Why I Shut Down My Commission Only Sales Team (A MSP Hiring Warning)

:: 00:00:00

Speaker 1

I inherited a national commission only sales team at the US Chamber of Commerce, and I had to shut the entire division down. 18 months later. And I'm going to share why a commission only sales team ruined my sales culture, and why it's relevant to you as an MSP. Now, a lot of business owners, frankly, think that commission only means it's going to be the hungrier rep it's going to be the more driven it's going to be, the higher performance.

:: 00:22:05

Speaker 1

And the person that wants to to earn more money. It's not necessarily true. And the commission only structure actually sabotages a lot of sales teams. And a commission only sales structure actually has the potential to ruin your sales team and your business culture. And I'm going to share why that is. Hey what's up? I'm Ray green, founder of MSP sales Partners, where we help IT companies and MSPs scale their sales teams.

:: 00:45:11

Speaker 1

And a couple of sales. Lifetimes ago, I was the managing director of the US Chamber of Commerce. So I ran a national field sales team, a national call center, you know, did political fundraising and small business membership, mid-market membership, as I was, you know, rising through the ranks. The chamber, one of the divisions that I got was that national field sales team.

:: 01:02:09

Speaker 1

And at the time, it was a 100% commission only role. It had been in place for, you know, for decades old structure, kind of old guard. And I was in the process of turning things around because you know, there were between sales, between culture and turnover, there is the number of issues that I was working through, your piece by piece and making improvements and turning those divisions around.

:: 01:22:28

Speaker 1

And when I got the field sales team, I brought them into this environment where we had strong core values, we had a strong team environment. We had I mean, we were kicking ass in sales, too. I mean, we had we didn't miss a number with the despite rising numbers every single year. So it was high performance. But it was also this collaborative environment that frankly, I'm still proud of that we that we built in a sales culture.

:: 01:43:54

Speaker 1

And when I got the field sales team, I tried to bring them into this thing that we were building that meant, you know, helping other people when they started out, like helping people ramp up. It meant helping troubleshoot people. If you had the ability to support other other players, it meant going above and beyond sometimes to hit your number in order to help the team hit its number.

:: 02:03:51

Speaker 1

And I'll be damned like the team up to that point was really, really stellar doing that and the field came in. The thing was, they didn't care about any of that. They didn't care because they were commission only. They only got paid literally on one thing. So the idea of a better process, the idea of selling better customers that stuck around longer, the idea of helping teammates ramp up none of that really matter to them.

:: 02:28:33

Speaker 1

And it highlighted for me the impact of commission only now, that's not the only national commission only team that I've run. I've actually run a couple. I've had the same experience over and over. And there are two significant problems that I find with with commission only as a structure. And the first is really good people avoid them. Right.

:: 02:48:18

Speaker 1

So the the mindset that your best performers are going to want commission only there are some of those, right? There are some elite like badasses who, you know, they want the commission only and they're like, hey, can you take that base and, you know, just add more commission? There are some of those, but there's also a huge number of rational people that see a commission only structure and go, nah, that's a red flag for me.

:: 03:08:48

Speaker 1

Put yourself in the shoes of an SDR or sales person who has gone into these commission only environments with other small and mid-sized businesses, only to find out, hey, you know what? They're paying commission only because they don't have any money. They were paying commission only because they were trying to ramp up, you know, 20 people at the same time and burning churn and not have to burn their own cash to do it.

:: 03:27:21

Speaker 1

Once you've done that once, maybe twice, you start looking at commission only plans and going, now I need to know a little bit more about your business before I absorb all the risk, because at the end of the day, if I'm a salesperson and I'm doing commission only, then I am effectively taking all of the risk in this relationship.

:: 03:44:17

Speaker 1

Okay? So if I get there and I start working and you don't have a good list and your CRM is shit and your customer service is shit, and the, you know, the value prop is no good and your pricing is way out of line, right? If I get there and all of this stuff is happening, well, that's going to affect my ability to get results.

:: 04:03:03

Speaker 1

Seasoned salespeople, experienced salespeople know that, right? So they know what you're asking them to take all of the risk that there's a chance that they walk in the door the next day, fully prepared to sell. With all of the talent and all the skills and all the acumen that they need to perform, but none of the tools, because you're not prepared.

:: 04:20:38

Speaker 1

So when you say, I'm out here hiring commission only salespeople, you're putting yourself in the category of a lot of other businesses. This may not be you, but a lot of other businesses who can't afford salespeople and expect them to come in and basically work for free to help them get the sales so that they can afford to do that.

:: 04:38:12

Speaker 1

And if you're in that category, you're going to miss a lot of top performers, a lot of top performers that say, no, I've got a mortgage payment, I've got kids to support, I've got things to do, and frankly, I know my value, right? So if you offer me commission only then I'm going to look at that and go, I think that means you're trying to not pay me cash.

:: 04:56:33

Speaker 1

And a lot of high performers, very, very good salespeople are going to never apply. And if they do apply, they find out that's the comp plan and just tell you to go fly a kite. You're dealing with a much smaller market than the amount of talented salespeople that are out there. When you choose to go commission, only what you're effectively doing is saying, hey, I want a really good salesperson.

:: 05:14:15

Speaker 1

There's this many people, well, I'm only going to do commission only now you're dealing with this amount of the market, because that's the amount of the market that is willing to do commission only in many times. It's because their experiences with other commission only environments. Now, let me tell you, the other teams that I ran after the chamber, this was not the case of the chamber, but a couple of teams.

:: 05:33:10

Speaker 1

wax of indicating to are they: 1099

:: 05:51:32

Speaker 1

Are they into benefits? You create all of this complexity and all of this friction when you're just trying to find a good person to sell your stuff, if you have the capability to share some of the risk, what you were saying is, I'm willing to invest in you as a salesperson if you're willing to invest in me through your compensation, through your commissions, through the incentives that I'm going to offer on the shared reward basis, right through, you're going to earn a lot of your money, but I'm not going to make you shoulder the entire risk.

:: 06:17:26

Speaker 1

I'm telling you right now, go put out two job postings and say one right up front. This is a commission only role, but one up front that says this has hired unlimited earnings but a base salary. Look at the pool of people that come in and tell me if your job is going to be easier, finding somebody in this stack of people or finding somebody in this stack of people.

:: 06:34:47

Speaker 1

Now, the second major problem that I've had with commission only, and that I've seen frequently, is you're going to attract mercenaries, right? Like you're going to attract people who are purely there to do one singular job. And, you know, in an environment where you say, listen, I don't need you to fix a process. I don't need you to help another team player.

:: 06:54:21

Speaker 1

I don't need you to even think about a broken process. I don't need you to do anything. Nothing except sell. Then you may look at it and say, hey, this is a problem. But the vast majority of small and mid-sized businesses have salespeople that add more value to the organization. When those salespeople are doing some other things. And I'm not saying you should go, you know, dilute your salesperson with a bunch of administrative work or a whole bunch of bullshit work, like let your salespeople sell.

:: 07:18:52

Speaker 1

If you bring your salespeople into sales process, conversations, if you bring your salespeople into conversations around churn, we keep selling the wrong customers. Like sales are great, but churn sucks. So our profit engine, our profit model is actually broken. Well, then we need to change who were selling. If I'm only earning commission on what I sell, I don't give a shit about your retention.

:: 07:38:05

Speaker 1

I don't give a shit about your churn. And you think, well, you know, you ought to. I mean, it's the health of the business, this and that. Human nature. Like if you say you were paid on one thing and one thing only, it is kind of crazy to think that they're going to care about almost anything else. So when you're trying to grow the team and you've got a top dog, a great leader that you want to ask for a little bit of help in ramping up some people or, you know, taking a look at some playbooks or having people shadow them or do anything else to help them team as a whole, rise.

:: 08:06:28

Speaker 1

You're going to have a problem when you're asking your salespeople, hey, we're trying to scale this thing and we're looking for any inefficiencies. Or if you see opportunities to, you know, improve this or tweak this, you're not going to get much feedback from people who don't actually care. And when you're trying to build a culture, a team of people that care about the team winning, then you're not going to get that with a commission only sales structure.

:: 08:27:39

Speaker 1

So the question you want to ask is, is it reasonable to say, I'm literally paying you on only this action and think that I'm going to be able to expect anything that's outside of that, anything outside of that is outside of scope, for all intents and purposes. So if you were saying this is literally the only thing that matters, then anything else your culture, your organization, your systems, your processes, your just your team as a whole doesn't matter.

:: 08:54:07

Speaker 1

And that's what you're effectively training people to think and to believe when they start and are only paid on one thing. I pay people a salary so that I can say, I pay you a salary. You will take a look at this playbook. Now, if you have the right team, you shouldn't be or you shouldn't have to say that right.

:: 09:08:30

Speaker 1

But that's why you do it. You're paid to do a job. Yes, you get incentives there, but we as a team need to win. If you put two comp plans in front of somebody and one of them is commission only and one of them has a base salary, but a really rich commission structure still. Right. Like it's like I'm still very high on incentive based pay.

:: 09:25:28

Speaker 1

And they pick the one with the base salary, don't automatically assume that that means they're not confident in their skills. That might just signal that they have enough experience to know that they shouldn't shoulder all of the risk. And it might have more to do with the fact that they need more confidence in you and more trust in you and the structure and the product and the team and the processes and the systems and the list and the data and everything else that goes into helping them get results before they're willing to take that dive and think about who you want to attract into your team.

:: 09:52:37

Speaker 1

Do you want to attract other people who are going to help you contribute to a strong culture? Do you want to attract people that are going to go the extra mile? Do you want to attract people that are going to help duplicate themselves and replicate themselves and train other people, or help you with some resources in some playbooks?

:: 10:06:55

Speaker 1

Or do you want to attract people who, from day one, you have signaled and told do not care about anything except the singular outcome, irrespective of whether that outcome is even good for the business long term, like selling the right customers to begin with. My recommendation build a comp structure that attracts professionals who want to be part of your team, who want to be part of your business.

:: 10:27:28

Speaker 1

Trust me, I've learned this in my own experiences and it's why I feel so strongly about it now. So I hope this has been helpful. If it has, go ahead and subscribe to the channel. And if you are an MSP seller, go ahead and check out MSP Sales Toolbox. The link is below. In the toolbox we drop new resources every single month.

:: 10:43:07

Speaker 1

We've got forecasts, we've got playbooks, we've got objection handling tools, we've got comps fresh. Like we've got a ton of stuff. And we just like drop stuff in there as we're creating it for clients who creating it for our communities. So go ahead and check that out and get it for free. You get lifetime access and I hope to see you in the next video.

:: 10:58:42

Speaker 1

Adios.