Death of a Salesman: Commission & OTE

On target earnings, the 50/50% split. It’s as old as the hills. Targets which the majority of the sales team struggles to hit save for the rep that’s been in situ for five plus years and killing it. Sound familiar?

Commission is designed to incentivise acting as a reward mechanism. Something that pays on output not potential. That’s a strong argument which, on the surface at least, should serve to encourage. However, does the pursuit of those goals, often driven by short term considerations, manifest positive behaviours consistent with the interests of the customer and ultimately the wider business?

I've often witnessed qualified prospects turned off by overly enthusiastic engagement driven by top-down pressure to accelerate a sales cycle. To trade cash for time. To move a deal up or out. Again, sound familiar...... When internal scrutiny is applied it takes a confident Account Exec to push back, thereby adopting behaviours which may harm their relationships, deal closer propensity and overall number. Let alone any bonus. I still recall working for an ERP vendor with an AE on the adjacent desk being pressured to visit a radio silent prospect without an appointment. It didn't end well.

Poor judgement aside, how do we move away from such scenarios and, more importantly, things that underline them. Another way is to remove the commission or at least the majority. To adopt a longer-term view. SaaS is often akin to dog years with such sentiment something of a misnomer as quarterly numbers are sacrosanct. However, if teams are allowed to operate with a degree of autonomy, free from short term immediacy, deal cycle execution would become more organic. The benefits could be startling.

Sales teams will mature and grow, improving staff retention and reducing (cough) hiring costs. The office environment less stressful. Customer relationships would become more authentic and less transactional. The business is also more likely to close as you’re seen as a trusted advisor rather than pervasive irritant. An altogether softer consultative sale. Such an approach would require controls and not a small degree of trust. It’s been adopted successfully by the likes of AWS. The long-term benefits would significantly outweigh short term gains.