Hiring a salesperson is a daunting task; you have to trust someone to speak on behalf of your company.
This person is the first voice they deal with, they make the promises, and they affect your bottom line. It’s easy to put off hiring a dedicated salesperson, but you need one – as an owner, you have plenty of other stuff to handle.
A good salesperson needs to be compensated differently than other employees of your company. Top salespeople are often ambitious and driven and are motivated by a pay structure that rewards them for meeting and exceeding their goals. In property management, where the typical deal is worth thousands of dollars in long-term income and competition is fierce, you cannot afford to take these hiring decisions lightly.
In order to find the right balance, so that your company and your salespeople can both win, in today’s blog we summarize a recent podcast on how you can set up the perfect compensation plan for salespeople in the property management industry.
In the podcast, we interview Duke Dodson of Dodson Property Management about how he hires salespeople for one of the fastest growing property management companies in the United States. The article below is just a taste of what we cover in the podcast. To get the full value of the talk, be sure to watch the video above.
When Should a Property Management Company Hire a Salesperson?
It all depends on how quickly you are looking to grow. For most property managers, growing by 10 properties per month is an excellent goal to start with. If you can attract that kind of new business every month, then you’ll enjoy an impressive increase in annual revenue. Hiring a dedicated salesperson will help you reach and even exceed that goal.
Duke knew it was time to hire someone when he realized that he was a good salesperson, but not a great salesperson. When Duke was doing the selling himself, he was able to grow by about 100 units per year, when he was spending 10 to 20 percent of his time on business development.
When he hired a full-time salesperson, his growth jumped to over 300 new units per year. One thing to remember if you are hiring a dedicated salesperson: you need to have the capacity and the systems in place to handle the growth you’re hoping to achieve.
A Realistic Capacity for a Good Business Development Person?
Since Dodson PM ranks well on Google, they are able to get a lot of “warm” leads. So with a salesperson, their goal is 25 properties per month or 300 per year.
In the wintertime business slows a little and in the summer it picks back up. There is also volatility when they get a big client who has 10 or 20 properties and their numbers spike. Success all depends on the amount of units a company can absorb quickly. Dodson built his company so that they can handle a new client that has 20, 30 or even 100 units. If you can handle that kind of volume, your goals can be fairly hefty. If you don’t, 10 properties a month is a good number to shoot for, until you can learn to onboard clients more efficiently.
You’ll also need to consider whether you have a steady stream of warm leads coming in the door from your content and marketing efforts. A dedicated salesperson needs leads to do their job. If you don’t have that steady stream you may want to consider investing in a Google Ads campaign, or increasing the amount you spend on your current campaign.
What Should a Property Management Company Pay a Salesperson?
There are essentially two ways to compensate a professional salesperson.
- You can pay a salary plus commissions on any new business that they bring you.
- You can make the compensation structure entirely commission-based.
At Fourandhalf, we recommend a base salary plus commission. Having a base salary solidifies your commitment to that salesperson, and theirs to you. In addition to the base salary, the commission on the new leads that are closed rewards and motivates the salesperson.
The salary structure you come up with will depend on a number of things. You’ll have to look at your market and the kinds of salaries and commissions that professional salespeople make in your area. Also, you will have to take into account how many leads per month your marketing efforts are bringing in to get an idea on the number of contracts that can close each month, and therefore the commission the salesperson can earn. Based on those things, you can do a partial salary and partial commission compensation plan that serves all your needs.
You can also offer accelerators for exceeding monthly goals, so that your salesperson can help determine how much he or she earns. There will need to be solid administrative and accounting organizations within your company in order for an accelerator payout to work, but if you can handle that without arguing over the details each month, it can help accelerate your company’s growth.
However, given the current market, it will be fairly difficult to hire someone without a base salary. It is the method preferred by most salespeople as well.
Where Can a Property Management Company Find a Salesperson?
You’re probably going to have a hard time finding someone with both sales experience and property management experience. And that’s not necessarily a bad thing. If you can find someone who excels at customer service and has a background in sales – even retail or banking – you can train that person in property management and the services you are selling.
Be careful, however: a salesperson that excels in a high pressure, high volume, sales environment may not be a good fit for property management, where you are looking to have a long-term relationship with the customers they sign.
So, think outside the box when you’re looking for that salesperson. You can run an ad, but you can also talk to people that you meet every day. People interested in new career opportunities are everywhere. Write up a job description and start talking to the salespeople and customer service experts who impress you while going about your daily business. There are lots of great salespeople out there that are not getting paid as much as they should, and some people that don’t even recognize that they could excel at sales.
The video above provides the full 32-minute talk with Duke Dodson, if you like the content be sure to subscribe to the Property Management Show on iTunes, or check out the rest of our episodes here. If you have any questions, contact us at Fourandhalf and we’d be happy to tell you more about how to put together a sales process and hire a salesperson.