Congratulations! You’ve reached the milestone when you're considering hiring a sales rep. Maybe ad selling isn’t your forte and you want to keep focusing on the news and running your business. Or you’re just too busy to cover the news and sell ads and run the business.
How to Know You’re Ready
Knowing when to hire a salesperson instead of continuing to handle sales and editorial yourself is a juggling act, and there’s no single correct answer.
You need to know two things: Are the prices of your ads high enough to support the organization in addition to paying for the person who sells them? Is there increasing demand for access to your publication’s audience?
“When your pricing and demand make it worth a seller's while. But you should start looking as soon as you know there's some demand for access to your readers,” is RedBankGreen (NJ) Publisher John T. Ward’s advice.
“When you need more revenue” is as good a time as any, according to Kelly Gilfillan, co-owner and managing partner of BrentWord Communications, which has publications in three towns in Tennessee. “Every business reaches a point where the owner or owners cannot do it all and it always takes revenue to do more.”
Where to Find Someone
Few things beat old-fashioned networking and getting the word out. Think Chamber of Commerce, LinkedIn and various social media.
“Be lucky, for one thing," Ward advised. "In the interim, post ads on your own site and job posting boards and tell everyone in creation that you're looking for someone.”
You may even talk up some trusted local ad sales reps at competing media companies for referrals.
“The longer we've been around, the more we've gotten to know the local ad sales community. They all know each other and who's looking for jobs,” said David Boraks, the editor and publisher of DavidsonNews.net. “Put out feelers with the ad salespeople you know from other publications – they can actually help you find the right person.”
Ward said he found his account manager through one of his biggest clients, who had bought an ad with a competitor and liked the account manager she worked with there. Almost a year after Ward reached out to her, the account manager joined redbankgreen after leaving her former position.
A few LION members have worked with sales recruiters. But beware: They don't come cheap. Some charge fees of 10 – 20 percent of your employee’s first-year salary.
How to Pay a Salesperson
Pay involves several considerations. Not only do publishers need to determine where the money will come from — the terms matter. Will he or she be an employee, an independent contractor? Is your business structured to handle either?
The most common model is to pay the sales person a base salary and commission on top of that.
Frequently, commission is based on a percentage of sales – either contracts signed or cash-in to the business (this matters, because sometimes getting small businesses to pay for their advertising takes awhile). In addition, many sales representatives are accustomed to receiving bonuses based on their performance either quarterly or annually – another cost to build in.
If you go with a base salary, remember that you will need to build in pay for him or her while the sales pipeline is built.
In some cases, the sales person may quickly become the highest-paid person on your company’s payroll. That may be fine if the person is not only paying for him- or herself but is bringing in double, triple or even more of the revenue that came in before.
The level of commission as a percent of sales may vary, but sales people have reported commissions of anywhere from 25-40 percent on new business. Some publishers say a higher commission for new business and a slightly lower percentage commission for renewals is warranted, as renewals tend to be easier than initiations. But don’t let the commission percentage for renewals get too low or your sales person may neglect them, leading to higher churn.
Decreasing commissions on renewals — all the way to zero — makes sense to Julie Brooks, owner of eCape.com, which publishes Cape Cod Today. After all, the advertiser has proven loyalty, she said.
“If a customer wanted to cancel in the third year and beyond," Brooks said, "I would have jumped in to save it.”
Some LION publishers to go on a straight-commission model.
Ward, for instance, made his sales person an independent contractor who receives a flat 30 percent commission on everything, even renewals.
“I want to make her happy and keep her around while she drives up revenue,” Ward said. “I came up with the flat-30 approach after talking to a number of LION friends, not all of whom think it's ideal.
"But I'm comfortable with it for now, and as long as my seller can triple or even quadruple sales in the first year, which we both think is realistic, I'll be happy.”
Gilfillan also went with a commission model, but admitted to starting with a percentage that was too low. This made it hard for her to keep account managers.
She switched to a tiered model, with higher commissions for new business than renewals, which drops by a few percentage points if the sales person fails to meet his or her goals.
“A good salesperson is likely already employed by another industry or your competitor. They will not usually jump ship for straight commission working for a startup. This means they need to be paid a draw," Brooks said. "How long are you willing to bleed until they sell enough to cover their draw?”
Keeping Sales People Motivated
Brooks, who is now doing her own sales, said that part of her motivation comes from it being her business.
“That’s why I really think that a partner doing the sales is the best bet for LIONs at this stage,” she said.
While partnership is not something to be taken lightly, publishers do need to balance rewarding their sales people for a job well done with the need for the business – not just the sales rep – to make money.
“Reps are motivated by rational self-interest, which is a beautiful thing in its simplicity,” Brooks said. “They will do what is good for them right now, not in three years.”
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