Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Why Must You Pay Sales People Commissions?

a16z.com

Post reply on HN
Print view View original

201–210 of 327 posts

Re: Why Must You Pay Sales People Commissions?

#201

Post by PeterisP »

calinet6 wrote: post #2

A strong argument would at least consider the systemic consequences of commissions, rather than just extolling the assumed virtues in a circular argument. What is their impact on product? On support? Engineering morale? On the customer experience itself? Just a myriad of effects not even considered here when commissions are looked at in isolation, the system be damned. It's probably very true that it's not plausible…

It's important to note that what counts in the end is the bottom line of the company.

Revenue brought in by sales has a direct effect on the stuff that matter. The effect of product quality, support quality and engineering morale matters only to the extent that it affects revenue.

A salesman getting some CFO to sign on the dotted line has a clear and guaranteed impact on your profits.

An engineer developing an excellent new feature or removing a major future scalability problem might have an uncertain (though possibly large) effect on your profits in the distant future. Maybe the feature will drive new sales, and maybe it won't. Maybe the company won't ever reach the volume where the future scalability problem will matter, as they'll go out of business.

Companies are in the business of using money to make money. Selling a feature doesn't work will get you money that might allow to make that feature. Making a great feature that's not sold is money and effort that's completely wasted.

Re: Why Must You Pay Sales People Commissions?

#202

Post by lr4444lr »

chimeracoder wrote: post #111
richdougherty wrote: post #63

Earlier quoted context omitted.

> the sales person knows exactly how much money they bring in I agree this is the key factor. Any job where a person can argue a clear, direct, measurable link between their work and profit is a job that can be paid based on financial results. Other jobs where you see this: financial traders, consultants with direct client contact. To take the other extreme, look at teachers. They have the potential to generate huge…

> Unfortunately the effects of a single teacher are so noisy and indirect that it's basically impossible to measure their performance. The lack of firm data is why the debate about teacher compensation is so fraught. The problem is not that it's hard to measure. The people is that teachers actually have very little ability to make a marginal impact on their students though their performance, except at the very tail e…

Disagree. The tails of the distribution are where the teacher effect is probably the least, because there are significant obstacles on the low end that make focusing on learning impossible and immense innate talent at the high end where the kid would learn if you put him in a closet with the textbook and a flashlight. The real problem with teacher success metrics is that they are outcome-based. It is no more useful to measure the success of a world class surgeon by including the outcomes of people who completely ignore the post-op care directions and instructions for lifestyle changes.

Re: Why Must You Pay Sales People Commissions?

#203

Post by chayesfss »

Problem is, only 1 in 10 or less salespeople are any good. Most are just there to try and get some easy inbound leads and close those off. Very few will actually try and do some work around finding projects, different ways into a company. It's ridiculous that salespeople will get 10-15% of a deal when they typically don't know jack shit about the technology. Honestly I think todays new companies would be wise to allow companies to sign up directly and save themselves 10% of the price. Yes these same companies would have to bolster their corporate staff to ensure redlines are done, etc but the world would be a great place.

Re: Why Must You Pay Sales People Commissions?

#204

Post by ghaff »

staunch wrote: post #164

Why? Because sales people are good at sales! Their whole job is negotiating the highest possible compensation for the value they provide. Apple doesn't need sales people to move millions of their products into "the Enterprise," and neither does any other company with products as good as theirs. It's just that most companies make shitty "Enterprise software" and then try to push it with aggressive sales tactics. There…

Except Apple actually does. [1] Yes, it's relatively limited but Apple has selectively hired sales people for enterprise sales.

[1] http://www.techrepublic.com/article/apple-posts-huge-gains-i...

Re: Why Must You Pay Sales People Commissions?

#205

Post by lr4444lr »

asdfgadsfgasfdg wrote: post #177
camelite wrote: post #148

Earlier quoted context omitted.

That's a myth. The real problem is that the average teacher (relative performance) is so far away from being close to maximally performant (as proved in studies which rigourously control teacher behaviour) that the impact of variation about that mean is swamped by environmental factors. People conclude that since swapping teachers doesn't make an appreciable difference, teacher performance can't make a difference. Wh…

If teaching is indeed universally bad (which I doubt but lets go with the idea as a thought experiment) - then surely the issue must lie with training/the accepted teaching methods?

I disagree with the parent post and do not dismiss your suggestion, but no, that needn't be the only cause. The profession itself may be disincentivized in a number of ways against bringing in capable people.

Re: Why Must You Pay Sales People Commissions?

#206

Post by kurtisc »

jasonkester wrote: post #185
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…

As an engineer, the way you get paid for the value you create is by starting a company. In fact, that's the way you do it in pretty much every profession. The only difference between the guy who owns a successful Veterinary practice and the guy working as an underpaid veterinarian is that one of them went out and leased some office space.

The difference between an underpaid processor designer and Intel is a billion dollar fabrication process.

Re: Why Must You Pay Sales People Commissions?

#207

Post by lr4444lr »

Ciao_a_tutti wrote: post #194
camelite wrote: post #148

Earlier quoted context omitted.

That's a myth. The real problem is that the average teacher (relative performance) is so far away from being close to maximally performant (as proved in studies which rigourously control teacher behaviour) that the impact of variation about that mean is swamped by environmental factors. People conclude that since swapping teachers doesn't make an appreciable difference, teacher performance can't make a difference. Wh…

I might become a teacher and I don't want to be a bad one. I want to be exceptionally good. Do you have any suggestions?

Pick an area with a strong union that will cover your ass when you have to use your experience, skill, and knowledge to do what has to be done when the admin bureaucrats not only don't help, but even become your chronic obstacle. Make sure you don't try to be too heroic before you get tenure, though.

Also, try to get a subbing or student teaching position that will put you with the same group of kids regularly for at least a month to be more sure you can handle the stress of the job.

Re: Why Must You Pay Sales People Commissions?

#208

Post by yoz-y »

peteretep wrote: post #162
scarface74 wrote: post #112

Earlier quoted context omitted.

Companies would do similarly for managers and engineers if there were a discreet non-gameable measurement of their output The sales process is gameable especially in software. The salesperson can sell vaporware and promise the customer that the company can deliver. That puts pressure on software development to work overtime - unpaid - to meet the deadline.

This can be easily worked around. In a previous CTO role we started talking about development costs coming out of sales commissions, and the problem went away.

I would LOVE this to be done everywhere.

Re: Why Must You Pay Sales People Commissions?

#209

Post by nthcolumn »

jasonkester wrote: post #185
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…

As an engineer, the way you get paid for the value you create is by starting a company. In fact, that's the way you do it in pretty much every profession. The only difference between the guy who owns a successful Veterinary practice and the guy working as an underpaid veterinarian is that one of them went out and leased some office space.

Glad you know that most vets are underpaid. Entry costs are massive - you can't just rent some office space and you cannot really do it alone, there are some single vet practices, they don't make much.

If you think some of the equipment is 100k, x-ray 30k per plate. You also need a territory before you start. It is too easy for bigger practices to starve you out to just pile in 250k and hope for the best.

You have to join a small practice, crawl up through the ranks, getting paid next to nothing, somehow kill your colleagues before they make partner and then you might be in a position to jump ship stealing customers as you go or organize a coup take over the practice by joining with another bigger practice nearby and buying out the seniors.

If you had said lawyer now... I don't know maybe - but I got your american dream point.

Re: Why Must You Pay Sales People Commissions?

#210

Post by notahacker »

hyperpallium wrote: post #152

> I guarantee your sales people never sell enterprise software for fun. A funny line, yet his "sales people" are really consultative problem solvers. Such people probably would apply their skills in areas such as community projects (e.g. sporting clubs, hobby/user groups, scouts, school, church), politics (e.g. local councils) and charities... for free. These probably bear about the same relation to selling enterpris…

> Such people probably would apply their skills in areas such as community projects (e.g. sporting clubs, hobby/user groups, scouts, school, church), politics (e.g. local councils) and charities... for free

They wouldn't necessarily volunteer to deal with the absolute tosser at BigAccount, make the 4am call to Asia or spend their entire time at the conference trying to find new customers as opposed to having a leisurely chat with someone who isn't going to buy though. For similar reasons, engineers who would happily write code all day for free get very highly compensated to work on fixing bugs on the somewhat similar but less exciting corporate CRUD app.

Post reply on HN