more-arw search

Q&A Forum

Any luck with equity + commission-only sales plans/people?

Like everyone here we're trying to save money. One of our "bright" ideas is to look for salespeople willing to work for equity plus commission only - no base. We hate paying base for non-productive salespeople for all of the obvious reasons.

As a many-time CFO I have created any number of sales comp schemes - and they all have their problems. And it seems as though base comp has crept inexorably up for salespeople over the past few years - plateauing during the recession, but still quite high. We are willing to pay equity and a very healthy commission, but I am wondering whether any of you CFOs have tried this route and how it went? Can you even attract anyone? If they start, will they stay? Any input is welcome.

Answers

Topic Expert
John Kogan
Title: CEO/CFO
Company: Proformative, Inc.
(CEO/CFO, Proformative, Inc.) |
I have found it very difficult to make that work. You may get some people to say "yes" and come on board, but right when you have them trained and going on calls they bail for a gig that pays them a base. They have mortgage payments, etc. to make and don't fare better than the rest of us when it comes to bringing in no cash. So your company's prospects had better be incredibly attractive to them or I think you will have real trouble holding on to anyone you find.
Anne Sutardji
Title: CFO/Controller
Company:
(CFO/Controller, ) |
We put the new reps on salary for 6 months but after that, they are on 100% commission. However, we support them a great deal. We provide them with an initial data base of existing clients, we allow them to have an equal split of profit for anything over the standard mark-up, we provide them with marketing tools and strategies, they are not on their own. They love it!
Rajeev Seshadri
Title: CFO
Company:
(CFO, ) |

Just a couple of additional comments to the excellent posts above....in one scenario where the sales cycle was several weeks long, we had to put in a 'draw' to smooth out the commission payments' timing. If the commission did not cover the draw after a review period, the salesperson was let go.

In another scenario, where the sales cycle was in days (e.g. in a telemarketing structure with several closes and lower dollar amounts per close), it was a lot of TLC, a small base (at the legal minimum wage+) reverting to 100% commission coverage after 30 days of post-training, on-the-job work.

As John notes, without a draw or a base, most persons would find the work daunting.

1427 views
Topics

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.