Where do you stand on sales positions that offer no base and are 100% commission?

Would you take a 100% commission business-to-business sales position?

I wouldn’t, nor will I take on any company that insists on such an out-dated pay structure. The turnover rates are just too high (something like 99% of commission-only sales reps fail to make a livable wage and are forced to leave for greener pastures) and it’s nearly impossible to find A Players willing to accept this type of position.

What’s more, those sales pros who do manage to succeed in a 100% commission sales job tend to be risk-takers with a strong entrepreneurial bent. They soon decide that they would be much better off putting their talents to work in their own ventures.

In short, the 100% commission sales position is a lose-lose proposition.

Curious to see how my position matched up with others in the business, I asked my LinkedIn connections for their views on whether or not a sales person who was unwilling to take a commission-only sales position was simply not hungry or motivated enough to generate revenues. The responses came in fast and furious, and it was soon apparent that I am not alone in my distaste for commission-only programs.

Notes one respondent: “…Great sales people are looking for companies that will invest in them in order for them to continue their successes. Like an all-star athlete negotiating the next contract, no one, especially with proven skills, will take the entire risk without a blanket… The player knows there is risk – in baseball, it might be a physical injury. In sales, the injury might be competitive pricing, customers losing budget, product failure, delivery failure, poor customer service, etc. such [that] the sales person can’t hit the ‘$15MM’ payout. There is no blanket for the rep. And, most likely, many other teams (companies) will gladly pay that All Star a market rate which then puts the original team at risk of losing not only the player, but the customers that player will attack. Pay your superstars and they will certainly pay you. After time, when they have made their mark, offer them the opportunity to move to 100% commission. If they don’t, it doesn’t mean they aren’t hungry and motivated. It means they are smart.”

Another respondent was a bit more judicious, noting that it depends upon what is being sold and the sales cycle: “If you are selling products/services that are a “one-call-close” (Insurance, Mary Kay, Amway), a 100% commission compensation system is the only one that makes sense. You can also go straight commission on products/services that have a short cycle like one or two months (Mortgages, Real estate) but the commission per sale needs to be substantial to carry folks through to the next sale. If you are dealing with long sales cycles (over three months) you will have to pay salary plus or your sales personnel will not be able to survive until the payday. It has nothing to do with dedication or hunger. It is really all about being able to support your family. In all cases the better performers enjoy the largest compensation.”

So where do you stand on the issue?

Who says great sales managers can’t be found? Dig deep and make the offer sexy!

I recently had the opportunity to participate in a Fortune Small Business “Ask FSB” column (see “How do I Find a Great Sales Manager” in the September 2008 issue of Fortune Small Business), responding to a reader’s question on how to find a great sales manager to expand his staffing firm’s client base. The business owner said he was willing to offer very competitive pay, but was having a hard time finding the right candidates.

Given the dismal state of the economy and rising unemployment rate, you’d think finding a qualified sales person would be a relatively easy task. Obviously, the problem must lie with the hiring manager or the company itself. Right?

Wrong.

The fact is, the demand for qualified sales professionals is strong. That is why you need to make sure that you’re giving them enough information upfront to entice the best to respond.  Make it sexy!

Provide detailed information on the business you’re in and the company’s culture.  Keep it sexy and make sure you’re communicating the positive points about your culture.  Make sure that the candidates know upfront if you can sweeten the pot with the option to telecommute, which is an especially popular and critical perk right now.

Whatever you do, don’t let the desperation for growing revenue force you to compromise. Be clear about quota expectations and never hire someone who has not exceeded their quotas at past organizations (no matter what excuses they give). Check past leadership, customer and partnership references to determine how effective the candidate is at meeting or exceeding revenue.

Once they’re hired, Tony Smith at the Brooks Group says it’s important to consistently ask these two questions in order to have enough information to lead them effectively;  What stage are you at in the sales process and what are you doing to move to the next level?

Does Web 2.0 make you less of a sales pro?

On my LinkedIn profile, I recently posed the question “How many of you categorize someone who is responding to web marketing leads, as a sales person?” The responses were fascinating, ranging from “I would not classify someone responding to web marketing leads as a sales person. At best, I would classify this as a pre sales function” to “without question, they are a salesperson. I assume they need to try to make a sale with that lead so they need the characteristics of a sales person. They may not eat what they kill, but still provide a significant sales function” and everything in between.

The debate generated by that one question also revealed some deep-seated biases when it comes to “true” sales people. Many felt that unless an individual was out beating the bushes for leads, meeting with prospects and closing deals face-to-face, they were inside sales reps rather than seasoned, strategically focused sales professionals.

From my perspective, that kind of thinking is a bit outdated in this Web 2.0 world. With as many as 60% of sales professionals now operating remotely when they aren’t visiting clients, and with such online tools as webinars, business and social networking sites and web conferencing at our disposal, we are limiting ourselves if we don’t take advantage of today’s global business environment.

As Thomas Friedman points out in “The World Is Flat: A Brief History of the Twenty-first Century,” technology has changed the way we do business in the 21st Century. Used properly, it makes us smarter, more efficient and better able to respond to the changing needs of our customers.

We don’t have to be face-to-face to be strategic partners with our clients. In fact, I’m willing to bet that most clients would prefer it if we didn’t insist on so many in-person meetings. They, too, have embraced the power of the Web to maximize their productivity and streamline their days.  And if we don’t demonstrate that we, as sales professionals, can function just as effectively in an online environment, doors will soon be closing.

That is not to say that we need never see a client in person again. There are some deals that simply require that personal connection. In fact, it is the ability to recognize when that is the case and go on to make the sale just as effortlessly in person as they do online that defines today’s true sales professionals.

End the debate over lead source performance with sales benchmarking

This week, SalesJournal.com is pleased to present a guest blog by Greg Alexander, CEO of data analytics firm Sales Benchmark Index. Greg is co-author of “Making the Number: How to Use Sales Benchmarking to Drive Performance” and “Topgrading for Sales: How to Interview, Hire, and Coach Top Sales Representatives.” In this article, he shares his insights into using sales benchmarking to evaluate performance of internal vs. external lead sources.

–Kathleen

One of most hotly contested issues between the sales and marketing disciplines is the topic of lead source quality. Marketing believes they supply quality leads in sufficient quantity to sales who cannot seem to close them. Sales, on the other hand, believes marketing does not produce enough leads and those that are provided are of poor quality.

Organizations faced with this strategic conflict have difficulty finding a means to arbitrate the dispute.

Sales benchmarking provides such a reliable mechanism.

By revealing to an organization which of its own leads are “best,” benchmarking allows executives to evaluate performance between lead sources within the organization (internal) as well as compare performance to a peer group of companies (external). Both approaches reveal weakness and strength with regard to lead source productivity.

The formulas for deriving lead effectiveness and cost attribution, as well as lead-based revenue generation, would be revealed and are part of a sales benchmarking effort that points towards best practices adoption.

For those interested in how to apply the discipline of benchmarking to the sales function, contact Sales Benchmark Index.

Social Media sites can pack your prospect pipeline. How are they working for you?

When you get those “invitations to connect” on LinkedIn, Plaxo, Ryze and other business networking sites, do you ignore them?

If so, you should re-think your strategy.  Turns out, those sites can be a powerful tool for keeping your prospect pipeline full and staying connected with your clients.

One reason they’re so effective at generating leads is because they provide an easy, efficient way to build a network of hundreds – even thousands – of connections. And, unlike sites like MySpace, business networking sites don’t force you to put up with page after page of videos, music and party photos to get the information you need.

You do need to take the time to set up your own profile (more information is always better). But once you do, building your network is as easy as clicking a button to launch a search of your email contacts for other members, then clicking again to send them a connection invitation. Once they accept, you have access to their connections as well as your own. 

You can also search for prospects based on a range of characteristics including job title, location, etc.  Once you find them, you can request a connection (some sites place limits on connection requests unless you pay a membership fee). If they accept, your pipeline just got a little fuller.

Even better, if you and your prospects have any common connections, you can ask for an electronic introduction.  It’s much easier than asking them to pick up the phone or write an email or letter – just a few clicks you’ve been introduced by a mutual acquaintance.

Like any tool, business networking sites are only as good as the user. To get the most from your profile, you need to keep your information updated and make it a point to visit the site frequently to see what new prospects might have joined since your last visit.

You also need to start accepting those connection invitations.