What does a 100% commission model say about that company?
- They are an Underfunded Company
- Lack of Confidence in their product
- Disrespectful: No consideration of experience or skills
- Deceptive: They use Shady Bait n Switch Job Posting details, what else are they hiding?
Let’s face it, it’s just plain disrespectful. Anyone willing to hire an employee at 100% commission, doesn’t care about hat persons’ previous experience. It could be a McDonalds Fry cook for all they care; nevermind the 30 years of professional experience they might have. They are cheap, underfunded, and can’t afford to push their own product. Just how long do you expect that company to be around? And a sales rep that will do anything to earn that low of income (hello desperate measures) will certainly risk putting the company in a bad light when pitching the product.
What’s worse, his company is a claim “the product will sell sell“. If that were really true, then they would Haryu a base pay and save the money they would do it otherwise on commission.
I wouldn’t, nor will I take on any company that insists on such an out-dated pay structure. The turnover rates are extremely high (something like 99% of commission-only sales reps fails to make a LIVABLE wage, and are forced to leave for greener pastures) and it’s nearly impossible to find “A Players” willing to accept this type of position.
What’s more, those sales pros who do manage to succeed in a 100% commission sales job tend to be risk-takers with a strong entrepreneurial bent. They soon decide that they would be much better off putting their talents to work in THEIR OWN ventures.
In short, the 100% commission sales position is a lose-lose proposition.
Curious to see how my position matched up with others in the business, I asked my LinkedIn connections for their views on whether or not a salesperson who was unwilling to take a commission-only sales position was simply not hungry or motivated enough to generate revenues. The responses came in fast and furious, and it was soon apparent that I am not alone in my distaste for commission-only programs.
Notes one respondent: “…Great salespeople are looking for companies that will invest in them in order for them to continue their successes. Like an all-star athlete negotiating the next contract, no one, especially with proven skills, will take the entire risk without a blanket… The player knows there is risk – in baseball, it might be a physical injury. In sales, the injury might be competitive pricing, customers losing budget, product failure, delivery failure, poor customer service, etc. such [that] the salesperson can’t hit the ‘$15MM’ payout. There is no blanket for the rep.
And, most likely, many other teams (companies) will gladly pay that All-Star a market rate which then puts the original team at risk of losing not only the player but the customers that player will attack. Pay your superstars and they will certainly pay you. After time, when they have made their mark, offer them the opportunity to move to 100% commission. If they don’t, it doesn’t mean they aren’t hungry and motivated. It means they are smart.”
Another respondent was a bit more judicious, noting that it depends upon what is being sold and the sales cycle: “If you are selling products/services that are a “one-call-close” (Insurance, Mary Kay, Amway), a 100% commission compensation system is the only one that makes sense. You can also go straight commission on products/services that have a short cycle like one or two months (Mortgages, Real estate) but the commission per sale needs to be substantial to carry folks through to the next sale.
If you are dealing with long sales cycles (over three months) you will have to pay salary plus or your sales personnel will not be able to survive until the payday. It has nothing to do with dedication or hunger. It is really all about being able to support your family. In all cases, the better performers enjoy the largest compensation.”
So where do you stand on the issue?