Startup CXO

Chapter 58Compensating Sales Team Members

Of all the myths surrounding salespeople, the one that is most widely accepted is that salespeople are wholly driven by money, which is not necessarily true. But compensation is a big part of building a sales team and it's one of the areas you'll have to think about early in your startup and revisit over time as you scale. I've seen two things occur in startups that you have to watch out for. One is that you hire someone who's willing, and enjoys the chase. You know they're motivated and they'll be aggressive but there's so much uncertainty that it doesn't make sense to have commissions. So, you pay that person an inflated salary, noting for them that part of their salary will eventually be turned into an incentive compensation. The challenge there is that it's very hard to dial back money once you put it out there. And even if you're explicit about it, even if you have it written down, the salesperson is likely to view any reduction in salary as a negative. So that is not my preferred form.

My preferred form of incentive in a startup is to give someone an aggressive salary, something that is at or above market. You want (and need) to get the best salespeople in your company, so pay for it. Don't try to go in on the cheap. That never works. Pay for the talent you think is going to help you be successful, based on market rates, and then pay a high flat commission rate on every single dollar that comes in the door. So, my recommendation ...