We interviewed Michael Humblet, former VP of Sales of one of the largest growing startups in Europe, on how to compensate your first sales rep.
Should I work with a commission?
Clearly, you should because you want your sales rep to be motivated to make more money, to close more deals.
How much you pay fixed versus variable… it depends. The typical hunter would be between 50 to 60 percent fixed, the rest variable. A more farmer type of person would be 60 to 70 percent fixed. The rest would be variable.
On what base do I pay commission?
You need to pay a commission on what you want, what the effect is that you want. Either it is going to be revenue or it is going to be margin. As you just start, i would advise you on revenue and not to go for margins straightaway.
Should I use commissions from day one?
Yes, you should, but you have to do it a bit differently. That means that the sales cycle, if your sales cycle takes three months or six months, what you should do is, you should measure and pay a commission on how to get there. You would actually do it on a KPI like the amount of calls or the amount of visits. That’s how you start paying him and then you switch it to revenue or margin or whatever else you have.