How I Killed a $40K Commission-Only Disaster in 2 Minutes

Speaker A: 00:00:37

I just saved an MSP owner from six grueling months of hiring the wrong salesperson, wasting tens of thousands of dollars and not getting results in basically two minutes on a call. So here's, here's how we did that.

We were on a coaching call where there's like open Q A, kind of like an office hours deal where, you know, MSP owners can ask any sales, marketing, growth questions that they, that they want. And one of the questions was, hey, Bray, how do you, you know, I've got this job posting up.

I'm not getting any, you know, many, many candidates, the people that are coming through aren't that qualified. And I'm trying to hire this, this sales rep. And what can I do to get more candidates to, to reply to the posting?

I said, well, you'll fire up the, the posting. Like, let me take a look. And he does a screen share, shows me the, the job posting.

And there's like one or two sentences and which, which weren't good, but they're, they would distract from my actual point. And you get like three or four sentences in. And it says, quote, 100% commission only role with a $40,000 guarantee and uncapped commission structure.

I said, okay, so this is, it's commission only. I said, what's, what's the 40,000 guarantee? Like, is that a, like some kind of draw? Is it like salary?

Like, how do you have commission only in the guarantee? And he's like, well, you know, they're going to kind of like a draw system. And I'm like, so. And you're not getting candidates to this?

And he said, no. I said, well, okay, tell me. I'll do a comp plan. Let me come back this. Like, why are we doing. Like, why are you doing commission only?

Why are you doing, like, why do the draw? Like, what's, that's confusing. Like, tell somebody like, hey, it's commission only, but you've got to guarantee.

Like, why not just pay him a base salary? You know, because you're on the hook anyway, right? Like, if you pay them the base salary versus the draw, like, either way you're on the hook. And I.

And so why not just do that to get better people? He's like, well, if they don't sell somebody in 90 days and they're gone. And I said, okay, stop. Like, let's just, let's just stop right here.

Like, hearing that and seeing this, I said, just throw this posting away. Like, don't, don't post it. Take it down. If it's up. And my advice is for you, like rethink this actual job.

Rethink the expectations that you have for the salesperson and rethink just the general strategy before you do this, not only just to yourself, but to somebody else, right? Like I've, I've been the salesperson, I've seen this play out a million times for two really big reasons.

One is the comment that you just made that like if they don't sell something in 90 days or they're gone. I said, tell me, tell me something like what's your, what's your average sales cycle? They said, well, it's about, you know, two to three months.

I said, interesting. So your sales cycle, let's say it's three months, your sales cycle is 90 days.

And if they don't sell something in 90 days, then they're fired and they, and they've earned nothing up to this point. I said, so just like think this through, man.

I said, that means on day one they don't have to have just one active qualified opportunity that they're working like day one because you've got a 90 day sales cycle, right? So it's, you know, two to three months, call it, but you get the drift. The thing is they don't have to have just one.

I'm assuming you don't close 100% of your deals, right?

Let's, let's say it's a third, then that means sales rep, new sales rep has to have three deals in order to have the probability because only one of those is going to close at that math on day one when they start with you, right? Like that's no time to train, that's no time to ramp up, that's no time to prospect, that's no time to build pipeline.

Like that's no time to do any of that. And you're setting them up to fail. Like you're setting yourself up to waste a ton of time. You're setting them up to fail.

Like if you're running any type of consultative sales process, if it's not purely transactional, meaning the first time that I talk to you, I can close it, right?

Like if it's not a one call close type of deal, then the way you've got to look at this is, and it's just a rule of thumb to anyone, not just him, is take your sales cycle and multiply it by 2.

If you've got a three month sales cycle, you've got basically a six month ramp up for that salesperson because they've got to, they've got to train, they've got to learn your playbook, they've got to understand your process. They got to understand the company they're selling for. They've got to understand like, what is the offer? What are they delivering?

Like what, who is the market? All like the whole, the whole thing, right?

And then they've got to have a reasonable time to go up and build some pipeline and then they're going to run the sales process, which in this case is 90 days, right? Or two to three months. So then they're going to run the sales process. They don't have any of the time to do any of that.

If you, if you say, hey, day one go and day 90, you're, you're fired, right? So that's, that's, that's one massive issue. The other one is that's just the commission only piece, man. Like, commission only sucks.

Like this is, I've done this multiple times. I ran the national sales team at the Chamber when it was commission only. And we ended up shutting it down.

Like it's just a, it's for, you know, recruiting reasons, for comp, reasons, for teamwork reasons. You, you've got mercenaries out there selling. You know, the only thing they care about is, you know, short term sales.

They don't care about like the long term retention. They're not thinking about how to improve the business or selling the right people.

They're not, you know, wanting to give any discretionary effort like at anything beyond what you're doing. And you're not going to bog a salesperson down with a bunch of stuff.

But you don't want people to be like, no, like I'm, I'm not going to help with that playbook. I'm not going to help train that person. I'm not going to hop on that call.

I'm not going to do any of that, which is what you get when you get commission only. And like, so just the, the plan sucks. And I, I, I did it again like after I, after I left the Chamber, I ran a, a company, an older company.

It was, you know, 45 years old enough now, you know, over 50.

sales team and it was, it was: 1099

But the other thing is about commission only is your talent pool is going to be less experienced people and it's going to be significantly lower.

And a lot of people think, well, you know, if you give somebody commission only don't they think they're going to make more money and the experience good salesperson is going to take it.

No, like the experienced good salesperson is going to look at that and say hey, you know, no commission probably means from experience that you don't have much money or you aren't willing to invest in the role, which in this case the person I'm talking to is the case.

Or they're going to like an experienced person to look at that and go, I don't know, like I'm shouldering all the risk and I've got to trust that you don't have all of your shit together. Right? Right. Like do you have training plan for me? Do you have systems set up? Do you have leads coming in the door? Do you have the right expectations?

I don't know any of that as a salesperson before you hire me.

I only know that after you hire me and if I'm shouldering all the risk in this deal and there's a whole bunch of information asymmetry that's against me, the smarter, even better, more experienced salesperson is going to say no. Again.

The on ramp piece of this like 2x the, the sales cycle and the commission only piece of this are, are just like two, two things that I don't love about this thing. And any experienced salesperson is going to like interview you for, for 10 minutes and they're going to run. They can smell it from a mile away.

Which is why he, you are not getting any candidates to the job posting. Like it just reeks of nope, small business without money. Old school, you know, no support, no systems, no training. Wants me to do everything right.

And you know, so my advice to him was like it wasn't all critical. I said, all right, so here's, here's what I do. First of all, just take the job posting down, right? Delete it from the Internet.

Second is take a step back and figure out a few things on the strategy side. Right.

Like before you, before you're trying to implement this tactic, like try to figure out a few things like what's the real problem that you're trying to solve? Like air quote sales is not enough. That's a huge issue. Are you trying to generate more leads?

Like trying to get more, more leads and opportunities into the pipeline? Are you trying to get all to all the leads?

Like maybe you've got A bunch of, you know, marketing stuff out there, newsletters and, you know, some content in LinkedIn and some inbound and phone numbers, other stuff that you're not potentially getting to like. So you, are you needing to go outbound? Are you needing to capture all the inbound that's coming in?

Or do you have leads and you need somebody to, to close more of those deals? Like run Discovery, close those deals. Those aren't all the same problem to solve, candidly. Most of the time it's, it's lead generation, right?

In which case you go, you go hiring inside sales rep, sdr, bdr, whatever you want to call it, you go hire somebody to, to either go outbound or capture all your inbound or do a little bit of both, right?

If you've, if you've got leads and you need a more seasoned, experienced rep to, to take those leads and do something with them or convert them at a, at a higher rate, then you go hire something like, you know, an account exec, right? Like an AE type of person to run that sales process.

And sometimes it's both like, hey, I need somebody to kind of fill the pipeline and, and be capable of closing deals.

Well, then you need a good, you know, experienced outside sales rep who can hunt and close and if you need that person, be prepared to invest in them, right? Both in terms of time and money.

Like if you're, if you're going to ask somebody to come in and do that, you know, hey, I need you to generate pipeline, I need you to run Discovery, I need you to close these deals. I need you to have the skill sets of, you know, a hunter and, and a closer and this now, like, then cool, fine, but pay them.

Like, expect to pay them. And like I, I get it personally as a small business owner, the temptation to have somebody come in and basically fix the whole damn thing, right?

Like on their own, right?

Like they can generate some leads, they can drive some sales and to do that without having to put a ton of cash out there and having to risk a ton of cash, I know how tempting that is and I know that there's some old school advice out there that says I'll just go out there and like stack up on commission only teams. But I've read this book more times than I can actually count, like how this plays out.

And the thing to remember is salespeople are not miracle workers. Like they are not there to fix everything in your business.

And so, you know, like you, you do you have the, the training for them, like they need to do that, like need some training, they need a ramp up period. They need some SOPs and some processes to follow. They need kind of a, a guide on, okay, how does this work? What is our way of doing things?

You know, some, some playbooks, like they need to, to consume that information like that, digest it so that they can go do the job and represent your company properly. And they deserve to get paid while they're going through all of that, right?

And even if you say it's a draw, like it's, it's not like they're selling against themselves, it's commission only. Everybody knows that.

If you don't have all that stuff, right, like if you, if you don't have training set up, if you don't have, you know, the 30, 60, 90 laid out, if you don't have some processes or playbooks, then, and you're expecting them to figure it out, like why on earth would they not expect to get paid for it, right? Like, you want me to do all, you want me to figure out all that.

You want me to figure out the process, you want me to figure out how to generate leads, you want me to figure out how to, how to run. Like, you don't have all that stuff mapped out, documented for me to know. You want me to figure it out? Like, cool, okay, pay me. Right?

And by the way, assume somebody can do it. Why wouldn't you pay for it?

Like if a consultant came in, if, I mean, if you hired MSP Sales Partners, one of my companies, to come in and build some of this stuff out. Cool. Yeah, we're, we charge and it's not, it's not cheap. That's my PSA for, for the moment.

Hopefully it saves a, you know, a good business from months of wasted time and tens of thousands of dollars and frustration and, you know, just, and not getting the results that you want. And hopefully it saves a good salesperson from an opportunity where they're set up to fail. Adios.