Business-to-Business (B2B) sales reps are frustrated with bad compensation plans.
Income caps. How does that ever make sense for a salesperson?
Confusing and complicated incentive plans. Reps unsure what they’re earning.
Ever-changing, black-box formulas.
Worst of all: little or no residual commissions.
This last offense – a company not sharing recurring revenue with the sales rep who creates a new client – is a huge deal.
Why does a company horde residuals and stiff their B2B sales reps?
Economics. Companies know residuals drive long-term economic value.
It may be part of a big company’s value system: our brand and our products/services are much more valuable and important than the people selling for us.
The sales force compensation plan often reinforces a mercenary relationship between a big company (with a long view) and its sales reps (with a short-term outlook).
Here’s the unwritten but tacit understanding in this arrangement: you, the sales rep, get what you need in the short run (a job, a decent paycheck, sales training, resume experience, and learn a valuable, transferable sales skill – how to hunt and kill) while we, the big company get the true long-term wealth builders (keep the new customers for many years, grow our revenue and brand, and accrue the profits from the residual income stream).
Many big companies can afford to overload front-end compensation, and indeed overpay B2B sales reps for new client development. The company knows it keeps the rich back-end prize – the recurring revenue stream.
Now, this is a fair deal for the company and the B2B sales professional.
Until it isn’t.
The best sales professionals, unless they choose to climb the management ladder, eventually recognize that they are selling in a GREAT job but a CRAPPY career.
We help top B2B sales reps to trade their GREAT job/CRAPPY career routine for the opposite (yes, a CRAPPY job/GREAT career!) with our retainer clients, the country’s top commercial risk management and insurance brokers.
The early years of becoming a commercial insurance broker (more commonly referred to as a “producer”) are not glamorous, easy or lucrative.
The start of the journey to become a professional commercial insurance broker is a new business prospecting grinder that requires extraordinary determination and resilience.
The economic upside to persevere and become a successful commercial insurance broker?
- Residuals on annual client renewals. It’s a career based on building a clientele (more commonly referred to as a “book of business”) over many years, so seasoned producers earn most of their income from annual contract renewals (recurring client commissions). Because of renewals, even mediocre seasoned producers earn low 6-figures over time. Our clients’ top producers generally make $250K+ per year and $400K to $500K income producers are not uncommon.
- Over 90% client retention. Commercial insurance is a big-ticket, non-discretionary, annual spend. It’s also a consultative, trusted advisor, relationship-based sale. So, once a producer builds a relationship with a client, they tend to stay together for years. And clients don’t stop buying business insurance during difficult economic cycles either.
- Transparent, uncapped compensation. Commercial insurance producers enjoy complete self-control over their W-2 income. A producer earns a percentage of the total commission revenue that their clientele (book of business) generates for their firm. They get paid for new clients, of course, but earn heavy residual commissions to keep their existing clients. And we’ve never seen an income cap. NEVER. So, if a producer is unhappy with their income, they can stare in the mirror to see who to blame. Go get more clients and give yourself a raise!
Certainly, becoming a commercial insurance broker is not the only lifetime career choice for top B2B sales professionals. Nor is everybody cut out to succeed in this career.
But, for B2B sales reps looking to escape a quota-chasing, “rat on the wheel” sales job that only makes their company rich over the long haul, it’s a great career option to consider — if only because it’s got THE critical ingredient for truly getting rich in a B2B sales career: residual commissions!