We are a web hosting company (duh) and are taking a look at maybe hiring some salespeople to help get our name out there, attract petential clients, etc. We are looking at various angles at how to pay these salespeople and were wondering if anyone out there had gone this route before, how did it work out, etc
We are considering paying a certain % of the first months payment to the salesmen, not sure the rate yet. Or possibly a flat fee per sale.

Any advice? Thanks in advance!

snikle,

I don't own a hosting company (may change sometime here in the near future hopefully :P) but I have done sales for web hosting companies and i will say this.

If you are going to compensate with commission, make sure you have good tracking methods in place. It is extremely frustrating to go out and spend time answering a bizillion questions and selling yourself/the company and the services to this potential client to in the end not even get credit for the sale.

Maybe "online salesman" like an affiliate program will do better. ;)

Yes, after some more discussion, this is the sort of thing we are leaning more towards.
Something like you get a set 10% of the billing cycle for the first 12 months for every account that signs up.

That sound like something that could work?

For an affiliate program to be attractive enough, you need to be paying between $20-40 per new customer as a reward. Then you can get good push from affiliates.

This is how some big sites like iPowerweb got to where they are now .. cos they offered big comms. of $40 per new customer.

My $0.02 :cool:

HostAZ,

What about recurring? Which do you think is more enticing to a potential affiliate?

20-40 bucks flat

or say 10% every month they stick with the host?

(Numbers just thrown out there.. would love advice on what you have seen work/think would work, etc)

Flat .. affiliates like to see money quick ... then they work even harder to bring in more sales after they see the first $$$ :cool:

Originally posted by HostAZ
For an affiliate program to be attractive enough, you need to be paying between $20-40 per new customer as a reward. Then you can get good push from affiliates.

This is how some big sites like iPowerweb got to where they are now .. cos they offered big comms. of $40 per new customer.

My $0.02 :cool:

$20-40 PER customer they bring in? There is no way most hosting companies could pay that, as most accounts are less than that a month, some even a year.

Trying to find a happy medium to making it something that brings in profitable business for us, but still rewards the affiliates as well.

snikle,

They figure it as if you provide great service and support the customer is going to stick with you for several months. Therefore you make the money in the long run, yet it is still quite high on customer acquisition costs.

Originally posted by snikle


$20-40 PER customer they bring in? There is no way most hosting companies could pay that, as most accounts are less than that a month, some even a year.

Trying to find a happy medium to making it something that brings in profitable business for us, but still rewards the affiliates as well.

Most affiliate programs offering the smaller comms. are hardly promoted ... so it's the case of who offers the most $$$. Affiliates go after the $$$.

I'm not sure if $40 per acquisition is expensive ... it may just be reasonable compared to some other marketing channels like banners - which can cost way more than $40 per acquisition. :rolleyes:

Ah I see hwo they do it, look at iPowerWeb's sign up, you have a $30 set up fee (ie, salesmen fee ;) ) + your monthly fee, basically they write off the first month as a payment to the sales man.

erm ... I think it's FREE setup if you prepay for the year ... the "setup fee" is simply there to push people to prepay ;) rather than pay comms. cos most people will go for the annual plan as there are more savings.

Right, I am just saying they offset their costs by having that setup fee (or pushing for the to prepay), either way, to them the salesman fee is not so hard to swallow.

Thanks for the comments!

my pleasure ;)

Interesting that you would ask this question snikle

We spent last year testing a reoccurring payment of 25% of the hosting fees and a 40% one time commision for web site development.

This was done with two part time sales people.
Both have their own business but were looking for a way to make additional income.

Seller 1 Consultant
Seller 2 Technical Translation

Plans available: $9.95 mo | $19.95 mo | $29.95 mo
Average development cost: $2500.00
Method of Sales: Cold Calls | Door to Door | Local Newspaper Advertising

Total web sites sold through the two sales people: 12

Conclusion from the experiment:

Limiting yourself to a few local sales people doesn't work. The general public just doesn't understand what web hosting is yet and why they need it.

We will continue to offer the same plan structure, although we will be opening it to the public with an online affiliate program.

Ah... see - I'm finding the opposite of EasySite...

The local sales people door-to-door is working ... except we target businesses. We explain that even though our plan is 50/mo.. that they are losing more than 50/mo because of not having an online image. - Works most of the time.

As far as getting our salesmen to do their jobs... we give them $50 per new monthly sign up, because they could possibly leave the month after...

and we give them $150 per yearly sign up... makes the salesmen put in the hours and drive the customers ;)

I would issue just a flat.... Funny this was brought up, we were just talking about making this a reality.

Here is the real tough question:
How do I put something affordable in place to TRACK this? I am talking about online referalls only. I can offer link code, but my system isn't exactly setup for something of this nature.

We were planning an online sales presence only, not a door to door one, though now, that is an interesting idea. And we have programmers onstaff that can implement software to track the salesmen's sales and progress.

snikle - your sign up process on your website is very nice - good job.

I wish I could take credit for that, that is our on staff programmer (and co-owner), Faldran. He is outstanding (and for hire, once he finishes the work I have for him! ;) )

snikle give him my information. When he is out of work, send him my way.

If you can't afford pay a comm of $20 - $40 per customer signup then you shouldn't even attempt an affliate program.

$40 can equal $120/yr. a host if there average client pays $10/mo. Thats a 200% return on your investment.

Looking at the more prominent hosting related affiliate programs, most are paying between $20-40. The more daring few pay $50-60 per new signup.

Hi HostAZ,
Could you give a url or say where you are looking at/for the host offering affiliate deals for new customers? Would like to check them out.

Thanks,

Louis

My suggestion is give 100% of the first month but pay on the day of billing for the second month.

IE Customer A Signs up by affiliate on Jan 1st. On Feb 1st when he is rebilled the affiliate gets 100% of the first month.

That way when you pay commissions you already have the next months payment.

Just my 2 cents...

Originally posted by stlouislouis
Hi HostAZ,
Could you give a url or say where you are looking at/for the host offering affiliate deals for new customers? Would like to check them out.

Thanks,

Louis

Check out CJ.com's hosting merchants. :stickout:

I went and checked the plans out and found an average of about $29 per sale (if I am to understand the little info they show you).
However after digging a little, I realized that most of the higher paying plans also used the setup fee or a pay X for 1 or 2 years, or pay XX for monthly model. So I think my theory that they used the setup fees or reduced prepayment (which we use also) to offset the commision fees was correct.
Either way, thanks for all the input, helped us in making our decision.

No prob buddy ;) .. remember one thing though ... affiliates want to see $$$ ... so your tracking and payment (promptness + accuracy) must be 110% .. this is the one key that will help you succeed in affiliate marketing.

Pay your affiliates good $$$ and treat them real well :cool:

Thanks, HostAZ!

I thought you were likely refering to CJ.COM, but wasn't sure; figured I should ask.

Thanks again,

Louis

my pleasure ;)