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Why Must You Pay Sales People Commissions?

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Re: Why Must You Pay Sales People Commissions?

#291
post #137

Earlier quoted context omitted.

You're not going to sell to large businesses without salespeople. A $10/month product? Sure. But when you're selling a $10,000/month product, you need salespeople.

Not always. We sell out software to the big banks and we don't have a single salesperson in our team. Everyone call us. The reason for this is that we have been in national newspapers with awesome articles, which is great marketing. I'm sure we could do even better on the international market with a sales team.

Out of interest, who speaks to them when they call if you don't have a sales team?

Re: Why Must You Pay Sales People Commissions?

#292
post #87

Earlier quoted context omitted.

>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 so…

Didn't Atlassian grow to a pretty big size before they even started hiring a sales team?

Re: Why Must You Pay Sales People Commissions?

#293
post #288

Earlier quoted context omitted.

I think the economy should compensate people based on factors they have control over, not ones they don’t. Someone who was born smart shouldn’t be better off for his luck. Your can choose how much you work. Maybe you can choose to do things like get an education (but not in our system where that is gated by standardized tests).

That doesn't equate to the same hourly rate though. Different jobs have different demands. In different roles I've been both lead engineer and painted fences. If the pay was the same I would probably paint fences and write code in my spare time.

Did you chose to have the aptitude to write code? Why should a person who can’t write code but can paint fences get rewarded less for giving up an hour of their limited time on earth than someone who can code?

Re: Why Must You Pay Sales People Commissions?

#294
post #228
post #200

Earlier quoted context omitted.

250k lifetime? So he should get another $6k. Teachers and engineers don't work for money. And there are often bad consequences for people who "don't work for money." I worked in sales so I could afford to be an engineer later. There were plenty of ex-teachers in sales. They did well.

>Teachers and engineers don't work for money. And there are often bad consequences for people who "don't work for money." This is a metnarrative[0]. It is a thing that people say not because it is true but because it is useful to create a larger narrative that is perceived as useful within the social sphere. Peopl, especially engineers, are socialized to believe it and normed to say it. The result is very simply lowe…

So true! Case in point: people considered it "oniony" for a top teacher to leave the state for one that pays teachers better. The metanarrative has made it risible for high-star teachers to shop around for better salaries like star basketball players would! That's ridiculously unfair, press them into a kind of charity role.

https://www.reddit.com/r/nottheonion/comments/6ktzx1/teacher...

Re: Why Must You Pay Sales People Commissions?

#295

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?

I would reccommend looking into everything written by Siegfried Engelmann, particularly "Theory of Instruction". Honestly though, that might not be enough. Maybe you have the brains and drive to do it, for me the only unquestionab success has been using scripted presentations written by people who are smarter than I am.

Re: Why Must You Pay Sales People Commissions?

#296

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?

Yes, I agree completely. Though I would emphasise that teaching universally bad only when compared to what is achieveable from tightly scripted presentations. I think the actual task of teaching flawlessly while "winging it" is extremely extremely difficult, and beyond at least 98% of the general population, even positing a good working environment.

Re: Why Must You Pay Sales People Commissions?

#297
post #288

Earlier quoted context omitted.

That doesn't equate to the same hourly rate though. Different jobs have different demands. In different roles I've been both lead engineer and painted fences. If the pay was the same I would probably paint fences and write code in my spare time.

Did you chose to have the aptitude to write code? Why should a person who can’t write code but can paint fences get rewarded less for giving up an hour of their limited time on earth than someone who can code?

I'm not saying current wages are fairly calibrated, but some work is actually more physically and/or mentally stressful per hour, and some work requires more training. Under your system, how do you prevent people from avoiding difficult work and/or work that requires extensive training? Central planning?

Re: Why Must You Pay Sales People Commissions?

#298
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…

What about sales engineers though? I've never seen them get commissions even though in a vast majority of cases they are the ones doing the heavy lifting of convincing the client's tech team[s] to go with the product/solution the company is selling? A little less obvious case, but still - what if we're talking professional services type situation and the architect/engineer assigned to the customer does such a killer…

There's lots of ways to compensate a cat! Not all sales compensation plans are commission-based (a percentage of the sale). Commission-based plans are much less common for sales engineers vs. salespeople, unless they are working with only a single salesperson.

In general, sales engineer variable compensation plans are going to be based on some mix of sales numbers, with less variability and risk than the salesperson's plan. Ideally providing goal alignment with money, smoothing out the stresses, but also encouraging some level of independence for the sales engineers. A ward against salespeople who might be seduced by the Dark Side.

The less obvious case you raise, a single engineer directly responsible for causing a customer to spend more money: structurally or ad-hoc, that person should probably be getting paid. Maybe the customer-facing people aren't engaging efficiently, and it's a sign of something a bit out of alignment with customer operations.

Salespeople can provide big value in getting engineering attention to the right customers at the right time... but the best ones know it's a team sport. I know salespeople that give envelopes of cash to difference-makers, though that's exceptional.

Re: Why Must You Pay Sales People Commissions?

#299
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…

Getting commissions does not necessarily mean getting paid more. Often people paid on commissions have smaller base salaries. Payments with commissions are a managerial tool to incentivize a certain behavior, the same way there are other structures to help organizations behave in a certain way. For example, you can incentivize people based on an easily measurable metric fully under their control (e.g. $ sales, custom…

The difference is that often sales commissions have no (or much higher) upper limit. That is, if you are skilled enough (and lucky enough, for sure, since there are certainly many factors outside of the salespersons control), then they can potentially make a large commission. On the other hand, a salaried engineer has a hard upper limit (their salary + any bonuses that may exist) which can only be raised through a promotion or renegotiation.

A problem for me is that there's little incentive to work b tons what my contract stipulates and what my manager feels is acceptable productivity (and whatever I need to get bonuses, if I get bonuses at all), because I get the same compensation (in terms of money or time off or whatever -- I don't get to leave early if I finish my work early: I move on to the next task instead) no matter how hard I work or productive I am. So why would I wear myself down by working harder if I can be less stressed and work less hard for the exact same compensation?

At least a commission-based role puts some of this into my hands. If I feel I can make more sales by working harder/longer/faster/smarter, I can get paid more.

Re: Why Must You Pay Sales People Commissions?

#300

Earlier quoted context omitted.

Replacing one teacher in the bottom 5% with an average one got the student $250k more over their lifetime. So the average teacher is generating around $135,000 more than the poor teacher. And equating teachers to engineers makes no sense, I've met dozens of people in some engineering school to make money.

That seems questionable. In a lot of school systems, the best teacher may be the difference between a kid ending up in jail or not, but kids that are flirting with that line aren't going to be particularly successful on aggregate. And American society loves sending black kids to jail. So, what's the value add there? It's so much more complex than that.

Yes, this is talking about the "average class." Individual circumstances vary in both directions, that doesn't make it questionable. Though, the difference between going to jail or not pretty quickly adds up to the 250k number.

Yes, this is way more complex than my two minute writeup of a small chunk of a 94 page paper.

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