Hi Greg:
As a former Baldwin and Young Chang dealer for 7 years, I have experience working with both referrals and sales staff with regard to compensation.
It is important to begin by distinguishing between a salesperson and someone who provides a referral that results in a sale. A salesperson is a person who is on the staff of your business who has been explicitly hired to sell your wares, in this case pianos. These people work in a variety of ways. Purely on commission, in which case they would likely receive a higher percentage. More commonly, they work on a combination of salary and commission, with a draw on commission for salary, which is the way I worked it with my employees. I paid 5% of the selling cost as commission to my sales people.
I also worked with referrals from other technicians that resulted in sales, and gave a 1 to 2% referral fee. I had to know that the customer referral explicitly and exclusively came from that technician, and that the customer was not already in my database.
I am assuming that your employee works for you not as a sales person but in other capacities. If so, he is not a salesperson. He didn’t sell the piano, you did. He talked up the piano to the customer, but that is what all referring persons do – why else would they come to you?
It is up to you to set a rate that is fair to you, and yet is sufficient to encourage this person to continue to make referrals in the future.
Whatever protocol you establish for the future, make it simple and straightforward.
Will Truitt
From: pianotech-bounces at ptg.org [mailto:pianotech-bounces at ptg.org] On Behalf Of wimblees at aol.com
Sent: Thursday, August 13, 2009 2:49 PM
To: pianotech at ptg.org
Subject: Re: [pianotech] Commissions
Greg
It doesn't make any difference what the customer originally wanted to spend. It's what the customer bought that should determine the commission your employee should get. Don't get in a "war" over who or what influenced the customer to buy the higher priced instrument. How much that commission should be is up to you, but sales persons usually get a percentage of the profit, instead of a percentage of the sales price. That percentage can range from 5% to 25%. It's all depends on how much the sale was worth to you.
Once you've come to a conclusion as to how much you are willing to pay, I would suggest that put that in writing, and use as a standard from now on, so that other employees, piano tuners, teachers, etc, know in advance how much they can expect.
Wim
-----Original Message-----
From: Greg Newell <gnewell at ameritech.net>
To: pianotech at ptg.org
Sent: Thu, Aug 13, 2009 6:26 am
Subject: [pianotech] Commissions
Greetings list members,
I need some advise. I am selling a piano to a new customer which an
employee (who also happens to give piano lessons on the side) has referred
to me. What20should his commission be? The employee referred this new
customer through his piano lessons with her. She originally had the idea of
only spending about $2,000 and this employee says that he talked up the new
Walters that I carry. It seemed to me that I had her leaning toward the
Walter from her very first visit not necessarily after he talked her up on
them. I want to be fair to all concerned … including me. Any thoughts? Is
there a standard commission rate that I should be aware of? Are there 2
different rates for a full fledged salesperson or someone who simply refers
another? Your thoughts, experiences will be much appreciated!
Greg Newell
Greg's Piano Forté
www.gregspianoforte.com <http://www.gregspianoforte.com/>
216-226-3791 (office)
216-470-8634 (mobile)
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