How do we design an attractive commission structure for our first sales person?
We are a small B2B startup and looking to hire our first outside sales person. We know that the best sales people won't work for straight commission but we also don't want to overspend on someone who isn't producing.
There are many factors that influence compensation. How much experience does your rep need? What type of sale, enterprise versus transactional.
Highly differentiated product or commodity. What do similar sales reps make for this type of work? How much can you afford?
Do you want to be a top 20% employer for compensation or bottom 20% or somewhere in between? What does your compensation package include; salary, benefits, stock, commission?
Compensation isn’t all about the paycheck. You’ll need to build a package that is competitive and that values what the sales person delivers to your company.
Amazon.com on the Marketplace sales team, we had the benefit of stock options, exciting new opportunity and rapid growth suggesting new sales executives could move up through the organization as we grew.
As a result, cash compensation was base plus a bonus up to 20% of total compensation. When I built out the advertising sales team, we had a much higher bonus attached to actual revenue as that model was easy to measure. I have worked in other organizations where we paid a one-time bonus for each deal signed.