Which will be useful for you to better understand when it doesn’t work or works badly and how to do it, instead, to make it effective.
Success fees Example 1
Seller compensation based 100% on sales incentive (100% success fee) Let me give you a typical example, a company (I mean top management) meeting business professionals.
As soon as the entrepreneur or the managing director realizes that sales could significantly improve with the collaboration of a professional (who brings a strategy and a structured process), the most famous sentence of all is pronounced: “I like what you offer me, do everything you say, “sell” and I’ll give you the percentage” https://www.propertyleads.com/motivated-seller-leads/motivated-seller-leads-oklahoma/
The interlocutor, i.e. a sales professional, replies:
“Great, I accept if you give me 51% of your company”.
Does that sound like a good deal to you? It is actually a clear provocation. These words contain the main problem of this form of success fee: business risk. Any commercial, merchant, seller, intermediary, consultant, knows well that to have a profitable sale he must have a structured strategy.
He must build a marketing plan (strategic and operational) to generate potential customers and affirm the brand (customer brand) and only then can he conclude a profitable deal . Hence, it has to make investments in the trading process.
As with all investments, these make sense if you are in control of the process and risk management. It is risky for a seller to invest in a sales process, when a simple sudden business decision can lead to changes such as: product quality, supply conditions, prices, commission percentage, or even revocation of the mandate to sell.
Success fees example 2
Company with commercial strategy + 100% salary on sales incentive
There is a case in which the sales incentive based exclusively on the success fee can also appeal to business professionals.
This is the case in which the company has a concrete corporate strategy and a solid commercial strategy capable of autonomously producing already interested potential customers (leads).
Professional salesmen realize that their work can be enhanced under these conditions, because they will only meet people who are interested and already trained in the subject of the business. Under these conditions, a seller knows that his job is only to close the contract.