Startup Looking To Hire First Sales Employee - And completely lost. Any advice on compensation structure (benefits?), items that need to be in place?

Jason Lemkin who runs the http://saastr.com blog (founder of EchoSign) answers your question here:

http://saastr.com/2013/06/21/a-framework-and-some-ideas-for-your-first-sales-comp-plan/

The challenge for you in recruiting great reps is how to adopt this comp plan to convince great sales reps they can make "M6" money on a $6k ARR.

Depending on the actual sales process for your product, you might be better hiring what looks more like a "Customer Success" manager. In this case, they are measured on a mix of customer sat, churn and add-on growth in accounts. Typically, not on quota, any commission they receive as part of the up-sell would be net-positive to their OTE (on-target earnings).

Happy to discuss further with you to provide more context-specific advice.

If you don't have experience managing salespeople, don't -- under any circumstances -- hire someone into a non-existent role.

A better approach is for one of the three founders to take on the sales role, develop it, document it and benchmark it.

If you're concerned that the founders can't sell, don't be. Founders can always sell -- because they are founders. (If your founders can't sell your product, you have a product problem, not a sales problem.)

When you hire your first employee, pay them a salary (not commission) and have them work side-by-side with your founder-salesperson until they are able to equal or better your founder's numbers. At that point they are trained.

They should be held accountable to your founder's benchmarks until they better them (at which point the bar shifts). Salary should be determined by market value (not commission) and performance should not be optional.

You should monitor the number of meaningful interactions a day (in addition to sales, of course). You'll quickly get a feel for the optimal number (probably around 45 a day) and once you know, this volume of activity should be compulsory. Activity isn't everything, but without activity, you have nothing!

You've probably heard the saying "I'll know if when I see it". That's often the case for people when they're hiring their first salesperson. Once you're down to your shortlist observe all the candidates in a real selling situation. If you don't want to do this yourself use a service like simberry.com

Good luck.

The fact that you ask the question, you are already half way there.

Here are a few steps I advise my customers to take:

1. Find the three core values all three founders share (easier said then done).
2. When recruiting, look for a sales person who shares those values.
3. Make sure the compensation plan rewards those values.
4. Train one of your founders to become a sales manager
5. Agree what target is non acceptable, acceptable, & realistic (again, easier said then done).
6. 100% commission for reaching the realistic target, 110% for over achieving, 70% for reaching the acceptable target & 0% for anything below.
7. Last but not least, have a 2 year career path in place.

Hope this helps.

PS: hiring and firing sales people will not only cost you time & money, it will also damage your brand.

Steve

First of all you need a base pay if you want to have full control over your employees. I have used minimum wage or $10 an hour often with a really good bonus package for sales where sales people made over $100,000 total pay a year. Have a graduated level that when they reach a certain quota there commission goes up or their flat rate per sales goes up. I have often made more than the owners of the company in the past when I was on the sales side but that is something that you have to live with if you want the best sales people. Keep in mind when that sales person is long gone you will still be benefiting from what he did so you will be the biggest winner in the long run. I worked for an attorney one time and he called my in the office one day and said can I can't stand anyone making over $200,000 a year that was the end of our relationship, he was more worried about what I made that what he made so I left and we both lost out, don't do that. On top of that you need to feed your best people the best sales leads because they will make you the most money. I have hired many salesman over the years, so call me and lets set up a compensation package and I have the best methods for finding the best sales people.

Compensation is an important factor when attracting and retaining talent on your sales team. However, sales compensation can be tricky to get right. Essentially, the shorter and simpler a sale is and the less impact a rep has over the customer's behaviour, the smaller the percentage of variable compensation should be. A less aggressive ratio is common when reps are required to teach the prospect because they are most likely selling an extraordinarily complex or technical product. A base salary plus a bonus compensation plan is common when your reps tend to consistently hit their pre-set targets. This approach offers a high level of predictability and still motivates your reps to close sales. But again, this prevents reps from feeling any motivation to over-perform.
You can read more here: https://blog.hubspot.com/sales/sales-compensation
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath