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.


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.


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. <<


Sales Compensation Plan: Careful With That

Sales Compensation PlanItching to change your sales compensation plan? Every so often I get a call or an email from someone who is bursting at the seams with the thought. They believe altering their sales compensation plan is going to solve all of their problems. Careful with that. Changing the plan will cause more problems than you think.

I'm not saying "Never change your sales compensation plan." That would be silly. But I am saying, "Don't head into the process of changing your comp plan and believing nothing bad or unexpected is going to happen."

Challenges of Changing Your Sales Compensation Plan

The first thing you should know is that when you change the comp plan, whatever alterations you make, people are going to be mad at you.

Here's the truth: no matter how good the change is for your salespeople, even if it truly is better for them, someone is probably going to quit.

Irrational, I know. But this is what happens. "Who the heck do they think they are, coming in and messing with how I'm getting paid? Forget this." Be ready to lose your top performer. Maybe it won't happen to you. It can, though.

If you look at the DISC profile, you'll see most people are Ss and Is. These people don't publicly complain very often, because they want to get along. But they may resent the change. And resentment causes a ton of problems: work slowdowns, your tasks being put to the bottom of the pile, low motivation...and more bad things.

The second common issue with altering sales comp plans is the "Robin Hood Syndrome". Rob from the rich to pay the poor. The plan gets weighted to reward the top performers less and the low performers more. That way the low performers are incentivized to stick around. Again, sounds irrational, but business owners and sales managers do this.

Comp plans need to reward your top performers so that it's perfectly plain that they're top performers. No one should be in any doubt.

The #1 Step You Can Take to Minimize Problems When Changing the Sales Compensation Plan

Many owners and managers come from 'on high' to make sweeping improvements to the business. Especially owners: after all, it's their business, isn't it? The problem is the friction this causes with employees who feel steamrolled by that process. They had no involvement. They're being dictated to. The Ds in the DISC profile may quit outright. The rest will resent the steamrolling. See the problem?

So what you can do to make a huge difference in managing this change is get their involvement.

Tell them what's going on before you do anything.

"I called you all together because I'm thinking our sales comp plan isn't working. What do you folks feel about it?"

Ask them what they believe would be a good solution.

You don't have to adopt their suggestions--but getting their ideas and feedback is a big step to reducing that friction accompanying the adjustment. They'll know you listened. And that goes a long way.

Thinking about changing your sales compensation plan? Tread carefully. Well-meaning but high-handed alterations breed resentment and cause unexpected friction. People may quit. Be ready for that. For best results, involve the sales staff early and often. You do not have to accept their recommendations, but just by asking for their opinions you'll have helped ease the stress of the process. And who knows? Maybe they'll give you a better comp plan than you would have come up with on your own.

>> Jason Kanigan is a sales force developer. Did this info help you? Share, Like or Comment to let us and others know! <<