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Compensating Sales Staff vs technical sales for a sale

The products and services that we sell at our company are highly technical (science and medical).  They are both technical from a medical and science persepective so more often than not is takes two positions in our organization to make a sale.  It takes the sales manager to land the lead, get the meeting, make the initial pitch, then it often takes a techincal position such as a scientist or medical director to help answer all the myriad of questions the customer has, and help convince the customer of the value of the product or services.  These product are fairly new and disruptive so I would expect this type of interaction with the customer.  My question is, how much of the sales commission should the sales person get vs the techincal person?  Any thoughts on a commission split?  50/50, 60/40?  Thanks

Answers

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

Without knowing the commissions structure customary in your industry, it is very hard to give an example. But I will try. The way I look at it, there are two pieces to commissions - customer acquisition and customer management. It is not uncommon for an operations manager to be called into the sales process. Usually they do not receive a commission. Assuming your industry is different, consider the following - If commissions were $100 - $50 would be related to acquisition and $50 would be for management. To be fair, I would split the acquisition piece 50-50 between Sales and Technical support. The management piece would be completely due to Sales.

Interesting situation. You are dealing with one of the longest running arguements in business. Sales believes the business survives because of them; while Operations feels the business survives because of them. Your model joins them. Please let me know how it works out.

Brad Luke
Title: SVP
Company: Software as a service
(SVP, Software as a service) |

Thanks Regis - I appreciate the response, your insight is helpful.

Todd Boney
Title: Chief Financial Officer
Company: Xceleration Partners
LinkedIn Profile
(Chief Financial Officer, Xceleration Partners) |

Suggest you consider who owns the quota vs. the service obligation. If the salesperson is the only one with a quota in this situation, then the lion's share of the variable compensation you're willing to pay should go to the salesperson. Message to your technical sales rep is simple - if you want higher total comp (on target earnings - OTE), consider becoming a salesperson. If you don't want the risk of carrying a quota and the risk of loss of your job if you miss your quota, then you're saying you want the comfort of a sales support job that entails less risk.

I do think that the technical sales rep should be paid variable comp so that the salesperson and the technical sales rep share the same closing objectives. But if the technical sales rep isn't generating leads, their efforts can be leveraged across a greater number of sales reps which means they have a larger base of qualified leads to potentially close. Technical sales rep could be getting 10-20% of the total variable comp paid on all sales. You would have to look at your sales goals/plans to figure out how much of the total OTE a technical sales rep gets - variable should be 15-25% of OTE. For a salesperson, variable should be 50% of OTE.

Topic Expert
Malak Kazan
Title: VP, Special Projects
Company: ERI Economic Research Institute
(VP, Special Projects, ERI Economic Research Institute) |

I concur with colleagues' posts and want to respond using different semantics. When determining commissions, incentive or discretionary bonus structures, you want to analyse each job/role in terms of degree of risk and influence they have on improving the probability of closing/winning the lead. The titles you used in the original post as Medical Director and Scientists, suggest they are subject matter experts and by the time SMEs are pulled into the sales process, the probability of close is greater and is a softer sales process from that point on. The SMEs could be on an incentive or bonus plan as their role risk profiles may not "respond or be motivated" by a commission plan. Hope this helps.

Joe Consul
Title: CFO
Company: Xactly Corporation
(CFO, Xactly Corporation) |

In general, we use a laser focused compensation scheme for sales people that ties rewards to achievement against quota and up to two other metrics, all related to individual performance. We've found that using more than three metrics for sales comp plans dilutes the impact and results in fewer sales people achieving plan.

Compensating technical sales staff (a.k.a. pre-sales engineers) is a different story. We combine a quota based plan with an MBO plan to drive the behavior we want from this team. The quota based plan aligns the tech staff with the goals of the sales team they support. The MBO plan ensures that they also focus on important objectives other than sales such as staying current on product updates, supporting post sales activities if necessary and maintaining existing customer relationships.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Interesting reasoning between Sales and Operations vis a vis commission compensation. I agree with most of the plans discussed.

Here's my take on the broader issue.

Fact: Without sales people, there is no revenue.
Fact: Without operations, those sales don't become an invoice.
Fact: Some sales people make more than the owners (in salary).
Fact: Most owners don't understand this.
Fact: Most operations people receive less than their sale counterparts.
Fact: Mostly all operations people don't understand this.

Solution: Team alignment. Bringing both teams together so that everyone is on the same page and understand the why's and wherefore's of the compensation plan. When everyone understands the program (they don't need to know everyone's specific deal) then both parties work to make the most money for the organization, and in turn make more money for themselves.

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