Commission-only sales plans are risky in my opinion.  I know they are the truest form of selling - you eat what you kill.  I simply think that many salespeople view this structure as a lack of commitment from the company.  I’m not saying that is accurate, but I have talked to many salespeople under these plans and this is their perception.

Fortune Small Business discusses this topic in their article Why to be wary of commission-only sales staff:

“If you hire someone and you’re not really willing to invest time and resources in them - and that’s really what a commission-only sales person suggests - then you’re missing an opportunity,” he says.

Good sales people communicate to prospects whatever makes your company special.

Again, the investment (or lack of) is the issue here.

“With the high churn rate of commission-only sales people, providing a position where there’s an equitable base and a reasonable expectation to succeed is probably less expensive in the long run,” she says.

Commission-only sales people who are just in it for the money “are the ones who will bail out first if hard times hit,” says Ross.

I’ve seen them leave before hard times hit.  The retention factor for these comp plans is minimal.  We have encountered sales comp plans that swung too far to the other extreme.  Those salary-intensive plans can create an entire set of problems themselves.  In the end, I am a proponent of a plan that blends salary with a commission.

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Posted By Derrick Moe | Compensation, Retention | |