In this presentation, Joshua Nelson critiques common agency sales compensation models—pure commission and high base salary—highlighting their drawbacks such as desperate selling, client mismatch, and complacency. He shares a cautionary anecdote from his own Plumbing and HVAC SEO agency where a perpetual revenue‑share arrangement nearly bankrupted the business, illustrating the cash‑flow danger of overly generous residual commissions. Nelson then proposes a balanced structure: a modest base salary of $30,000‑$40,000 combined with a 20‑30% commission on the first month of a new contract, with the possibility of higher percentages for benchmark achievements. He advises keeping ongoing residual payouts to a maximum of 1‑2% in limited cases and recommends performance bonuses for exceeding targets. He also mentions a compensation document he created to map on‑track earnings, emphasizing that a well‑designed compensation plan aligns salesperson success with agency profitability.
Chapters
I know a lot of people say commission only, right? That's what you should always do. I've had bad results with that. And I'll talk about that in a little bit. On the other side, I've heard people say, well, let's just make them base salary, right? Let's give them a relatively high base salary. And I don't like that either. Because I think that sales is one of those positions that you should be able to make as, as much money as you earn, right? By closing more and more opportunities. And so I think too little base leads to desperate selling, right? Commission only people become desperate and they start to sell the world, they start to sell promises. And if you get somebody good, maybe you can make it work. But a lot of times you're gonna wind up with bad clients that aren't good fits that don't stick around long term. So too little base can be that problem. Too much base is complacency. Oh, you know, I've got the 6-figure income, I'm just gonna cool my jets. Even $75,000 or $50,000 base salary I think is extremely high for a salesperson where they can earn as much as that and more, but they'd have to sell, right, in order to make that a reality. Wrong compensation structure can lead to massive cash flow problems. I played with this throughout our agency's life cycle at Plumbing and HVAC SEO where I hired an appointment setter slash hunter type of role, gave them a percentage of revenue on a perpetual basis, started doing a lot of our own marketing, getting tons of opportunities, people basically coming in pre-positioned to buy. I had an order taker that was getting a large percentage of recurring revenue, almost would have bankrupt our company. So it was really important that we removed that salesperson, removed that compensation strategy. Getting your compensation strategy in place right so that as, as they win, you win is super important. Closer compensation. And this again assumes you've got inbound opportunities. They're taking sales calls with people already interested, already qualified for what you do. I like Relton modest base between $30,000 and $40,000 per year, and then commission on the first month. So we're talking 20 to 30% of the first month. So if it's a $2,500 a month deal, they get 20 to 30% of that first month. And you can play with if they hit certain benchmarks, the percentage is higher in that one particular month. I really would suggest avoiding high residuals. I've seen agencies get themselves into 5% of monthly recurring, 10% of monthly recurring. Knowing the margins in this industry, that has a massive toll on your profitability. I would say max for sales compensation, assuming they've got a base salary and you've got some marketing going, is gonna be between 1% and 2% of residual in only certain situations, right? So really avoid that. Go ahead and give them performance bonuses for exceeding targets. Now, I've got a great compensation document that I put together that helps you map out on-track earnings.
