How to Figure Out the Right Sales Salary for Your Sales Team
Salary greatly influences who you hire.
If you’re struggling to find quality sales recruits or trying to figure out how much you should pay your sales team, you may be surprised at what you find.
Adjusting your base salary offer could solve your hiring problems!
Sales managers are often faced with a decision when looking to hire for their teams: do they pay by commission or do they pay by base salary?
To determine how much you should pay your sales team, you have to consider several factors, including the cost of living, market saturation/competition, and whether or not they’re earning a commission.
In this article, I’ll discuss what you need to know so you can determine the best sales salary and commission structure for your team.
Base Salary: A Definition
While many companies define base salary as the salary you start with, we consider it the average income you earn during one calendar year while working with a company.
Base salaries are the starting point for any negotiations. Often, the level of sales and industry experience the sales candidate has. Base salaries can vary widely based on a number of factors, including your level within the organization, the industry, and the market/territory you’re in.
It may or may not include benefits like 401k, health insurance, and intangible fringe benefits like being able to work from home, or having access to a company wellness program.
How to Determine a Base Sales Salary
A good starting point when determining a starting sales salary is to take into account the following…
- Are there any special skills the employee has that could be applied elsewhere in your company?
- How much sales, technical, and/or industry experience do you want the salesperson to have?
- How much training do you want to do? What skill sets should they already have? What other non-sales things will they do?
- What is the cost of living for the area they live in?
- Does your base salary give you a competitive advantage that makes your business an attractive one to work for?
How to Figure Out the Right Salary for Your Sales Team
Once you’ve determined that you need to hire a sales team member (or multiple members), there are some important things to consider when establishing your team member’s starting sales salary.
There are four factors that determine your sales team’s compensation:
- The level of commission, based on a percentage of their sales…we like to call it Sales vs. Salary Ratio, and it is a very important part of your sales compensation strategy
- The salesperson’s Sales DNA (i.e. their ability to sell)
- The salesperson’s past sales results. If you know they can sell like crazy, it may be in your best interest to offer them more money at the start of your negotiations.
- What they NEED to live, not what they WANT to live.
A salesperson’s experience plays a big role in determining how much you should pay them. You’ll have to hire the right person to work for you because they will determine your company’s success.
Your sales team’s salaries should reflect the amount of time and effort they put into selling for you. They should also be able to provide you with evidence that they are successful at what they do via the pipeline they are creating/maintaining and the sales they are closing.
Adjusting Your Base Salary Offer Could Solve Your Hiring Problems!
Base salary can be a big problem when it comes to hiring the right person for your business. Unfortunately, it’s a very easy thing to underestimate…
If you’re not careful with your base salary, it can be a huge red flag that warns people away from wanting to work for your company. Make sure you do your research before deciding on a base salary offer.
Sometimes it’s hard to make an offer that is competitive when it comes to salary. You don’t know what other companies are paying for the same job. If you’re looking for top-tier employees, you have to make an offer that is in line with what similar positions earn.
One of our recent clients advertised a sales job offering a $40-50k base salary. The candidate would be required to go into the office, take customer service calls, be an admin and also sell. It was a lot of work, for not very much pay.
They had few applicants, and the ones who applied were not ideal candidates…low salaries primarily attract those who aren’t confident enough to go after what they want in life. Those are not the kind of people you want working on your sales team!
Since our client felt this combo admin/sales position best met their needs (and they didn’t want to separate it into two roles), we were left with one choice: raise the salary limit.
Once we did, they were able to attract a different quality of applicants and were finally able to hire someone who was perfect for the role.
Sure, the client invested another $15k/year to hire the right person, but they were able to find someone to do the combination sales/admin role that was critical to their team structure. They found an employee who could do both parts of the job equally well…they just had to offer a bit more base salary to entice the best candidates to get interested in working with them.
What is the right salary for an effective sales superstar? We can tell you that it depends on your market, industry, and the type of salesperson you’re looking to hire.
Determining your starting sales salary and commission structure is the first step in onboarding the right candidate. Unfortunately, there is no magical “sales salary calculator” that can help you figure this out quickly…and anyone who is trying to tell you they have one is likely using outdated methods that lack the personalized, data-driven, and highly-effective approach we use.
There are many factors that go into determining your sales salary structure, it can be helpful to get an outside opinion on whether you may be making some costly (but solvable) mistakes…
Have you wondered if you should base a new hire’s salary on the salary of other employees at the company? Maybe you want to know what the right salary is for your sales team. Help is just one click away.
Contact us today for your FREE 30-minute sales hiring process analysis and discover how we can help you find the right sales candidates, the first time. Sales hiring doesn’t have to be hard, we can help…contact us today!