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

Simple Math to Set Up a Sales Team

sacks.substack.com

Post reply on HN
Print view View original

51–59 of 59 posts

Re: Simple Math to Set Up a Sales Team

#51

Post by tweetle_beetle »

Aeolun wrote: post #24
tweetle_beetle wrote: post #12

Earlier quoted context omitted.

Like in any trade, I'm sure that the best are great at what they do, but I suspect I'm not alone in finding that the vast majority of my interactions have not been with a good sales person (and maybe by your definition not with good orgs either). I've never been told that I might be better off going elsewhere. Many times I've been told that whatever problem I describe, they can handle it, or my problem isn't what I t…

> But the reality is for most sales jobs, as a former colleague once told me, you're never more than 2 missed targets away from being let go. That sounds... fair? It’s like having a programmer that cannot program. If your job is literally to sell, and you’re not doing it? I guess it doesn’t have to be black and white as long as you bring in more than you cost though.

How much you can attribute the success of a sales person to the quality of their work is hard to know. Sometimes you get lucky and you get a hot lead which virtually signs itself, sometimes you put lots of time and effort in and for no apparent reason the client backs out at the last minute. Yet typically you are only measured on completed deals.

A target driven job with unemployment as the cost of failure, judged on simple metrics which do not correlate to effort or skill, and may be almost entirely out of personal control, creates a tension that most programmers are not subject to.

Re: Simple Math to Set Up a Sales Team

#52

Post by dhimes »

motohagiography wrote: post #41
dhimes wrote: post #31

Earlier quoted context omitted.

Guessing a bit here— correct me if I'm wrong. This jargon is utterly foreign to me: SMB = Small to mid-sized business (not server message block) JR = Junior rep? Jr? AE = Account executive ARR = Annual recurring revenue

No need to guess, they're in the table in the article. The question I have is whether it makes sense to add a team commission variable where instead of just Geos, Verticals or Round Robin, there is a ~%5 redistribution of the sales commissions to provide a co-operation incentive for assists. In a strictly competitive team, assisting on another sale comes with an opportunity cost against your own quota and commissions…

He should add "ARR" to the glossary. I know a lot of others here, like me, scan the comments to see if the article is worth reading, so translations help us.

Re: Simple Math to Set Up a Sales Team

#53

Post by jonfw »

costcopizza wrote: post #45
raiyu wrote: post #2

I know from a mathematical perspective this works in order to ensure that the company can be profitable at some point but a part of me wonders if it’s really necessary. I’ve never had a positive interaction with a sales person. But I’ve had countless positive interactions with customer support reps. One is over paid, the other under paid. If companies just created a sales team from their highest performing customer s…

How? I've done both. The reason people are in support is because it's a fundamentally different role. I don't have to try and push a single damn thing on anyone. It's the opposite, you are on the receiving end of the problem. Every interaction I have is because of a need, I don't have to try and create said need or make a prospect think there is even a need.

I think the point OP is making is that a sales person shouldn't justify or create the need- they should identify an existing one and solve it. Which is similar to what a CSR does.

Re: Simple Math to Set Up a Sales Team

#54

Post by watwut »

cosmodisk wrote: post #39
watwut wrote: post #35

Earlier quoted context omitted.

There is massive difference between "the reality is for most sales jobs" and "if you get hired to position widely out of your ability". What you describe is quite unusual exceptional situation. Not nearly reality of most programming jobs.

The problem is that a lot of people hired into sales positions shouldn't be allowed anywhere near it.. What I've seen: blatant lies in regulated industry with mandatory call recordings, refusal to do even the basic admin( I'm here to sell, not to fill in the info in the CRM system), fraud ( can't comment,as it's quite specific), lazyness ( watching YouTube/Facebook/Shopping while pretending your phone isn't working).…

No, sales people who lie dont get fired. Sales people who dont hit targets get fired - and those are biased towars salesman who dont lie. Those who lie sell better hit targets.

Sales who do basic admin instead of selling dont get fired, they are the ones more likely to hit sales targets. The ones who do basic admin waste effort that could be used for selling and get no rewards for it anyway.

> lazyness ( watching YouTube/Facebook/Shopping

Completely normal among programmers.

Re: Simple Math to Set Up a Sales Team

#55

Post by jonfw »

motohagiography wrote: post #41
dhimes wrote: post #31

Earlier quoted context omitted.

Guessing a bit here— correct me if I'm wrong. This jargon is utterly foreign to me: SMB = Small to mid-sized business (not server message block) JR = Junior rep? Jr? AE = Account executive ARR = Annual recurring revenue

No need to guess, they're in the table in the article. The question I have is whether it makes sense to add a team commission variable where instead of just Geos, Verticals or Round Robin, there is a ~%5 redistribution of the sales commissions to provide a co-operation incentive for assists. In a strictly competitive team, assisting on another sale comes with an opportunity cost against your own quota and commissions…

I'm in a sales engineering style role, the way our incentives work is 'pool based'. Sales success funds the pool for our team, and the pool is distributed among the team based on performance.

We have a breakdown of how management intends to quantify performance, by categorizing different performance measures and giving them different weights (ex: sales impact is 40%, leadership is 20%, etc.)

This system makes a trade-off- it isn't as objective as a percentage commission structure, but it does allow opportunity to be rewarded for work on re-usable assets, troubleshooting with your peers, and spending time on knowledge acquisition/sharing.

I'm really interested in how this looks at other companies

Re: Simple Math to Set Up a Sales Team

#56

Post by ianmcgowan »

heipei wrote: post #27
tarsinge wrote: post #26

Earlier quoted context omitted.

My take in B2B (private and public sector) is that a sales team is a necessary counterpart to how procurements works. Answering RFP, navigating orgs and finding sponsors, organizing meetings and doing presentations, customizing the contract and negotiating, etc. is a full-time job (source: bootstrapped and done that myself).

Exactly. Add to that that good sales people will build up a lot of "soft" knowledge about the orgs they will be selling to, like: When does their fiscal year start, what's their budgeting timeline, who has purchasing authority, am I talking to someone whose job it is to negotiate a discount, how long will the sales process take to close, should I try to go through a reseller for this deal, is the customer gonna nicke…

To add an anecdata - I worked in IT at a medium-ish (10K people) company, and Microsoft, IBM and Oracle sales reps absolutely had a better understanding of the procurement process (and employees involved) than most people at the company. To everyone saying Customer Service can handle sales, there's a large misunderstanding of what enterprise sales involves - making the sale (getting to yes) is just the first step in a long slog to a signed purchase order.

Re: Simple Math to Set Up a Sales Team

#57

Post by stephen_cagle »

boringg wrote: post #48

Do sales ever get incentivized with equity? Couldn't that be a good long-term arrangement? Incentivize the original sale and over time as the client remains on platform unlock stock - make sure there is continuity with client. I recognize that is a different model and the inbound sales team hands off the client internally.

That is an interesting idea. Issue I can spot with it is that you would still be incentivized to sell "short term" as you still get equity. The equity isn't becoming more valuable due to your sales (which don't act as recurring revenue), but your equity does increase in value from the other (more honest) salespeople who are doing "long term" sales.

Still, I think it is a neat idea.

Re: Simple Math to Set Up a Sales Team

#58

Post by kingnothing »

twic wrote: post #17
ZephyrBlu wrote: post #9

Is 10x base salary as a quota standard? It seems like a really high target.

Look at it the other way round: the company is bearing a cost 10% of revenue just in commission to salespeople. If all salespeople are exactly meeting quota, then the total cost of sales is 20% of revenue. The same applies to their manager, at 2.5%, for a total of 25% of revenue. The remaining 75% has to pay for everyone else in the company, and external costs!

I've worked places that approach paying 100% of year 1 revenue to sales. We had a relatively cheap B2B SaaS product with a higher barrier to exit. It really depends on what the LTV of your customer is as to what percentage you should pay sales people.

Re: Simple Math to Set Up a Sales Team

#59

Post by motohagiography »

jonfw wrote: post #55
motohagiography wrote: post #41

Earlier quoted context omitted.

No need to guess, they're in the table in the article. The question I have is whether it makes sense to add a team commission variable where instead of just Geos, Verticals or Round Robin, there is a ~%5 redistribution of the sales commissions to provide a co-operation incentive for assists. In a strictly competitive team, assisting on another sale comes with an opportunity cost against your own quota and commissions…

I'm in a sales engineering style role, the way our incentives work is 'pool based'. Sales success funds the pool for our team, and the pool is distributed among the team based on performance. We have a breakdown of how management intends to quantify performance, by categorizing different performance measures and giving them different weights (ex: sales impact is 40%, leadership is 20%, etc.) This system makes a trade…

Key difference to me is whether the comp is direct commission, or a pool at the discretion of a manager. I'd do sales eng in the former case where there was a shot at multiples of base salary, but otherwise it's a more political process that others find more appealing than I do.
Post reply on HN