Questions

What is the current compensation structure for a Sales and a Business Development position at a Series A funded startup?

3answers

Depends on the vertical your business is in, the seniority of the candidate and the geography/ territory.

This is strictly shooting from the hip to get your headspace into options:

The compensation and KPIs should be twofold triggers, that is to say:

1. They determine rewards and incentives
2. They determine if the candidate gets to stay

I personally never respect someone in a biz dev or sales role who takes no risk.

In general a lower basic and heavy compensations for the first 3 months and then reassess.

At the end of the 3 months decide on: bigger salary and lower compensation or keep the status quo. If they're super confident, they will keep bigger compensations. To see how vested they are in the business, perhaps offer to let them have the option of converting some of their earnings into share options.

If you're selling into the agency and big brand space, the issue is a bit more difficult.

Why?

1. Sales can take up to 6 months to pull through due to agency and brand red tape;
2. Networks and existing rollodex are going to count for a lot to get sales rocking quickly. Getting in front of the right person can be a chore
3. Understanding the brand and agency speak and space allows for quick sales and lower bounce rates. So finding people from the space to sell back into the space is a major requirement. Those skills are not cheap.

There you go ;) Chew on this, enjoy the flavor.


Answered 7 years ago

Here is the greatest advice for compensating sales persons. Think of a crack addict (kind of a harsh example)...If you were to want the crack addict to continue down that path (obviously I am just making this up because we would want to help the addict)...you would give him a dose of crack and then provide a challenge to get the next dose...the process of getting and the challenge is the formula we need to replicate with sales persons.

Never pay a sales person a high base salary with a low commission. If one asks for that...please dismiss them. People who are tired of selling ask for those arrangements. Hungry sales persons want to eat what they kill without any upside limitations.

If you take the example of the crack addict...provide them a small dose...(a small base salary) and then feed them the bigger dose (their commission)...this will make sure that you hire the right sales person and keep that sale person addicted to making the sale.


Answered 7 years ago

Having had several businesses where we had to deal with the issue of sales compensation early in our business development, I think the better question might be what is the best sales and compensation structure for a sales and business development position in your industry (or related one).

Then the key question is can you be competitive and offer an attractive package to pull in the best candidates. We always looked to stay competitive for sales candidates, with a big focus on the incentive side of closing the deal. Great sales people are always incentive driven. This does not necessarily mean you have to dip into equity to pay them. In fact the business development people that were always trying to get a piece of the company for coming on board, were always the ones that didn't click.

Business development compensation is always something that as you develop and grow you have to re-evaluate, as well as determining are they type of people you hired in early stage, the same type of people you need two or three years down the road. We had an innovative product and in the beginning, our business development team had business dropping out of the sky (Apple called us after seeing us on Google and became an early customer). As the years progressed and our market and competition changed, we needed a much different and more aggressive type of person. In our case, we realized it, but it took a while to re-adjust the sails (pun intended).

Be happy to talk to you more if we can help.


Answered 7 years ago

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