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Why Must You Pay Sales People Commissions?

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Re: Why Must You Pay Sales People Commissions?

#311

Post by harryh »

rayiner wrote: post #293
scarby wrote: 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 may not have chosen to have the aptitude to write code, but I did choose to go to college to better learn how to do it. I also chose to work very hard in my industry to advance. Had this come with zero financial rewards I probably wouldn't have done those things.

Do you actually believe this or are you just saying something striking to illustrate an underlying principle?

Re: Why Must You Pay Sales People Commissions?

#312

Post by networkguy »

ChemicalWarfare wrote: post #276
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…

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…

I work for a Major ISV and I get a commission.

How it works is there are various clip rates

0-80% 80-100% 100%+

On 0-80 I get a percentage of the deal, on 80-100% I get a percentage and there is a small multiplier and above 100% I get a larger percentage and a significantly improved multiplier.

My quota is divided quarterly and yearly; the incentive is set out that if you overachieve on a couple quarters, I might exceed my "On Target Earnings" even though I didn't hit the yearly number.

You are correct that the Sales Engineer does a lot of the heavy lifting; and in most cases we are the deal -- without us selling the technical, the deal usually doesn't get done. So should we get paid the same as the Account Executive? No Freakin Way.

The purpose of the Account Exec isn't to close a deal; that's table stakes. The purpose of the Account Exec is to open doors and exceed quota, 100% quota attainment isn't a high-five moment as the expectation is 110%+. Take a good hard look at the sales people you know and look where they are and where they have been -- these people are hired for their contacts and usually once they have exhausted their contact list they are done and they move on to the next organization unless they are exceptional at developing new pipeline and new relationships.

I've seen firms go through 2x Account Execs in a year because they weren't hitting the numbers fast enough; that wont happen with a Sales Engineer we get a lot of job stability and protection but we wont get a 30% commission.

Re: Why Must You Pay Sales People Commissions?

#313

Post by _xhok »

rayiner wrote: post #273
frgtpsswrdlame wrote: post #256

Earlier quoted context omitted.

>And my person view is that all jobs should be compensated at the same hourly rate. What? Care to elaborate?

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).

If jobs of all levels of difficulty are to be compensated the same, what then counts as a job? Would I be able to get paid for sitting around thinking?

It also sounds like you're basically proposing we give people free money. That could be a fine thing to do, but then why not give it out explicitly, instead of holding wages fixed?

Re: Why Must You Pay Sales People Commissions?

#314

Post by parasubvert »

gaadd33 wrote: post #292
parasubvert wrote: post #99

Earlier quoted context omitted.

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?

I think so, but it depends on "big". You probably can get to $20-50 million without much in the way of sales. They did have reasonable marketing.

It's when they started targeting the mass market, getting funding, removing features their early adopters loved (eg. wiki syntax in Confluence) that they needed a sales force. But that was necessary for their plan to scale. They're still not huge ($600 million is excellent but not Red Hat).

Re: Why Must You Pay Sales People Commissions?

#315

Post by mercutio2 »

rayiner wrote: post #249
hacking_again wrote: post #246

Earlier quoted context omitted.

All of it? None of it? Teachers themselves don't add value, teachers enable value addition.

I mean, obviously everyone adds value (from janitors up to doctors). And my person view is that all jobs should be compensated at the same hourly rate. But is there anything special about teachers? Like if they all quit society would go to hell, but that’s true of garbagemen and road workers too. The question is, does it matter who does the job?

Off topic: are you, by chance, familiar with Participatory Economics [0]?

Like most utopian economic visions, it’s hard to get there from here, but it seems like it’s well matched to your stated labor market ideals.

[0] https://en.m.wikipedia.org/wiki/Participatory_economics

Re: Why Must You Pay Sales People Commissions?

#316

Post by robocat »

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…

Thinline misposted response to the inc.com article:

Interesting last comment (from November 2016) to the original article: "Important Update * I am currently employed at Pluralsight, and I feel obligated to point out that the author of this article, our CEO, no longer believes or stands behind any of the content in this article. Pluralsight does not operate under the Deming philosophy. As of January 2017, Pluralsight will be implementing sales commissions again. We have reverted to the typical high-pressure, high-stress quota models found in most companies.

Re: Why Must You Pay Sales People Commissions?

#317

Post by robocat »

calinet6 wrote: post #18
ryanmarsh wrote: post #8

Are there any examples of competitive sales organizations that don't pay commission of some kind?

Not competitive exactly (it's not necessary when you don't have commission) but Pluralsight: https://www.inc.com/aaron-skonnard/why-sales-commissions-don...

Thinline responded to that article in another post:

Interesting last comment (from November 2016) to the original article: "Important Update * I am currently employed at Pluralsight, and I feel obligated to point out that the author of this article, our CEO, no longer believes or stands behind any of the content in this article. Pluralsight does not operate under the Deming philosophy. As of January 2017, Pluralsight will be implementing sales commissions again. We have reverted to the typical high-pressure, high-stress quota models found in most companies.

Re: Why Must You Pay Sales People Commissions?

#318

Post by seem_2211 »

clort wrote: post #302
seem_2211 wrote: post #282

Earlier quoted context omitted.

This is one of the biggest problems with trying to evaluate individual teacher performance (and reward / punish based on this evaluation), is that you need to watch out for incentives. Rewarding teachers who have best highest test scores, for example, is a pretty good way of disincentivizing good teachers from helping less gifted children. Sales people work their comp plan, especially if they're good. They tend to kn…

> Rewarding teachers who have best highest test scores, for example, is a pretty good way of disincentivizing good teachers from helping less gifted children. In the UK at least, they have changed the measurement to one of progress in a basket of subjects. Students are measured as they leave primary school, and the secondary school is rated on how much different their grades are to their predicted grades. I don't kno…

I actually have a friend who taught in the UK for two years. While I'd have to ask him for the specifics, he told me there was a lot of gaming the system so people would get their bonuses.

Re: Why Must You Pay Sales People Commissions?

#319

Post by seem_2211 »

TheCoelacanth wrote: post #287
toocool wrote: post #110

Earlier quoted context omitted.

I personally know sales folks in large enterprises (say Cisco) who do a lot of travelling and are able to get base salaries of ~250k and commissions of ~400-500k a year, on top of essentially life time personal unlimited travelling due to millions of miles points accumulated. So yea, pretty high.

That's only the very top salespeople, though. There are also salespeople making minimum wage with no commissions.

Salespeople in the tech space in SF start on about $70k (first year) and can expect to get to $200 (all in) after 5-7 years. Top reps aren't going find it hard to get $250k+ by their early 30s.

I don't know a huge amount about engineering salaries, but my guess is they're actually pretty similar across the board (although engineers start a lot higher).

I've done sales recruiting for about a year. I've only ever talked to one guy who's made more than $1m in a year. He was on a base of $125 or $150k. Last year he made $750k, and the year before that $1m.

But if you're a rep who's truly making $1m+ a year, you probably aren't planning on jumping ship anytime soon.

Re: Why Must You Pay Sales People Commissions?

#320

Post by posterboy »

jimbokun wrote: post #250
thanksgiving wrote: post #178

Earlier quoted context omitted.

> Public education by state rankings show that New York spent the most per pupil at $20,610. The next top five are District of Columbia ($18,485), Alaska ($18,416), New Jersey ($17,907), Connecticut ($17,745) and Vermont ($16,988). http://education.cu-portland.edu/blog/classroom-resources/pu... https://archive.fo/DeBGH A teacher's salary in New York isn't good enough but you can at least afford rent if you're smart.…

A documentary I watched claimed giving laptops or iPads to students is correlated with worse academic performance for those students. Sorry, don't remember enough for a citation, but the suggested causal effect was students just spending even more time on social media, games, and web surfing instead of school work.

i'd oppose that. For one that's disingenious given the parent argument, that about scandinavian countries leading (by some measure) in school education and them using computers in class.

And on the other hand, what if the test subjects you mentioned just didn't learn to use the technology responsibly? I'd argue, teachers and professors need to be given computers, in a metaphorical sense, first.

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