4 ms·

So, my takeaway from the article: Sales commissions are good because they align what the company wants and what the salesperson wants. Sales commissions are b

by jmduke 14y ago

So, my takeaway from the article: Sales commissions are good because they align what the company wants and what the salesperson wants. Sales commissions are bad because sometimes the company wants something (pushing a harder product, etc.) that isn't in the salesperson's best interest. ThoughtWorks' solution was to eliminate commissions, thus pushing for a salesperson role that was less of an advocate for the product towards the customer and more for an advocate for the customer towards the company. Maybe I'm oversimplifying things, but the sales staff the author describes isn't sales -- it's marketing. Which is good! But fills an entirely different niche. One of the issues the author talks about is that the sales staff were promising things that couldn't be delivered, but I only see that more exacerbated by this approach. What's the disadvantage of scaling commission based off of company goals? (Selling a less demanded product yields more commission). This is, from my understanding, how more institutionalized salesforces operate, and seems like a more gradual solution to the problem.

mindcrime 14y ago
Maybe I'm oversimplifying things, but the sales staff the author describes isn't sales -- it's marketing. I don't think there's any maybe too it. I think it's quite clear that the OP isn't suggesting to abandon sales completely in favour of marketing. So, yes, I think you're oversimplifying to a strong extent. What is being discussed is all about incentives for sales people, to motivate them to do what's in the company's best interests. If it were in the company's best interest to simply get a sale no matter what, regardless of how much damage that sale does to the company, then the standard commission based approach makes perfect sense. But what do you do about the deals where the salesperson does the normal "used car salesman / snake oil pitchman" act, scores the sell by promising a lot of shit that's not realistic, and then it ultimately costs the company more money than the sale price, to fulfil the deal? Or maybe it's not that bad, but maybe the scenario just creates a debacle that leaves a bad taste in the customer's mouth and ixnay's any future deals with that customer. And if your firm emphasizes lots of up-selling and cross-selling and tries to optimize "lifetime value of the customer" then you want to start the relationship off on a strong note, no?
- jmduke 14y ago
  What is being discussed is all about incentives for sales people, to motivate them to do what's in the company's best interests. If it were in the company's best interest to simply get a sale no matter what, regardless of how much damage that sale does to the company, then the standard commission based approach makes perfect sense. But what do you do about the deals where the salesperson does the normal "used car salesman / snake oil pitchman" act, scores the sell by promising a lot of shit that's not realistic, and then it ultimately costs the company more money than the sale price, to fulfil the deal? This argument isn't against sales commissions, it's against bad salespeople. Obviously any sales approach that values get-rich-quick over providing long-term value for the company is going to be dangerous. Smart salespeople recognize that a relationship with the customer is the most important thing -- not despite commissions, but because of commissions. There's a sales cliche that goes along the lines of treating the customer like a cow to be milked instead of a cow to be slaughtered: if you're trying to optimize the lifetime value of a customer as a business, then that also means maximizing the possible commission from that customer, no? (And, furthermore, the point I'm raising is -- are those smart/good salespeople going to be disinclined to work at a company without commission? I really don't know.)
  - mindcrime 14y ago
    This argument isn't against sales commissions, it's against bad salespeople. OK, I can buy that, but I think it's creating more of a binary situation than exists in reality. Surely the "goodness" or "badness" of salespeople, in this regard, is on a continuum? If so, wouldn't choosing the best incentive structure be most important to the ones who aren't solidly at one end or the other?
    - jmduke 14y ago
      Oh, definitely. It's just hard to mentally conjure a spectrum of fitness for the company without having more specifics. I guess in my mind, what the author is doing is creating a structure that minimizes damage done to the company by bad salespeople: and I wonder if an unintended consequence of that is limiting the abilities of great salespeople as well.

by jmduke 14y ago

mindcrime 14y ago

Maybe I'm oversimplifying things, but the sales staff the author describes isn't sales -- it's marketing. I don't think there's any maybe too it. I think it's quite clear that the OP isn't suggesting to abandon sales completely in favour of marketing. So, yes, I think you're oversimplifying to a strong extent. What is being discussed is all about incentives for sales people, to motivate them to do what's in the company's best interests. If it were in the company's best interest to simply get a sale no matter what, regardless of how much damage that sale does to the company, then the standard commission based approach makes perfect sense. But what do you do about the deals where the salesperson does the normal "used car salesman / snake oil pitchman" act, scores the sell by promising a lot of shit that's not realistic, and then it ultimately costs the company more money than the sale price, to fulfil the deal? Or maybe it's not that bad, but maybe the scenario just creates a debacle that leaves a bad taste in the customer's mouth and ixnay's any future deals with that customer. And if your firm emphasizes lots of up-selling and cross-selling and tries to optimize "lifetime value of the customer" then you want to start the relationship off on a strong note, no?

jmduke 14y ago
What is being discussed is all about incentives for sales people, to motivate them to do what's in the company's best interests. If it were in the company's best interest to simply get a sale no matter what, regardless of how much damage that sale does to the company, then the standard commission based approach makes perfect sense. But what do you do about the deals where the salesperson does the normal "used car salesman / snake oil pitchman" act, scores the sell by promising a lot of shit that's not realistic, and then it ultimately costs the company more money than the sale price, to fulfil the deal? This argument isn't against sales commissions, it's against bad salespeople. Obviously any sales approach that values get-rich-quick over providing long-term value for the company is going to be dangerous. Smart salespeople recognize that a relationship with the customer is the most important thing -- not despite commissions, but because of commissions. There's a sales cliche that goes along the lines of treating the customer like a cow to be milked instead of a cow to be slaughtered: if you're trying to optimize the lifetime value of a customer as a business, then that also means maximizing the possible commission from that customer, no? (And, furthermore, the point I'm raising is -- are those smart/good salespeople going to be disinclined to work at a company without commission? I really don't know.)
- mindcrime 14y ago
  This argument isn't against sales commissions, it's against bad salespeople. OK, I can buy that, but I think it's creating more of a binary situation than exists in reality. Surely the "goodness" or "badness" of salespeople, in this regard, is on a continuum? If so, wouldn't choosing the best incentive structure be most important to the ones who aren't solidly at one end or the other?
  - jmduke 14y ago
    Oh, definitely. It's just hard to mentally conjure a spectrum of fitness for the company without having more specifics. I guess in my mind, what the author is doing is creating a structure that minimizes damage done to the company by bad salespeople: and I wonder if an unintended consequence of that is limiting the abilities of great salespeople as well.