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Why Must You Pay Sales People Commissions?

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Re: Why Must You Pay Sales People Commissions?

#91

Post by 0xbear »

Fordrus wrote: post #65
Waterluvian wrote: post #7

Earlier quoted context omitted.

Also personality. Good salespeople are... Good salespeople. They apply their craft when negotiating compensation. What am I going to do, make a single page app about why I should be paid more? ...actually that's not a bad idea.

When I was still in the humanities (German Literature Major), my program was making a MAJOR push for all graduates of the major to be able to articulate to others and interviewers the skillset they'd gained during their time at university, and I found it quite useful and helpful, even though I can't remember too much about the specifics. I even talked to one of my professors personally about the push, in which I ment…

Out of curiosity, what career path did you end up pursuing?

Re: Why Must You Pay Sales People Commissions?

#93

Post by tptacek »

calinet6 wrote: post #41
tlb wrote: post #26

Earlier quoted context omitted.

It's not a circular argument to point out that excellent sales people will take the commission job, while bad sales people will take the salaried job. All the things you mention (support, morale, ...) are second-order considerations -- the first order consideration is getting the best people.

This assumes a specific philosophy of how companies work (good individuals) while an alternative model of good working systems is also effective. A systems view is less dependent on good individuals. As W. Edwards Deming said, "A bad system beats a good person every time."

I've read articles from credible people talking about building commission-less sales cultures and I like the idea.

But from experience in a few different companies, one of which involved me directly working with a decent-sized sales team, adverse selection is empirically a major issue.

Among the things I feel like I've learned is that the sales people who are most engaged with the product space and can converse most intelligently about the product you're building are not necessarily the people who are best at actually driving revenue, and that a fledgling product for which the numbers don't exist to guarantee a pretty steady stream of commissions will drag very intelligent-sounding ineffective salespeople out of the woodwork.

There seems to be a species of salesperson that has evolved to sell executive management on continuing to pay them while blaming the rest of the company for their inability to close deals, rather than selling prospective customers on a product. I've had the misfortune of working with some of them. At the time, they even had me on their side! It's really quite creepy in retrospect.

I'd go way out of my way to avoid attracting the sort of salesperson who is driven by anything other than transactionally closing deals as quickly as possible, just to avoid the possibility of having to work with someone like that again.

Re: Why Must You Pay Sales People Commissions?

#94

Post by tayo42 »

JamesBarney wrote: post #16

CEOs tell everyone if you want great CEOs you gotta pay them. If you wanna great salespeople you gotta pay them. You want great devs. You should put in a ping pong table and give out free soda. The myth that great developers aren't interested in compensation is terrible for our collective pay.

Dev salaries are pretty high? Are sales people really making what engineers make? I took a quick look at glassdoor for my company and it doesnt seem like it.

Re: Why Must You Pay Sales People Commissions?

#95

Post by greedy_buffer »

Waterluvian wrote: post #7
phkahler wrote: post #3

Why do sales people get commissions and engineers don't? Because the sales person knows exactly how much money they bring in and can claim "if I didn't make the sale, that money would not be coming in" even though it's not always true it's a good story. An engineers actions are so far removed from revenue that they can't make a claim so directly. Also, if they did want to claim a portion of product revenue they could…

Also personality. Good salespeople are... Good salespeople. They apply their craft when negotiating compensation. What am I going to do, make a single page app about why I should be paid more? ...actually that's not a bad idea.

Depending on who you are pitching, it might turn out something like http://getcoleman.com/

Re: Why Must You Pay Sales People Commissions?

#96

Post by aggie »

RcouF1uZ4gsC wrote: post #54
JamesBarney wrote: post #16

CEOs tell everyone if you want great CEOs you gotta pay them. If you wanna great salespeople you gotta pay them. You want great devs. You should put in a ping pong table and give out free soda. The myth that great developers aren't interested in compensation is terrible for our collective pay.

You don't see CEO's being CEO's in their free time. Nor do you see sales people selling stuff just for the fun of it. With open source, developers will spend time and effort building very valuable stuff for free. This perpetuates the perception that programmers like programming so much they would do it as long as their living expenses are met. I honestly think open source has depressed the wages of programmers. Linux…

> Nor do you see sales people selling stuff just for the fun of it.

Do you hang out with many sales people? In my experience, it's a very personality-driven field and they certainly do at least act like sales people outside of work, even if not literally selling a product or service for money.

Re: Why Must You Pay Sales People Commissions?

#97

Post by tptacek »

gozur88 wrote: post #43

If you didn't pay commissions sales people would start coasting once they made their numbers. Imagine you have to make a million on sales per quarter, and three weeks in you strike gold in the form of a $1.1m contract. Sure, you get bonuses for exceeding your numbers, but you could spend the next two months slacking off, which would probably be worth the lost income. Worse, from the company's perspective, you might t…

The theory of not paying commissions is that salespeople will be incentivized the same way other employees are. You don't code on commission and tend not to coast once a revenue number is hit.

Re: Why Must You Pay Sales People Commissions?

#98

Post by askari01 »

Sales is very important, a salesperson can sell shitty app and still make money, meanwhile i have seen some really good softwares n products being dumped for lack of budget. So I think hardworking smart salesman deserves to be paid well. And marketing is very important.

Re: Why Must You Pay Sales People Commissions?

#99

Post by parasubvert »

ugh123 wrote: post #87
phkahler wrote: post #3

Why do sales people get commissions and engineers don't? Because the sales person knows exactly how much money they bring in and can claim "if I didn't make the sale, that money would not be coming in" even though it's not always true it's a good story. An engineers actions are so far removed from revenue that they can't make a claim so directly. Also, if they did want to claim a portion of product revenue they could…

>An engineers actions are so far removed from revenue that they can't make a claim so directly. Really? I see it the other way around. How did the salesperson contribute to building the product? A well built technology solution can sell it self in many scenarios. If we didn't have sales people, we could still build a product and push it into the market. Of course all of this depends on the type of product, but still.…

I've been working in software for a long time, and other than inexpensive / simple consumer software or inexpensive departmental IT software, I've never seen products that sell themselves. Marketing at the very least is required, and for anything remotely complex, that's what sales is for.

Sales does something nearly as important as building the software: they map a customer's opportunity or problem to a technical solution, and ensuring they're successful with it. Sales (and marketing, which is arguably the evolution of sales at scale) are the field forces in discovering and exploiting product/market fit. No feature list survives first contact with the customer. Sales creates customers, and thus create markets.

You might have a great piece of software but if no one can explain it, no one will understand it, and it won't sell. This is the difference between software that costs $1k and $100k+. The price is reflective of the value it can provide and who is buying it.

Now in very small companies, the engineers are also marketers and salespeople. But beyond (say) 50 people, the divide between engineering and customers gets wider unless you have very good communication between sales, marketing, product, and engineering. There's too much work for everyone to focus on everything.

Re: Why Must You Pay Sales People Commissions?

#100

Post by puranjay »

greedy_buffer wrote: post #95
Waterluvian wrote: post #7

Earlier quoted context omitted.

Also personality. Good salespeople are... Good salespeople. They apply their craft when negotiating compensation. What am I going to do, make a single page app about why I should be paid more? ...actually that's not a bad idea.

Depending on who you are pitching, it might turn out something like http://getcoleman.com/

That page is glorious
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