Outsourcing salespeople can be a good idea for some emerging tech startups for different reasons:
- Can’t afford to hire
- Want to test a new product
- Want to expand into new Markets where independent sales agents might have pre-existing contacts.
Ramping up salespeople is tough even when you pay them a salary. Here are some facts:
- 53% – of companies in Europe and the US reported bad hires according to CareerBuilder Survey.
- 27% – of companies say a bad hire costs more than £50K British pounds in the US and the UK.
Commission only is an industry, there are marketplaces out there making a killing who will be quick to write about its benefits but, is it the right decision for a small IT vendor?
If you think that not paying a basic salary won’t cost you anything, think again. These are some of the challenges that our clients have faced:
- Brand damage: associated with having people sell your solution with no idea of the customer’s pain points or how to sell your solution.
- Opportunity cost: in terms of total time wasted trying to support opportunities that didn’t go anywhere, this has set back some of our customers thee years, not ideal in a sector with a 7-year average window of opportunity.
- Frustration: what customers have experience trying to support said salespeople.
Are you hiring or about to hire? Considering to hire commission only sales guys? Concerned about long or failed ramp ups? Below some things to consider and questions to ask yourself to help you assess what’s best for you:
You need to be able to sell yourself to convince companies to pay you a basic salary. If a salesperson can’t convince you to pay them a basic salary, what makes you think they will be good enough to sell your solution?
There are new technologies coming to market every day, some have really big pockets, they want only the best talent and are willing to pay for it. Successful salespeople tipically earn packages with basic + double OTE, they would need to be rewarded handsomely to leave that to join an emerging tech startup that probably has a 90% chance of failure. If they are willing to do that for no commission, can you be sure they were successful in the first place? Can you confidently say you are getting the best talent? Are you willing to settle for less?
If you don’t pay a basic salary you can’t expect salespeople to sell your solution exclusively. Will they dedicate enough time at selling your solution? What about your IP? What makes you think they won’t be sharing your secrets?
We’ve established that it’s unlikely to get a senior salesperson to join work with you on a commission only basis but even senior salespeople require sales enablement which takes time and resources. Junior salespeople can become excellent salespeople if they have the drive, ambition, intellect and some sales acumen, you could persuade them to join your organisation on a commission only basis in exchange for the promise of a bright future but,they have to be enabled properly, otherwise, they can do more harm than good selling your solution in the wrong way.
Commission only people has a high tunover so, having done all the effort of forming a succesful salesperson, are you willing to risk all that going down the drain only to have to start all over again?
Ask yourself the below questions before hiring commission only salespeople:
- Do you know who your ideal customer is/where the low hanging fruits are?
- Do you have a compelling value proposition?
- Will buyers think it’s risky to buy from a small vendor?
- Do you have a repeatable prospecting process, sales process and methodology in place that they can execute on quickly?
- Do you have the right sales materials to support their learning (playbook, onboarding, elevator pitch, etc)
- Do you have the knowledge and time to train them and coach them?
- Do you have the technology to enable them to generate leads and be more productive
- Does your CRM guide them through the sales cycle? Does it tell them what steps need to be taken to close a deal? Does it teach them how to take every step?
- Does it help you identify areas of improvement before its too late?
- Do you know how much you want them to sell? Have you achieved it before? Have you broken down sales targets into effectiveness targets (close rate, average deal size, salescycle lenght) and required weekly activities (calls, emails, discoveries, demos, etc) to hit quota?
- Do you have the time, knowledge and tools to analyse their performance and spot early warning indicators of bad performance and help them improve in such areas?