3 ms·
Yes, but it makes sense for things that like to occur because when you think about it, firms care about the total contract value - meaning it might be a 50k con
by turc1656 9y ago
Yes, but it makes sense for things that like to occur because when you think about it, firms care about the total contract value - meaning it might be a 50k contract per year for 2-3 years. Companies are looking at the longer term. At least that's how it is at my company. Clients generally sign a 2 year contract at $X per year. So if a sales person only sells 50k in a given year but every contract averages 2 years that's really 100k.
- yannyu 9y agoRight. As you said, companies aren't optimizing just for this year's sales; they're going to be balancing acquiring customers this year, the cost of each sale, and the retention of those customers year over year. So if a sales guy gets a huge commission and salary for the first year for his acquired customers, but the company's retention rate is high, then that sales person's salary could be paying multiples in revenue over several years.