I've been in sales for most of my life with the latter being in commissioned sales. I enjoy it but I realize the challenge in going to work for a startup with no guarantee. I also understand that the majority of young people are less enthuised about working for commission than ever before due to the uncertainty of the market.
My thoughts. I have proven time and time I can open doors many can not or don't have the strategy to, so no way I would consider it for the average sales deal. I don't consider myself a sales person in the traditional sense. But for me to do 100% commission, I would want well over the average commission for the same position in an established company, and I would also want a contract guaranteeing me the account for a set period of time regardless if I set up the account today and left 6 months down the line. And likely I am not going to set up that kind of deal without a % of equity in perpetuity, because I know the value of those deals and how difficult they are to set up. If I make a deal that makes your company, I will absolutely own a piece of your company, not even negotiable. But at least by doing this, you offering a type of temporary equity of sorts. I would also want the option to head up the account as long as I worked for the company.
You have to make up for the risk. You have to make up for no benefits which is a huge deal today. So figure out that rough dollar amount and compensate for that with a premium. But here is the thing you have to consider. Do you really want someone who doesn't value their ability?? Sure there are bloated egos and plenty of people not anywhere worth what they think they are. But in 100% commission all of that goes out the window. Who cares? If they come in and say they can out sell every sales person in the world, believe them and hire them and let them prove it. You lose nothing. But you better at least offer a lion's share reward if they do. Otherwise, the solid sales people are not even going to waste their time with your company.
Commission only sales people are very much independent business owners. One key is to find out where your product will sit in their portfolio. This will give you an idea how much effort they will apply. Things to consider are ease of sale, commissions and residual income. One thing that is often over looked is resources. Do you have any assets or resources that will be available to them that will help them sell not only your product but others they offer. Something like a marketing system (which I have) and not just marketing material or collateral for your specific product. Good reps come in all sizes. I find that marketing the opportunity as "run your own business" works well. Some like training. Some hate it and view meetings as a time suck. Make it optional. Hope this helps.
Commission only sales people are effective in well defined and understood markets. People willing to work on commission-only in new products, particularly innovation that takes significant learning/teaching, that inherently have long sales cycles, are usually ineffective. Professional sales people understand they have a mortgage, tuition, and retirement to deal with so predictable income is critical. People willing to work commission-only on startups have an exceptionally high turnover, costing the company more than they save in base. However, as mentioned in other comments, a person accepting a sales role where they demand a high base and low commission, will likely not be effective as well. The incentive for a professional sales person is to multiply the base by the commissions. The most effective people will have a higher income than the CEO.
I agree, strongly, with David's point. %100 commission can seem attractive and all, but it isn't the "perfect fit" for the average salesman. What we do at my start-up is we establish a combination between Base pay, allowance, and commission to establish the target pay of the sales person. The commission is designed to provide the sales person with their desired income (e.g. 10k/month), and be enough for them to meet their sales targets. So the combination is well in sync to establish a win-win for the sales person and the organization.
Hi Jeremiah. I recently accepted a remote, commission-based sales job, and I'll tell you my reasons for doing do.
At the end of the day, you can't view it as "they should choose my company because..." You have to view it as "What do I offer that they can't get at another company?" If they're an experienced, successful sales rep, they'll have no problem getting a salary + commission job elsewhere. If they're inexperienced, there's likely going to be a learning curve and it will be difficult to keep them motivated while they're hearing "no" and not getting paid in the beginning. Figure out what makes your company an exciting place to work and sell that. Go above and beyond to help train your reps. Shoot for quality over quantity with your reps. Start with one, make sure they're successful, and use them as an example for everyone else.
I noticed you're in Jax (as am I), so drop me a line on LinkedIn and we can chat.
The simple answer is that you can not, unless you bring them as partners too. After all, sales people work for money. You offer them potential. To accept they must believe in what you do. In this case they will require partnership
I understand the frustration of getting the incentivisation plan right. I've often struggled with hiring sales people who wanted a comfortable base but very little commission - it makes me question how hungry they are. But for commission-only deals there needs to be certain factors in play, especially for start-ups: what success has been achieved so far and how, what is the sales cycle, what materials are in place so far, what's the average sale size, what sales objections have been made and how were they overcome, what's the conversion rate at each sales stage, what's the ROI, do leads need to be self-generated Etc.
Then the commission needs to be structured such that the sales targets are realistic, the commission reflects the risks and rewards (inc equity), and for a realistic period of time.
Finally, you also need to consider what sort of person will take a commission only deal. For example, I have a number of commission only agreements that I work on as a cluster approach to make introductions. I also work on a retainer (salary) so will allocate my efforts according to the likelihood of reward.
The challenge is that there are countless startups who are looking for "straight commission" sales people and very few really good sales folks. You're going to have to SELL THEM on your opportunity before you can get them to sell for you.
Also, these people still need to eat! Make it easy to sell your stuff. Make the payoff for them investing their time worthwhile. Have some metrics. Can you tell them how long a typical sale takes? Do you have a well-defined sales process that you can convey? Do you have marketing support? collateral materials? Reference clients?
That is very hard to do. And a fair portion of salespeople who are highly successful in one situation, end up being duds in other situations. And it isn't even predictable to them, let alone to you.
Find sales people who are selling a non-competing product to the same customer base and offer them really really fat finders fees.
Then recruit from those who are able to earn the finders fee.
Offer the chance to control your salary through entrepreneurship. There is total flexibility once you have the right structure and CRM tools in place and you can set your own goals once you have established a good level of income. There is no better way to leverage the risk of ownership in a business than to become an independent contractor once you have the right product and services for your market.