Sales Compensation – Exceptions to the Rule

I’ve previously written about sales compensation, with the average salesperson earning $96,000, a good salespeople earning $135,000 (varies by industry and geography) and poor and entry level salespeople earning around $67,000.  Several companies have recently asked me about how to hire salespeople when you can’t afford to pay even the entry level sales compensation.

Case Study number one is a start-up with a complex sale.  By complex we’re talking long sell cycles with a high-ticket sale.  By start-up we’re talking unproven and challenging to sell.  Straight commission isn’t an option here because it could take 18 months before the sales begin coming in. How is a salesperson supposed to survive for 18 months?  A base salary for 18 months isn’t an option either because the company doesn’t have any revenue (or any funding).  The only hope this company has of finding a good salesperson is to offer equity.  And when equity is on the table there is no room for error.  Selection excellence becomes critical!

Case Study number two has money but it’s not realistic for a new salesperson to generate enough revenue to earn more than $45,000.  While that’s well below entry level money, this is a great example of two possible compensation exceptions.  First, there is virtually no ramp-up time because the sell cycle is so short, so the salesperson can actually begin making sales the first week.  That makes straight commission very viable.  This easy-to-make sale makes it possible for even an inexperienced salesperson, one who would welcome $45,000, to be effective, as long as they are well suited for selling in a short sell cycle.  Once again, selection becomes critical, with no room for error.

Sales compensation is difficult enough in normal situations.  It becomes even more difficult when the organization doesn’t fit into the normal category so the big difference maker is your sales selection tool.