Should You Consider Commission-Only Salespeople?
This was a question that I started pondering and immediately retracted and realized that it is a foolish question. The real question should be: "Would I myself consider a comission-only salesperson?", and the answer is a resounding "Of course not!" - in today's world selling has changed extensively to the point of being very complicated - salespeople are no longer a dime a dozen but experts of their craft. Suggesting that you offer a seasoned sales person a commission-only salary is a slap in the face.
However, there are some positive and negative points to consider should you venture down this path.
- afReduced risk in hiring (there are still time and opportunity costs).
- Salespeople a highly incented to close business (if they are young and hungry).
- If sales cycles are more than a month or two long, commission-only salespeople will begin starving before they can realistically close enough business. They are more likely to fall out before you can see whether or not they will really work out.
- The company will attract more inexperienced salespeople that can’t get better jobs.
- Commission-only increases the motivation to “do wrong” to close a sale. You do not want desperate salespeople representing your company. They will increase your liability, decrease your customer success and satisfaction, and wreck your culture and morale.
- Erratic compensation and lack of reliable income means your sales people have more financial problems, ironically distracting them from work goals.
Very few companies are set up for a commission-only based sales workforce. If a company is offering a clear commodity that has a quick sales cycle, then this kind of structure may be the way to go. The best way, however, to ensure commitment of the sales team is to have the company invest in the team's success (stock options, perks etc.), then it may be a great idea to opt for this kind of sales workforce model.
I had a chance of working for a company that offered a comission-only model and realized very fast that the hungry inexperienced colleagues that I had wore out fast in their passion for selling the products and services. The company was very apt in providing accolade for the young worker bees. But this carried only so far and resulted in quick turnover for sales people.