Should I Hire Another Salesperson or Invest in an Affiliate Program?

by Bill H.

By Thom Schlip, CEO of PlugInGo.com
April 19th, 2000

I was having a discussion recently with another small business owner about how to grow their online business when she mentioned that she was considering hiring another full time salesperson for her staff. I inquired as to what was the benefit she expected to receive. As expected, the answer was “Increased sales”.

Curious, I asked “How has your experience been in hiring salespeople in the past?” Based on her quick and flippant answer “horrible” I knew immediately that she had been burned in the past. I figured this was as good a time as any to refresh myself with the positives and negatives of growing a business by looking at the core ways in which it can be done. After all, everyone needs a splash of cold water in the face sometimes.

“Do you have a few minutes to review the process of hiring a new salesperson,” I asked? She was game so here’s what we discussed and the conclusion we came up with.

The major benefit of hiring a new salesperson is to bring in new revenue — Period! Very little company branding occurs through the power of one salesperson (When discussing sales it is in fact the loneliest number). So, for it to be profitable the salesperson must bring in more “profit” to the company than expenses incurred.

To determine what that number is we need to understand what expenses are involved, so I asked, “When you hire a salesperson do you have to recruit” She answered, “yes.” Does that cost money, “Of course it does” she smiled back. I asked, what are the other expenses involved. In no particular order she said:

  • Salary
  • Benefits
  • Taxes
  • Supplies, computers, paper, pens, etc
  • Miscellaneous
  • overhead, like car allowance
  • Phone
  • Fax
  • Copier costs
  • Office space

After she mentioned these costs I asked: Is there any guarantee that sales will be made? Is there any guarantee that the person won’t take in all your “Free” training then move onto another job after you’ve spent the time, money and resources training them? Is it possible that this person may not get along with some of the other employees and cause friction that reduces output? Two no’s and a yes and we were on to cash outlay.

I then went on to ask, “If you had to put a number on the total costs of bringing on a new salesperson for one year what would it be? She thought and responded with this; Salary would be $30,000; Benefits run $500 per month ($6,000 per year), Payroll taxes are 10% of employee earnings ($3,000 per year); A new computer and accessories are a couple thousand dollars; Car allowance is $300 per month ($3,600 per year); Phone, office space, fax, workmen’s compensation, temporary disability insurance and copier costs are at a minimum $1,000 per month ($12,000 per year.)

So, in ballpark numbers we are looking at least $60,000 and that doesn’t take into account your time for recruiting this person, interviewing others who you did not select and training. Its safe to say that total costs would be in the vicinity of $80,000 for just one new salesperson.

Taken back, she said “But I need to grow my business, I don’t have a choice”. Does she?

What would you say if I told you that there is a way to develop a worldwide sales force (affiliates/advertisers) of thousands in just days and direct them in seconds via a web- based interface? How about if you only had to pay these people when an action (that you determine) such as providing a sale or a lead is made. That these people would work on commission only. No salary, benefits or overhead expenses. If any of these salespeople (affiliates) don’t make sales you have the option of simply removing that person from your sales force. This ideal program would help you maximize your advertising and sales efforts with the least amount of expense possible.

In return, the salespeople are allowed to offer your products and services without having to invest the capital typically needed to begin a new business venture. The usual headaches associated with creating their own store, stocking of inventory, hiring employees, handling returns and processing orders would be removed. The characteristics of this program result in a perfect advertising model; you only pay on results and the salesperson is able to make money on the Internet with minimal capital outlay.

“Is there a name for this,” she said. “Affiliate Marketing,” I snapped out. It can be the ultimate business tool.

Now that she had bought into the concept of affiliate marketing, her next question was “Where am I going to find these people?” I said, that’s the beauty, they are everywhere. People that have a website, people with email, other businesses, in fact there are millions of them involved in programs like this all over the world.”

“This sounds great but if hiring a new salesperson cost me between $60-$80,000 per year, what will this cost.” she asked. “In most cases less than $1,000″, I replied.

                      NEW SALESPERSON       AFFILIATE PROGRAM
Initial Outlay	        $60-$80,000               $1,000
Guaranteed Results        None	                  Yes
Pay an extra bonus      Sometimes           Only when sale is made!

The Internet changes everything it touches and it touches almost everything. Businesses no longer have to fall prey non-producing salespeople and ridiculous advertising costs. Even the smallest of companies can now develop a world wide sales force and grab a share of their market with virtually no out of pocket costs while controlling and directing their sales people online in seconds.

And you can easily accomplish this without incurring the advertising, recruiting, managing, tracking, payment and overhead costs typically associated with adding new salespeople. Best of all, you can do it all from any computer that has Internet access in the world, with a simple web interface, in just seconds. This will bring you more sales and in less time than you ever dreamed possible.

All, while only paying for results!

Thom Schlip was the CEO of PlugInGo.com, a leading affiliate program provider, specializing in small and medium size businesses.

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