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A breath of fresh air: a hot, social networking start-up thinking about revenue relatively early on.

The problem with this article (NB. not the article from the above quote) is that it fails to account for the different way salespeople are measured and treated within an organization.  Salespeople are usually given a much shorter leash than other types of employees.  The pressure on salespeople to drive revenue is intense.

Salespeople (the good ones at least) are like professional poker players.  The chips poker players use and accumulate are how they keep score.  Talk to any serious poker player and she’ll tell you that chips have no monetary value to her.  They are simply a means to show the other players how much better than them she is.  Salespeople (like I said, the good ones) treat their commission in the same way.  It’s a mechanism to keep score and prove you are better than anyone else on the team.

Sales is a difficult, gut-wrenching, nerve-racking and at times ugly way to make a living.  It requires people to want to have a number on their back every single second of every single minute of every single day.  And if you start to fall off you’re gone.  Miss your number and it’s not “Oh, do better next time, you’re great!”  No.  Miss your number and it’s “Bye.”  The harsh reality of being a salesperson demands compensation that is tailored to the job.

This article also makes a number of claims - for example that salespeople spend 20% of their time calculating where they are in terms of their payout - that are ridiculous.  If the sales people in his company were spending 20% - 20%! - of their time figuring out how much they were making that quarter than that is a management failure not a compensation failure.  If any of my salespeople spent 20% of their time doing anything other than selling they would be fired immediately.

For what it’s worth my sales team is extremely cooperative.  In three years I’ve not seen anyone on my team throw anyone else under the bus for anything commission related.  I do believe this goes back to management not compensation.  Well managed sales teams do not have the problems the author describes.

Sales is war.  If you look at it any other way you are not cut out for it.  If you are not ready to fight - and I mean really fight - sales is not for you.  And because of this and of the way salespeople are measured by management, I am a strong believer in sales commissions.

(via evangotlib)

Here’s my take on Evan’s analysis: he’s right, sales is frequently war. Particularly media sales in digital start-ups whether they’re content, video, ad networks, ad tech. I think the Fog Creek approach would actually work really well at a more established company when sales is frequently more account management-centric.  I found myself nodding as I read the post based on frustrations stemming from my experience at CBS.  The comp plans changed annually, were byzantine and led to a lot of unnecessary turf war and squabbling about one’s relative value vis a vis their peers.

Now I’m at an ad tech start-up, and while I’m not strictly in sales, I’ve observed that the vibe is a lot more like what Evan’s described.  Commission is a badge of honor and if your leash is short if you’re not performing.  I think it boils down to reliance on brand vs. individual effort.  In media sales, you can rely on big brand (Google, CBS, Facebook, etc…) to help you bring in deals whereas at a start-up it’s much more up to your individual effort.

Bottom line is there isn’t a one size fits all solution.  Commission plans might work well in certain types of companies under certain types of sales managers with a specific type of culture.  More salary-focused approaches could work well at companies with established products/brand presence that have a different type of culture.  

I think debate on this topic is useful.  It’s never a good idea to simply use one framework because “it’s the way things have always been.”  If anything, that approach is antithetical to the industry the companies we work for are part of.

(Source: inc.com)