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How long to pay commissions for?

866 Views 4 Replies 4 Participants Last post by  jlgill
I've got a guy who just got me an order with a retailer. I am giving him a 15% commission.

He wants to keep getting more accounts, and pass them on to me, and then move on, without staying in touch with the accounts.

He wants to know if he is going to be getting a 15% commission on all subsequent orders.

How long would you think someone should get commissions on subsequent orders if they do not maintain the accounts? First order only? 1 year? For as long as he is bringing in NEW accounts to me?

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Putting a time limit sounds like the way to go. If he doesn't want to maintain the accounts, I can't see how he can expect to keep getting commission. Limiting the time will hopefully keep him bringing in new business. How long it runs is something you'll have to decide. A year seems like too long for something he drops on you.
I think part of commission is servicing the account,This includes collections if the account falls delinquent. I would expect a sales person to earn a commission for more than just the initial contact of the order. I know that the original contact is important , but service after sale is important too. I say if they don't want to earn more sales or service the account that commission on future orders would not be warranted. ... JB
I've worked at businesses that employed salesmen. The salesmen opens the door for the business. Had it not been for the salesmen, the business would not have had access to the customers the salesmen generated.

I understand the concern. Why pay the salesmen for a customer he hasn't maintained since the sale? It would be nice if the salesman helped to maintain the account, but all he's really doing is selling YOUR product. It's your job to keep the customer.

Everytime the customer orders your product, remember it's the saleman who generated that sale, even if he's done nothing since. Cut the salesman his check and send your customer the product. You wouldn't have the sale without that person's effort.

You'll never be able to prove the customer would not have been able to find you without the salesmen, but we all live in the real world. Chances are pretty darn good that it was the salesman who got you the customer. Remember, there are thousands of us that make tshirts.

It's money well spent if the person you hire to generate sales actually does so. Give the salesman the benefit of the doubt and cut the check. If you don't, next time a sale presents itself, he may not mention your name, he may mention someone else. Now where will your sale go.
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Just another point to add. These salesmen make their living selling stuff. That is what their focus is. If they had time to maintain accounts, and still make their livelihood, they would. The more often a customer orders, the more commissions they make because their initial contacts are reordering, thus generating money for them.

I think alot of them make their sales, and trust their employers to send the checks. Remember, it's a 2 way street. How can they ever know your keeping your part of the bargain unless they have it in writing that they can look at your books. If they don't have time to maintain the customers, which is in their best interests, how will they have time to look at your books.
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