A lot of small business owners feel as though a salesperson on 100% commission is a panacea. Common thinking is that with no base salary there’s no risk; you only pay them when they produce. Wrong.
Risk #1 – Reputation
When you hire a commissioned salesperson (or anybody for that matter) they become a representative of your company, regardless of what you pay or don’t pay them. They’re out there pounding the pavement on behalf of your company. For most prospective clients, this person is the only person at your company they’ve ever met, so this person is your company. You better be damn sure that they’re well trained and well versed in your company’s offerings and ideals.
Risk #2 – Winning the Right Business
If a salesperson is on 100% commission their goal is to close quantity, not quality. They don’t care what the project should cost. They need that commission to put food on the table, so they’ll happily close a $100 deal for $50. The onus is then on the rest of the salaried team to deliver at half price.
Risk #3 – Loyalty
A 100% commission salesperson has no incentive to stay with you. If they get an opportunity to sell more somewhere else, they will. So all the effort you’ve spent training this individual goes out the door.
What should you do?
Ideally, a salesperson should have a mixed compensation package: A base salary plus commission/bonuses. This works to ensure that they’re properly invested in your company, and properly incentivized to close the right kind of deals.
