> we're talking about salespeople hired to scale up a proven business model, not entrepreneurs exploring different ways to make money.
I don't think it was intended, but that's a condescending statement. That's like saying "I'm looking for developers to just write some code, not find ways to do it better." A good salesperson should be looking for different ways to make money for their client, their company, and effectively (profit sharing) themselves.
Additionally, most sales managers are promoted sales people, not necessarily cunning business people. A "known process" rarely exists.
ps, I'm a big fan of your blog and contribution here, so please go easy on me.
I don't mean it as condescending. Sales takes a lot of creativity and skill - but still, if you're hired by, say, Fogcreek software, to sell the Fogbugz product to enterprises, the product is known, the customer base is more or less clear, and the process to get them sold has probably been practiced hundreds of times before you're hired. There will always be unique quirks to every client, but compared to the levels of uncertainty of entrepreneurial sales, you could say that every sale is pretty much the same.
Making a sale still takes a lot of skill and effort - and, even more, it takes tenacity, and drive, and a very strong desire to actually close rather than spend months and months waiting for the client to make up their mind. Sure, you might lose some clients by pushing for the close (though with experience, you know which ones will respond to it), but at least it then frees up your time to pursue other prospects who can be sold more easily.
I don't think that makes salespeople inferior to programmers. These are two different kinds of jobs with two different sets of parameters. Programming is project-based work, where you aim somewhere and you go there and then you're done. Sales is process-based work, where you have an infinite pile of leads to go through (and if the leads run out, you go and generate more), and selling more today doesn't mean you sell have less to do tomorrow. I find the latter much more difficult to do.
To put a final nail in the idea that I look down on sales - both my girlfriend and my ex-girlfriend are salespeople. Not that that's why I dated them, or anything, but it'd be hard to be with them if I looked down on their profession ;-)
I don't want to speak for John, but this is my answer to the same question: "Sales isn't rocket science, it just takes someone who is comfortable talking to people...and when you're selling something you believe in, that's really easy to do."
It depends on the type of sales. Selling two sided markets is much, much harder. Through in required analysis and it takes a lot.
Examples:
Real estate Brokerage &
Investment banking
Etc.
I am intrigued by the idea of no commissions in some if not all sales jobs. If the person isn't selling you can fire them. If they do well in the managers judgment you can bonus them. While it is subjective, almost all business decisions are. A good manager is good at making good subjective decisions.
It's a good philosophy to start from, but you can't have a career in sales without eventually being forced to push products that no reasonable person would believe in.
Perhaps I've been soured by the particular salespeople I've worked with, but I don't think it's a job that ethical or sane people thrive in long-term because there are eventually going to be situations where management expects results that can't be achieved without deceptive behaviour. Most of the successful salespeople I've known have been greedy, delusional, unethical, or borderline sociopaths. The really good salespeople are the ones that can hide it until a critical moment.
As a sales professional myself, I find it disheartening that so many view salespeople in the manner described. One of the cardinal rules of being a truly great salesperson is to believe in what you're selling (Zig Ziglar talks about this often). If you don't, customers and prospects will not only be able to smell it from a mile away, but your passion and desire to succeed will be nonexistent and you'll have to fight for every closed deal because you won't have anything convincing to say when the person on the other end decides to call you on your bullshit. Being a truly great salesperson means fundamentally understanding the needs of the customer and working together to discover ways that your product or service can deliver them benefit and a positive ROI. Sales is about asking questions and listening intently, and I believe the truly great people find a way to effectively sit on the same side of the table as the customer while at the same time delivering the objectives that their company requires. Honesty and integrity play a huge role in selling and business relationships, and any company that understands the value of maintaining long-term business relationships will work this into their sales incentive structure.
I used to work for a highly sales-focused software company (6-7 figure licenses, year-long sales cycles) with some very good salesmen. It was an eye-opening experience. The really good salesmen were no more ethical than a used-car salesman, but they were very good at portraying themselves the way you describe and extremely judicious in their use of deception. Perception of honesty and integrity is very important in sales, but I have my doubts that genuinely honest people rise to the top in sales. I had the typical distrust of shady salespeople before working there, but now I'm deeply suspicious of anyone in sales, regardless of how honest they seem.
Long time HN contributor, first time I've felt the need to go anonymous.
I've been in sales my entire professional career, but always commissioned based. I've worked in SMB with small teams and enterprise with massive teams. I feel like these are related points (to paying commission), but you may have a different opinion.
First, commission is like crack. Once you get a taste, it's hard to kick. Earning potential is outrageous. I was the highest paid employee for two years. I made more than the founders, anyone on our leadership/executive team, and anyone that built what I sold. That last point kept me up at night, so I eventually found a way to redistribute the wealth. I stayed in sales because I couldn't imagine "how anyone could live on that little" (< $100k). It's hard to quit.
Second, crack either transforms people or attracts a certain personality type. I've never been surrounded by so many disloyal, self centered, unethical, and maniacal people. Ever. I've also caught myself crossing boundaries I would have never previously considered -- until I thought about how it would push me over the accelerator and significantly increase my commission. I have met some people with strong character and ethics in sales, who are great salespeople, but they're a tiny minority.
Third, those ethical breaches typically result in misrepresentation of the company/product/service you're selling. Commissions are typically paid on a contract, not on the lifetime value of the customer. I firmly believe the commission-based sales people are potentially the most damaging thing to your company. Set an inaccurate expectation to close the deal? As a sales person, you're on to the next one. Results in high churn and damaged credibility, neither of which affects the salesperson's commission check.
Last, sales people are typically the least knowledgeable in the organization about the company/product/service they're trying to sell. I've always been in, uhm, technology as a service(?), but neither of the companies I've worked at have any desire to hire people who understand the technology. They hire salespeople that have "consistently exceeded quota" and "increased customer spend by x" or some other sales achievement. That's great, dude, but you sold fucking vacuum cleaners. What do you know about the product those guys in the dark rooms are slaving away over? Why are you the best person to go out and represent all of us in the market? Speaking of, I've yet to interview a salesperson that's come in with "here's a list of my previous clients who will vouch for my integrity."
For those talking about large sales team, I can personally assure you all of the negative aspects mentioned in the post become even more apparent with scale. Poaching leads, generating fake orders, tarnishing the company to exceed quota ("total lack of ethics")-- it's all there, and it's easier to hide in a bigger pond.
I know you need to move units and generate revenue, but I agree, why do we pay sales commission?
That's a really good question. The short answer is, "it depends."
In my mind, the problem is that commission is an incentive to do whatever it takes to close the deal -- especially if you're in an uncapped commission with accelerators. For example, if I'm paid 10% on my first $300k in new business, 15% on $300-499, 25% on 500+, I'm doing everything I can to hit $500k, right?
I (the commissioned salesperson) would lie to my mom if I'm at $490 with a $12k deal on the table. I'll lie to you, and I'll tell you things about our product/service that aren't true. You'll do this one project with us, I'll get my gigantic commission check, and then you'll a) never come back b) tell everyone you talk to about us and c) not affect my commission check. I'll also put on my resume that I "exceeded monthly quotas" and smile. Remember, I'm here to get paid. That's why we're in a commission-based role. [edit: Please keep in mind that I'm giving accounts of what I've seen, not necessarily what I've done. I wouldn't lie to my mom. Others would.]
I believe you can mitigate that problem by paying out over a term, or upon certain achievements (deployed, customer gave us a positive rating, etc.). However, what additional problems does that create in your organization? Is it good or bad to have the salespeople managing (micro or otherwise) the delivery ("selling is not delivering")? Does that compensation model get too complicated?
Call me an optimist, but I wish companies would hire people that want to truly evangelize their widgets, put them on a base salary, and then measure performance. Sales isn't rocket science, it just takes someone who is comfortable talking to people...and when you're selling something you believe in, that's really easy to do.
Just for the sake of argument, what if it were a pro rata commission on the lifetime value of the customer, paid continuously as money comes in the door, and only while you are employed with good standing?
What I'm really getting at: is the problem with commissions themselves or the way in which commissions were structured at the places you worked? Putting aside cash flow and accounting issues, could you design a commission structure that incentivises correct behavior?
Equity would get complicated, quickly. Profit sharing seems to be an easier route.
I'm not sure I agree with sales being in product development. You run the risk of having a sales person champion an idea as the greatest thing on earth, only to find out the market size is exactly 1. The salesperson should, however, be concerned with the customer's satisfaction long after the deal is signed.
> For example, if I'm paid 10% on my first $300k in new business, 15% on $300-499, 25% on 500+, I'm doing everything I can to hit $500k, right?
Why would you do that if the 25% is only on the 500+ stuff? It's not like those $2k at 25% ($500) are going to be very significant compared to the 300k@10 ($30000) and the 200k@15 ($30000 as well).
I don't think it was intended, but that's a condescending statement. That's like saying "I'm looking for developers to just write some code, not find ways to do it better." A good salesperson should be looking for different ways to make money for their client, their company, and effectively (profit sharing) themselves.
Additionally, most sales managers are promoted sales people, not necessarily cunning business people. A "known process" rarely exists.
ps, I'm a big fan of your blog and contribution here, so please go easy on me.