes you realize you are far more effective than you thought back in the old market.

The new projects will be a heck of a lot more exciting, I promise you.

Do you get the point here? BE DELIBERATE.

Once you begin down this path, the only direction is Up. Be brave for just a little while, and join me on it.

2021 Update

This article has helped so many people with their mindst and pricing issues over the years. Don't discount the impact of "What is 'a lot' of money to me?" It's one of the most powerful questions you can ask yourself—and keep asking yourself. In fact, you can chart your upper limit money tolerance over time, every day, week or month, and follow how it changes. Guaranteed certain people and events impact how you feel about money, and therefore what you believe you can charge at any given moment.

If you'd like to learn more about money tolerance, I've discussed the subject in general in this article, and the importance of the lower money tolerance goalpost here.

>> Jason Kanigan is a business development expert with two decades of experience helping leaders at organizations from startups through the Inc. Top 1000. If you want help with Pricing, book a call with Jason here. Was this information helpful? Please Like or Share so others can benefit from it! And if you have a question, kindly Comment below. <<