Dear SaaStr: Do Salespeople on Commission Really Sell More Than Salary-only Salespeople?
1000000000000.00% in SaaS. Commissioned salespeople sell more.
Lots of us try to run this experiment. At least, those of us who haven’t done software sales before, and have a low-ish price point and run an all in-bound model.
Why can’t someone just answer the phones, and take their orders? Wouldn’t it be more customer-centric if they weren’t just focused on that commission? Can’t I just have “happiness officers” and not traditional salespeople?
Well, best case:
- They won’t ask for 60 seats when the customers says they only “need” 20. A bad sales rep will break a deal here trying to maximize his commission. But a good one will learn the prospect actually needs 60 seats — and close 60. Tripling the revenue from this customer.
- They won’t ask the customer to buy this month, this quarter , etc. That dramatically increases the risk the deal never closes.
- They won’t be proactive or hustle. They won’t map out the stakeholders at the prospects. They won’t schedule the follow-ups. This will again decrease the odds the deal closes.
- They’ll let the deal go. Non-commissioned “sales” people will generally only close the deals that close in 1 call.
So by closing less, and closing slower … in most cases, best case, that’s half the revenue you’d have gotten otherwise. Best case.
I know a lot of you want Happiness Officer, not traditional sales folks. But first, incentives work. People align around incentives. And salespeople and sales … work. It’s a profession (done right). They know how to get the customer what they need, and in return, get more revenue, more quickly, more efficiently per given lead.
Now, at close to the very bottom of the market, tiny little deals — say < $50-$100 a month … you can do a simpler, smaller commission system. Those deals have to close in one call, and have to be 100% reactive. But even there. You’ll close more with commissions, even if the OTEs are lower.
You can also try with a fully-self serve model. Slack did, and at first, they thought they could do forever without sales people. It worked well at first. But as they scaled, 50%+ of their revenue came from … the sales team. So if nothing else, at least be open to change here.
We also did a great Workshop Wednesday with MongoDB’s VP of Sales Operations. Even with a huge PLG motion, you can see just how important sales commissions and sales incentives are there:
More here: Curse of the ‘Middlers’: Why Happiness Officers Can’t Stand In for…
