It is great when early stage startups put an emphasis on business development right out of the gate! I’ve managed dozens of commission-based employees over my career, and I can tell you that finding the right candidate with the right attitude for that position can be even more challenging than the actual sale of the product/service itself. Sales in general, but especially commission-heavy sales positions, require a certain temperament and conviction from people to be successful (for themselves and for your company.)
Deciding how to fairly compensate a new sales associate depends on a few factors (whether you are a digital startup or a brick and mortar small business.)
- Is the product/service being sold primarily B2C or B2B? B2C sales usually mean that associates can subsist on their month to month commission disbursement as the close cycles are tighter and payments come in faster. Inversely, B2B sales typically mean longer close cycles and payments coming in over a longer timeline (which could make it difficult for an associate to live month-to-month.)
- How are leads being sourced to the sales associate and what is the overall quality of those leads? If they are being asked to go out and cold-build their own book of business from scratch, it usually necessitates some other consideration other than commission to be included.
- Has anyone gone out and proven sales already for your company/product/service? If you can show success with someone else selling your wares (even yourself as the founder) then the argument for a larger commission-based compensation package could be made.
- Does your sales process require specific industry knowledge, level of education or length of experience out of the candidate? Typically the more sophisticated your requirements are for experience/pedigree, the harder it is to argue just a commission-based package.
The bottom line is that sales people, in general, typically embrace the commission side of their job with open arms; this is because they believe they can own/grow their earning potential themselves with effort and energy. So, if the primary metric for a position is the amount of revenue they can bring in, I would look for those people who are confident and get excited about the opportunity to own their earning potential, versus shying away from it right out of the gate.
If you want to discuss structuring your sales team or other compensation/motivation ideas, feel free to reach out.
