Should I Hire a Commission-only Salesperson?
You’re a bootstrapped B2B tech founder. You’ve done much of the hard work building a product, getting it to market and closing those first deals. What’s more, you’ve done it and, likely, not drawn a salary.
It was tough, wasn’t it? Maybe even a little uncomfortable for founders with a more technical background. It would be natural to now want to hand off the Selling baton to someone else and you wouldn’t be alone if you were trying to find a risk-free, variable cost-only person who you could feel had some skin in the game.
That would be a commission-only salesperson.
Here we look at the pros and cons of hiring a commission-only person as the first Sales hire in a B2B tech startup.
I don’t want to be flippant here but, unless you get extremely lucky, there are no Pros.
Before looking at the flip side, and recognizing we’re only talking about B2B tech companies here, let’s consider why there are no Pros. That comes from what you need this person to do. Just sell stuff? To anyone? Do you need them to sell to someone who’s not a good fit such that you end up with all kinds of client issues going forward? Do you need them to tell you that you need to add features x, y and z in order that they can be successful – meaning you have a ‘path of least resistance’ salesperson driving product development? Because that’s what you’ll get with a commission-only salesperson.
The reality is that what your business needs is someone who can develop a predictable, repeatable, scalable, profitable sales process that others can follow. You need a Pathfinder salesperson who will create a playbook for others to use.
In short, you need someone who will teach you to fish. That person is worth their weight in gold and you need to pay them commensurately. If you don’t have the money to do this right now then wait, keep selling yourself until you do have the resources to support this role.
Let’s look at the Cons of a commission-only salesperson in a little more detail.
Firstly, and expanding on the points above. A commission-only salesperson will have no incentive to find the right clients for your business, they are only motivated to close whatever deals they can find. Building a repeatable sales process for your business starts with identifying your initial target market, but why should a commission-only salesperson care about that? They need to earn commission and will follow the path of least resistance (for them) to earn a pay check.
Secondly, where is the motivation for them to bring in clients who are a good fit for your product, or even to look for those clients best suited to the features already available? There is none. It won’t happen. What will happen is you’ll end up with unhappy clients and product features driven not by the needs of your target market but those your sales rep needs to close deals.
Thirdly, what’s the motivation of the person you’re bringing in? Working for commission only suggests their motivation is money (or desperation). There’s nothing wrong with that (money not desperation) but the Pathfinder salesperson does not have money as their primary motivator. Of course, it’s important to them but their primary motivation is to build something, to create that sales process that others can follow. At The Right Five a candidate’s primary motivation is one of the many attributes that we assess for.
Fourthly, do you have everything in place to support this salesperson in the field? Do you have a functioning marketing activity that will generate leads? Do you have the pre-sales resource to support them if they need to demo the product or answer technical questions? Likely you don’t have anything in which case how/why is a commission-only salesperson going to be successful? You might be asking, “How is a Pathfinder going to be successful?” but it’s their job to figure out the whole end-to-end process, to blaze a trail that’s repeatable, scalable and profitable. That’s why a typical ‘Playbook’ salesperson won’t be successful in this role. They just don’t have the breadth of experience.
Let’s stop counting the Cons, there are too many, but here are a final few to consider.
Who’s going to manage your commission-only salesperson? You? Experience shows that where success does occur with commission-only salespeople, a seasoned Sales Manager is watching their every move and measuring progress. In your case, who’s going to do that and what metrics are they going to be tracked against? Where’s the playbook? Of course, that’s the role of your first Sales hire, to produce the playbook…
If you’re still determined to try this route in the hope you get lucky, you also need to consider if it is legal in your location? Outsourcing the Sales function to an agency of some kind is an option, but if you’re trying to bring in a commission-only employee, you need to make sure you’re compliant with minimum wage and other laws.
In summary, don’t do it. If it’s a lack of funding that’s pushing you in this direction then continue selling yourself or look for some angel funding. If it’s a lack of confidence then recognize that your mindset is more aligned to managing failure than rewarding success.
When you’ve reconciled those issues your first Sales hire should be a Pathfinder. The great news is The Right Five has just made finding that person fast and almost effortless for you.