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?

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

  1. I believe the comments about this subject are right on the mark, companies that just pay on a commission only basis or as some of them hid it in a guaranteed draw which in reality is “you’re only as good as last week/month are taking advantage of salespeople and not rewarding them with a blanket of protection, which should be provided to hard working employees.

  2. 100% commission us very old-school. It demonstrates that what you are selling is a commodity product that should be sold over the internet or through catalogs. Personally, I would even consider residential real estate a commodity sale.
    If a business wants:
    -Long term Sustainability (meaning that the sales people can support their family and you have less than 10% sales person failure) so you can invest in your sales force.
    -Long term Loyalty (meaning, the best won’t jump ship for the competition or go into business for themselves), and
    -Long term Stability (able to retain the best even in tough market conditions) delivering consistent results,
    Then a 100% commission sales plan is NOT the answer. It works against the above objectives. It only works for business models where you essentially need a breathing body, where nano-second sales cycles are the norm, and where having 90-100% sales rep annual (in some cases monthly) turnover doesn’t hurt due to the low investment in the reps (Insurance, cars, telesales, Amway, real estate, door to door, get rich scheme du jour..etc)

  3. Hi,
    Great topic for discussion!
    I’ve had the opportunity to sell and manage under 3 compensation plans –
    100% commission
    Salary plus bonus
    Draw versus commission

    Each plan meets the needs of the respective industries right or wrong. As an experienced Sales Manager I can say that it is a challenge to manage & coach 100% commissioned sales reps.

    In the Realestate and financial services (stock broker, life insurance ) these industries have always paid 100% commission and have always been under great scrutiny for using strong armed unethical sales closing tactics. Don’t get me wrong, there are some very good ethical commisioned only sales peolple that get results however, I have found (in my experience) with 100% commission you get what you pay for. In working with commissioned sales reps the mentality is “I am paid to only sell” which worked well in the 1950’s to 1980. In todays competitive business enviorenment buyers want a product expert and solution provider, buyers are educated and require sales peolple with good busines skills. Unfortunately, the majority of commssioned sales reps are not skilled business people.

    In salary plus bonus systems you definately get a more complacent personality, however, you are paying for a long term player / thinker who can be coached and controlled. You get what you pay for with a 100% commissioned sales person versus a salaried rep. With the right salaried rep you are investing in and growing your business for the long term.
    Question –
    In respect to your sports analogy – would you really want to compensate a player based on wins only? Imagine the type of team / or player that was paid only when he or she won a game.

  4. I think these comments are spot on. The problem is now EVERY mom and pop wannabe is making 100% commission offers to Everyone in the Sales role. I personally have been offerred 100% commission to resume the same responsiblities I have as VP of sales at a $150K Base + +. It seems all of the knowlege and legacy work that I would pass along setting up an entire sales organization is worthless to them.

    I challenge any professional to put out a resume these days and not expect to get ltterally dozens of these type of offers every day. Many years ago I did take one of these offers that promised so much and once my organization I had built from scratch became wildly successful the Ceos Nephew from Canada flew in and replaced me.

    It it my humble opinion that if you do not want to pay any type of Salary then you should be willing to consider the work the people do as sweat equity because it IS a financial investment to work for a company for FREE.

    It can be as much as $40,000 investment for most senior executives. How much Stock could THAT buy.

    Anyway I have not seen one company yet be successful with this high turnover low morale system and if they cannot afford the best then …….

    Nick

  5. 100% commission plans allow employers to over-hire reps and weed out the ones that sell less. As tough as sales is, you’re also competing with your colleagues!

  6. 100% Commission programs…..

    I’ve seen it all…companies that bring people in with a straight commission program, only to fire them later over some trivia event, and then hand the now very profitable territory over to a family member or croney.

  7. Too often, companies with little to no capital to invest in sales, opt for the 100% commission position. This is the lose/lose if you believe that you get what you pay for.

    I do believe that a 100% commission Sales Job can be an attractive way to further incent top performers and allow them to make more money. I recall a comp plan I was on at AT&T back in the late 80’s that allowed sales people to choose between 70/30, 50/50 and 30/70. Once you picked a plan, you had to stick with it for the year. It gave new sales reps with little to no pipe, a nice salary while they grew thier business. It gave the more tenured reps a way to earn a higher comp factor if they went with a higher risk/reward package.

    This type of example is a win/win. I agree that most of the 100% comp positions are set up to lose, as this is where they start, not where they evolve to.

Comments are closed.