Should sales staff get commissions for customers who seek / contact the company?

Question

I work as a software developer in the United States for a very successful (but small) SaaS company (less than 80 employees). It's privately held with no profit sharing or equity options available. Our development team is salaried, and most of us have been here since the startup phase.

We have between 2,000 and 3,000 enterprise (high paying contract) customers, and are growing at a rate of about 5-10 new sales per day.

In response to our growth, the leadership team has been hiring a lot of sales staff to handle this very large volume increase in customer interest. We literally did not have enough warm bodies to take calls.

In our current landscape of an overflow of customers & interest...

Should our sales staff receive a commission for customers who contact us?

Is it normal practice for a sales staff to be on commission (rather than salary) regardless of the company landscape?

These questions obviously stem from a perceived inequality in pay (or at least profit sharing) by the developers, including myself, in that we feel an earned commission should involve more than taking an order over the phone.

Answer 1

Should our sales staff receive a commission for customers who contact us?

Is it normal practice for a sales staff to be on commission (rather than salary) regardless of the company landscape?

Everywhere I have worked over the past 35+ years, from startups to huge companies, many of them SaaS or SaaS-like, all have had commissioned sales folks.

I have seen Sales teams broken down into "Phone Sales" and "Outside Sales". The phone sales folks had a significantly lower commission base than the outside sales folks (since it took far less work to land a phone sale). Even there though, they did have a commission.

These questions obviously stem from a perceived inequality in pay

I understand how you feel. I generally try not to worry what others are paid, particularly sales. My feeling is - if they sell more, we all benefit. If they make a good living at it, then good for them. If sales slow down and they get less commission, I still expect to be paid my regular salary.

Answer 2

I think you're wanting to have your cake and eat it too.

The developers have been paid a salary to build an application that until recently, didn't bring in much money. If it failed, you still got paid. Your company is going to need to get enough customers signed-up to start making a profit and pay for all those devs and servers. You decided to take less risk and now that things are sucessful, you want to cash in on that too.

I don't know how difficult it is to close a sale when a customer calls, but if it is such a trivial order taking task, why not have customers just signup on line? There are no guarantees for commissions. Miss a day of work or just get up and go to the bathroom? No sales.

Eventually, it is going to be very important for your company to retain customers. This may be the phase where support and development bonuses are tied to keeping customers. Unless there is some upselling involved for additional services or contract renewals, I don't think the sales team will be involved.

I agree you should be compensated when the company is successful, but you have to factor in the risk you took. You could have worked for a startup that was going to pay you eventually based on your sweat-equity. Decide how your compensation compares.

Answer 3

Developers get a salary. Salespeople are on commission, they usually have to meet a quota and if the quota is high, it's a tough way to make a living. Any paycheck they get is structured as an advance against their commissions. On one hand, sales people should be more than order takers. On the other hand, they HAVE to be more than order takers if they are to meet their quotes and even make a living. Salespeople take greater risk because if they don't catch, they don't eat. I don't envy salespeople. Yes, they take orders but that's the only way to reach out to the customers and talk to them and get to know their needs. And it's much easier and cheaper to expand a relationship with an existing client and to make money off that existing client than to develop a new client from a cold call.