The 100% Commission Headache

An interesting question was recently brought to my attention:  Should we resurrect the 100% commission sales position?

This topic has long been the subject of heated debate within the sales profession. On one side, there are those who believe that full commission positions are not only alive and kicking, but that companies should make them more appealing to hesitant sales pros by offering enhanced incentives and showcasing the income of top sales people to demonstrate earning potential.

Others, like me, are more divided on the subject. While 100% commission positions do have their place in sales, they aren’t always a good option for either the company or the sales professional. Certainly A Players can be wildly successful in 100% commission positions, but finding them is a major challenge. For many companies, these positions are recruitment and retention nightmares that result in low sales and high turnover.

While there are high caliber sales professionals who have the entrepreneurial spirit and drive necessary to make a 100% commission position work for themselves and the company, you have to dig very deep to find them. Too often, whether it’s justified or not, top sales pros perceive the companies offering commission-only positions as less-than-reputable.

The other problem with commission-only positions is that they haven’t kept up with the changes to the sales profession. Sales is far more than simply selling a widget and moving on. Today’s most successful sales organizations have recognized that success requires adopting a consultative, partnership approach that results in long-term client relationships.

By offering a base plus commission, hiring managers are acknowledging that they value sales people with much higher levels of education and experience than ever before – qualities that are neither cheap nor easy to find.

That is why I always encourage my clients to rethink their stance on commission-only positions. However, if they are insistent, I urge them to at least offer some level of draw against commissions and some type of guarantee. This demonstrates to prospective hires that the company is seeking a long-term, mutually beneficial relationship with their sales team. It shows good faith, which ultimately leads to higher caliber sales professionals and lower turnover.

14 thoughts on “The 100% Commission Headache”

  1. Kathleen, maybe we need to define our terms a little better. I am a Manufacturers Representative, a 100% commission salesperson. I am sure that you are not refering to Manufacturers Representatives, am I safe in assuming that you are refering to a company’s dedicated sales person who is compensated entirely by commission?
    As a rep I work constantly to develop my skills and to stay abreast in the very best of current sales philosophy and tactics. I have to, if I don’t sell my family suffers.
    I am encouraged to see that many more manufacturers, perhaps because of the current economic climate are rediscovering the value of Manufacturers Representatives. It can be a quick road to success when you match the right rep group with the right manufacturer. I agree completely that hiring direct salespeople with 100% commission for compensation is probably a losing proposition.
    Bob Van Winter
    Van Winter Associates, Inc.

    1. Bob – you are not a salesperson, but an entrepreneur. You clearly own a business named after yourself, and, like most businesses, you eat what you kill. Kathleen was referring to, as you called it, a “direct sales person”.

  2. I have worked for companies who offer a base salary. One of the things to watch for is if the company “caps” your earnings, that is, “creates a ceiling” which limits your opportunity.

  3. Interesting piece, thank you for writing it. I have worked all sides of this issue. 100% Commission vs. Base + Commission…. Individual contributor vs. Hiring manager… all combinations. I agree with you that 100% commission sales forces’ are recruitment and retention nightmares. In my experience 100% commission needs two base things in order to work. 1) A very dedicated sales manager that can train fast and really team with the rep until solid success is achieved. 2) The right product. Some products are a onetime purchase and require very little follow up after the sale. Now, If the company can build a support team that either pays the rep to follow up or even better, takes the follow up task off the reps plate, then that will work as well.
    If the rep is required to do all the follow up, at some point the system breaks down and the rep falls victim to their own success by having too many clients to follow up on and therefore has no time to sell. Once this happens, they lose their edge and by default turn into farmers and not hunters. This takes you back to step #1… the need for a great sales manager to train new reps because you just lost another one to the system. It can work if the complete system is coordinated and watched over. I have made some great money working 100% commission opportunities. With integrity, it can be a great life style for the rep and profitable for the company.

  4. My experience with companies that only offer 100% commission is that they are under-funded and unsuccessful. They cannot attract quality salespeople and wind up getting “warm bodies.”

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  7. I have been “offered” a switch from $40k base salary to a $24k draw against commissions. In effect my entire base salary will be removed and i will be going 100% commission. My boss is responding to gripes by an admin staffer who works longer hours than me for less money so he feels switching me to 100% commission would make my more flexible hours more justifiable.

    If i were him i would just fire the squeaky admin staffer. I get up in front of groups of 30-50 potential clients and make sales presentations and get results. I make outbound sales calls. Unlike him, i have to come up with what work needs to get done, come up with a plan to get it done and then execute, i dont have a steady stream of tidbits to do coming inbound by phone and email from people who are already happily sold clients.

    I think im going to quit this job. 100% commission shows no respect for the value i provide to the company doing things other than smiling and dialing. Whats even worse is that my role is outside sales and i am not in control of the closing process. I would only receive commission on accounts that close, and the closing team does a poor job of landing the accounts.

    I am infuriated to be offered a switch from salary to straight commission and have my employer toss in my face my “poor performance at bringing in accounts” when its the closing team bungling my sales. In the past month theyve bombed on 1.5MM in accounts alone and then i get raked over the coals for bringing nothing in?

    1. If you are a sales person, what value do you provide other than getting paying customers for the company?

  8. Taylor, it is certainly not a good idea for an employer to change the game after you have been in the position for a while. When you join a company, you come in based on the fit for you personally as well as the economic factors for you and your family. If any of those things change, and no longer meet your needs, it may indeed be time to leave.

    Generally, 100% commission models drive higher turnover – which it sounds like you are about to prove correct.

  9. Listen folks if a sales person is getting a base salary and not bringing in paying customers then how do you suppose that is affecting the bottom line of the company. Your job is to get paying customers. You are not even getting the customers to cover the salary that you are getting, it makes no sense. 100% commission is out therefor anyone to accept it, To each his own. if it produces turnover then so be it..because if you are not bringing revenue through the door then either way you losing something.

  10. Too many folks these days want something for nothing..i wouldn’t have the peace of mind entering into a base salary agreement with the chance that he or she won’t bring anything through the door.

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