Is it possible to get IT - Software sales / marketing people working for equity or on a commission only basis?
Is it possible to get people working for equity or on a commission only basis in IT/Software (sales, marketing, business development, solution sellers, deal closers, business broker)? And where can I find them? Will this model work out for a custom software application development startup firm. What are the pros & cons associated with it?
Possible is some cases. The bottom-line is are you doing it on genuine ground or just trying cut down cash out flows. The intention of such action is not out for good fate, the chance of success consider relatively low. The probably more prominent if it is for a startup company as too many things change in short-time.
A sales/ marketing people who also double row as business development, product development, and even leading projects will be very useful to you for equity or commission basis. Why am I say so? This type of people have that quality to lead and adjust to changes + if they also innovative and willing to take responsible to look into other business functions.
Answer is yes and no depend on situation and the kind of people you are getting, more importantly, your true intention affects the whole matter.
Complicated question, not a simple answer. Each one of those need to be taken individually. I wrote an article specifically on Compensating the High Tech Sales Force here: http://www.pjmconsult.com/index.php/2009/08/compensating-high-tech-sales-force.html. In any case, sometimes you can find people of any type to work only for equity--if they are in on the ground floor, and only for a while.
My simple answer to this is no; unless you are selling a real commodity that "jumps off of the shelf" commission-only sales doesn't work. You aren't describing such a situation. Yes, you will be able to find people to take such a role, but it's fools gold. No one that can get a "real" job will take it. So you will get two types of people take your job: People that can't get any other type of job, and people that will take it only until they can get a REAL job. You will spend a lot of time training them, which will be wasted as you see them rapidly quit or need to be fired.
Marketing people don't work on commission. VARs (solutions sellers) do work on commission-only (discount), but generally aren't interested in selling someone else's custom software services (they sell their own).
In general, commissions should be used to provide additional incentives, not as the sole basis for compensation.
What you are asking about is really a classic "you get what you pay for" situation". Would you ever dream of asking a software developer to write some code, and if you decide to use it you'll pay for it? It's actually kind of ridiculous to ask a sales or marketing person with a useful skill set to expend their effort under a similar condition.
I agree with other people here - it may possible to get sales and marketing on commission only for custom software for a short while but you will likely get poor results. Custom software is hard work to sell, needing lot of time and uncertainty. Would you take a chance on an unknown company's development approach, with new / untested customers, with possibly getting no sale or commission ever? How long would you stay committed to that before deciding to jump on the next paying thing that comes along?
The trouble with equity is, people need to be able to sell it at some point into real cash when they need it. You're not a publicly traded company. Who will buy that equity from them at a good price (it needs to be much more than the total market salary up to that point would have been), and will they be able to actually sell it at the time they need the money? Can they trust you to pay them the true value of the equity in cash when needed? How do they know they can trust you to do that sometime in the future, even if they're not working for you anymore after getting you some sales?
Basically, you need to be able to offer some initial cash very soon, with the promise of the cash + equity increasing to a competitive level within a known time frame. Otherwise, you will get very poor (or zero) results and lose the person very quickly.
It's probably better to consider commission over equity. Sales people, especially, are familiar with this pay method. Often time - though - you offer to give them a straight (small) salary of some sort the first few months - until they have built their client base. It takes time to make the connections and find the right clients. Then after a few months - good sales people can support themselves on commission.
It can work if you are confident that you are are going to be able to offer Meaningful Equity. My that, how are you offering Uniqueness in your product and/or Service that will make Equity actually worth something? If you are "Just another Provider" of whatever it is your are selling it gets hard to do. People have been burned before by Equity Plays.
Dear Sampath, in my opinion, software sales need high skilled and smart people. I wouldn't bet to try to hire people to work only for comission. These professionals need to work with some base salary plus comission . But if you convince someone to work for equity this could be a good way to validate your offer, the value added of your business. If you don't convince anyone to work with you, it could be a could opportunity to review your business. In other words, if you have a good business, an excelent product/service, you will find someone to work for you, on the other hand, nobody will work on a business with no challenge. If you find someone, this could be not a good deal.
A good sales person will be working for sure and earning money on regular basis. Your offer needs to compensate for this facts like giving a guaranteed minimun income and very attractive contractual terms and still it will not be easy.
One company I worked for paid their software sales people a commission that lasted 2/3rds the length of the service contract. If you have recurring contract opportunities, please consider that. It offered great retention and reliable income for the salespeople.
Dear Sampath, when you onboard people's services in exchange for equity, it usually translates into a form of partnership. So people like these will generally not ba available 'on hire'. You are mostvlikely to find them in your close network. As for comission, it depends on the percentage. An equivalent and better model would be to contract out to firms or private consultants. Feel free to connect if any questions.
It is possible but has to meet high likelihood of market success validated in terms of feasibility in most facets of business. This combined with the track record of the management team / leadership. Think what will be needed if you were to attract a VC to fund you as a startup or an early stage company.
My experience is those working on straight commission for a start-up will be tough...They may need a bit of starting salary...If you can find big game hunters then you have found a treasure...So keep them and make them feel wanted---They should become your partner if successful...You find these types in all walks of life---however, the best are very competitive who believe the sale is the competition and then the money follows...There are no issues negatively once you have "big game hunters" selling your software...Look for Emotional Intelligence and then build TRUST...
For Custom software or for any other government related applications it is imperative to have the onus of responsibility clearly stated. Phil is right a commission based model will not work in this scenario. Please feel free to contact me for specific clarifications.
Geographically, the place to look is where immigrants have been received and are flowing into. My country, Malaysia, is a hotbed of immigrant potential and those displaced by immigrants are also up for commission work. Maybe America is feeling it too.
Yes it possible to get But Sales & Marketing people are working on a salary Plus commission basis , I don"t if they work on commision basis only , they won"t give the results you want or you need , because they will not be loyal to you , lots of time is not considered for the company . So its better to give salary Plus commision .
Most all the answers are right on point. Especially since sales & business development take time, who can work for some time and not get paid. Simply said "You Get What You Pay For"
This is a difficult road but it is possible. You simply need to present the idea well enough to get others excited about the prospect of selling what they thought was so exciting about it. My advice is that simply put.
In my opinion, the answer is a resounding NO based upon the length and complexity of the Modern Sales Process, especially in IT. Please see my article on LinkedIn that discusses this: https://www.linkedin.com/pulse/modern-sales-process-denise-m-barry?trk=mp-reader-card