Everyone has a price where they become fat and happy.
I fondly recall when my wife and I first worked after college.
Twenty years ago, in our last year of full-time school, we worked nights and weekends to make ends meet. We made $15,000 that year. Shortly after graduating, we moved to Richland, Washington and quickly found ourselves making several times what we had the previous year with one third of the effort.
What was the first thing that we did? We cut back on the number of hours we were working.
We had become fat and happy.
A rich base compensation often kills the motivation to sell.
Regardless of the sales position, every salesperson has a price where they become "fat and happy". It is a universal truth. The best way to destroy motivation to sell is to overpay a salesperson through an overly-rich base compensation.
I have seen first hand what happens when companies make the mistake of "rewarding" their salespeople with high base compensation packages. A overly rich base compensation often drains the will to pursue additional opportunities out of otherwise good sales talent. While the intentions are good, companies often later regret this decision.
Regardless of the B2B sales role, the first thing that usually happens when salespeople "earn" a rich base is accountability goes out the window and entitlement thinking floods in.
With the occasional exception, the best sales wolves - those who perform in the top 20th percentile - are driven by financial gain.
Every single salesperson makes income decisions every single day. They just do so under different income circumstances. Following are two examples to illustrate.
- Salesperson X has a low base coupled with high variable compensation. It's 3:30 in the afternoon. Their last appointment for the day just cancelled. They are tired. On their way home they stop by a couple of prospects. When they get home, they update their CRM and prepare for the next day.
- Salesperson Y has a rich base coupled with a low variable compensation. It's 3:30 in the afternoon. Their last appointment for the day just cancelled. They are tired. They do not visit prospects on the way home. Nor do they update their CRM. They call it a day. They have earned it.
The best salespeople are driven by the desire to improve their financial future.
Should your salespeople be on 100 percent commission?
Most B2B salespeople should be on 100 percent commission. Inside sales, account management, and outside sales should all be on 100 percent commission after onboarding and full ramp-up. This creates strong accountability necessary for success in B2B sales.
However, salespeople have a tendency to be loyal to their employer. Highly-commissioned salespeople have a tendency to be more loyal to their Customer over their employer. When highly-commissioned salespeople seek employment elsewhere, they are more likely to take "their" Customer with them.
A rich base makes it difficult for low performers to leave.
When we analyze sales team member job fit and compare key performance indicators, we often see the low performers who are fat and happy stay because their base compensation makes it attractive enough for them to stay.
Never enable a low performer to be able to live off of a rich base. It destroys Customer and shareholder value as well as the ideal sales culture.
A 100 percent commission compensation plan quickly weeds out the low performers.
