Beware of Online Company Reviews & Awards

I’m not afraid to admit that I’m one of the first people to peruse through the occassional online review. Whether I’m craving something tasty to eat and decide to look at Yelp, or I’m evaluating a new company on Glassdoor, I love a good review. Online reviews can make you feel much better about where you’re focusing your resources, and give you the confidence that you are going to see real value for every dollar spent.
Just recently, I found my new favorite taco spot on Yelp. I also turned down a new prospect because the Glassdoor reviews confirmed exactly who I thought they were after meeting with them.
I detail these experiences to also note that everyone should take online reviews with a grain of salt, because what you see is not always what you get. It can be tricky navigating the world of online reviews. Taking these reviews as gospel could backfire on you, or at the very least manipulate you into thinking something that isn’t true.
My father recently forwarded me an email that he had received, and the subject line read, “Want to have positive online reviews?”  The email proceeded to detail a process in which business positive reviews could be purchased for a nominal fee.
This definitely wasn’t the first I’d seen of this type of offering. A few months ago, I received an email informing me that I could be listed as one of the country’s best recruiting firms. This would be published through a noteworthy source, and I’d even receive a plaque to hang on my office wall. What an honor to be bestowed on me, when all I’d have to do is call in with a credit card number.
Obviously both of these offerings were declined, as I felt it would not be very ethical. However, plenty of companies do take advantage of these offerings, and manipulate the online narrative around their place of business.
When researching on Glassdoor, I’ve noticed companies with three 1 star reviews followed by three 5 star reviews the following day. This seems a bit suspicious doesn’t it? Sure, these reviews may be completely legitimate, posted by actual employees. However, I would at least question if their bosses requested that these reviews be posted.
I spent time working in market research, and during this time my mentor used to say, “Whenever you give people the opportunity to decide to voice your opinion, you’re always going to get the extremes. Those that will go out of their way are either going to be extremely upset, or extremely happy. There’s typically not much in between.” This is something that I believe is important to keep in mind.
Considering everything that I outlined above, I really do want to stress that I STRONGLY recommend these online resources.  It is just important that you look at them closely in order to pinpoint any trends.  If you see any “red flags,” don’t be afraid to ask about it.  For example, if you see multiple reviews about how poor their training is, you may ask the question, “Can you tell me more about your training?”  I’ve had candidates do this and have received the response, “We were very aware that we needed better training so let me tell you what we’ve done to improve it.”
Even knowing what I know now about how these platforms can be manipulated, I still find most online resources are extremely helpful.  However, I recommend that you always remain cautious of what you read, and try to read between the lines.

Why Are BDRs So Difficult To Hire?

Historically, they go by a variety of different name, BDRs (Business Development Representatives), SDRs (Sales Development Representatives), or appointment setters. When it’s all said and done, all are more or less interchangeable.
Over the past year, I’ve noticed a definite increase in the number of people who ask me, “Why are these roles so difficult to fill?” There are a few reasons for the difficulty associated with hiring BDRs.
First of all, most companies are seeking an incredibly smart and driven BDR.  They want to find someone who will pound the phones and set a lot of appointments. However, if a BDR leaves their company, they typically don’t want to be in another BDR role and if they’re in a closing role, they don’t want to go “backwards” into a BDR role.
Secondly, appointment setting tends to get boring for many. It’s kind of like telling a fantastic runner, “You’re only going to run half of the race, and then I’m going to step in and run the remaining half. However, how I finish the race is completely irrelevant to you. You’re not going to benefit, or get punished either way based on my results.”
The big question we’re dancing around here is, “If a good appointment setter is easily going to get bored, and can get a higher paid closing role elsewhere, how do I attract a strong BDR?”
Recommendations
1.) Don’t Be Cheap
If you want somebody great in any role, and you know that they can secure a higher paying job elsewhere, be generous with the compensation.

 

2.) Make the Path to Promotion Clear
It becomes much easier to sell a BDR role when you can tell the candidate. “You need to learn how to walk before you run. This is a great way for you to learn our business from the ground up. Assuming you set 3 appointments per week, we plan to promote you to an Account Executive within 12 months, where you’ll make $100,000+”
I typically recommend that you try to promote BDRs within 12 months, especially when they have previous sales experience.

 

3.) Give Them Skin in the Game
Most companies that I know are willing to pay the BDRs $50-$100 per appointment but I’ve seen it as high as $400-$500 depending on how difficult it is. However, the ones that end up seeing the most success provide their BDRs with an added bonus if one of the appointments they set closes.

 

4.) Train Them
Over the years, I’ve hired BDRs that make anywhere from $40,000 to $80,000. Regardless of their salary, they all need some degree of training.
Some BDRs, especially junior ones, will be patient in an appointment setting role. However, they need to feel like you’re investing in them so that they’ll have the opportunity to get promoted to a closing role. Otherwise, they will start to feel like they are forgotten and being left behind to stay in this position forever.

 

5.) Celebrate Victories with Them
The salesperson always seems to get the credit. When a big deal closes, recognize the BDR as well.

 

6.) Make it Fun
Being that appointment setting isn’t the most fun thing in the world for most individuals, do your best to make it fun for them by having contests. When I’ve suggested this to some companies, they say that they don’t want to spend a lot more money.
That’s not a problem. Consider running a contest for an extra vacation day. The prize doesn’t have to be anything big, but throw some excitement into the contest, and put people in teams. Even small things like free tickets to a sporting event, or a gift card to a good restaurant can go a long way to exciting employees.

 

The process of finding the right BDR definitely has its challenges, however, the right approach goes a long way.  Before considering hiring a BDR, please consider the recommendations above.  It should result in the development of many great appointment setters and eventually strong salespeople.

Why Your Interview Process Should Take 2 Weeks

Right now it’s a candidate’s market, making it a challenge to find strong salespeople. When you do find the right one, it can often turn into a bidding war. These bidding wars tend to be very hard to win when you have some of the biggest and most reputable brands competing with your small or mid-sized company.
Many of these larger, more well known organizations can offer more money, a recognizable name that will look great on a resume, more desirable benefits, and a cooler office in a prime location. The question here is, “How do you compete with these companies?”
The answer, one simple word: Speed. Your interview process should last 2 weeks, which is a time frame that larger companies simply cannot work with. These large organizations are going to take closer to 6 weeks, and that creates a huge advantage for you.
Before the inevitable hiring managers pounce on me saying, “I’m not cutting corners when I interview candidates, and that’s ridiculous,” please finish reading this article before you pass judgment.
I am NOT encouraging hiring managers to cut corners, in fact I’d challenge your interview process if you did. In addition, I want to stress the fact that there are definite exceptions to this rule. I don’t expect somebody to hire a CEO in 2 weeks, and sometimes a candidate’s or hiring manager’s travel schedule can get in the way where it might take closer to 3 weeks.
Suggestions
What I’m suggesting is that you keep the structure of your interview process the same, but you make it a high priority. In other words, if your interview process is two phone interviews, two in person interviews, and a reference check, maintain this process. The only difference is ensuring that you get through these steps in 2 weeks rather than 6 weeks.
Following the final interview, inform the candidate that you want to make an offer. Don’t be afraid to discuss the numbers before the offer is made instead of waiting 3-4 days for HR to put everything together. At the very least, you can hope that they agree to it verbally or have time to think about it or discuss it with their significant other while they wait.  Also, start doing the reference checks immediately after you know you want to make an offer.
Standard Timeline
The following is what I typically see in the marketplace after a candidate submits his or her resume:
Week 1 – HR conducts phone interview with candidate
Week 2 – Hiring manager conducts phone interview with candidate
Week 3 – In person interview held with candidate
Week 4 – HR coordinates the interview with the executive team
Week 5 – Candidate has second in person interview with hiring manager
Week 6 – Offer is made
Accelerating this process does a few things for both you and the candidate…
  1. You decrease the chances of losing the candidate to another company, and you avoid the possibility of a bidding war.
  2. Both you and the candidate remain excited and engaged throughout the process, especially because they see that your company is fast and efficient. This level of efficiency and rapid action is rare among big companies.
  3. You show to them that they’re a priority and important to the future of your organization.
Again, I want to emphasize that a quick interview process doesn’t mean that you hire somebody as fast as possible without adequate vetting. Instead it means that you are prioritizing the candidate, and conducting an evaluation that is equally as thorough and rigorous, just in a shorter period of time.

Don’t Hire A Salesperson Yet

When making a new hire, one of the worst things you can do is invest time and money into a salesperson with no plan of how to manage or train them. You are setting yourself up for failure, and likely going to see a high amount of turnover if this becomes a trend.
A few months back, I was speaking with a prospect who wanted to hire our firm to assist in the recruitment process. The following conversation told me everything I needed to know about the results I should expect when working with this prospect.
Gregg: Can you tell me why the position is open?
Prospect: Our last salesperson quit.
Gregg: Do you know why he quit?
Prospect: We’ll take most of the blame here.  We didn’t really train him or spend much time with him.  Since he worked remotely far from our corporate office, it was also hard for him to pick up on things.
Gregg: Have you had other salespeople turnover?
Prospect: Yes, he was our 4th salesperson to turnover in this territory in the past 2 years.
Gregg: Did you ask any of these salespeople why they decided to leave the company?
Prospect: No.
Gregg: Do you plan on putting together a training program to better help future salespeople?
Prospect: I’m not sure.  We’ve spoken about it.
Gregg: What makes you think that if I hire somebody for you that they’re going to perform or want to stay if you are still not training them?
Prospect: (Long pause).  I don’t know.  That’s a good question.
Long story short, I made the decision not to move forward with this prospect. There was no doubt that they seemed like genuinely nice people.  However, they had a serious management issue on their hands, and seemed to have no intentions on addressing or fixing it.
In situations like this one, I provide the analogy of building a ship. If the ship has holes in it, it’s irrelevant how great the captain and the crew is, that ship is going to sink. There is no avoiding the fact that holes must be addressed. The ship must be fixed before you can onboard the crew. It’s really as simple as that.
There are many executives out there that are extremely intelligent, however their expertise is just not in the realm of sales. If this is the case, my recommendation is to either hire a sales consultant (whom I’d be happy to recommend if you’re in need), or hire a great sales leader. These hires should be finalized before you ever think about hiring salespeople. With the right sales leader or consultant in place, you are preparing yourself and your organization for the creation and management of a strong sales team.
As I previously mentioned, it is a very bad idea to invest resources into salespeople without any real plan of how to manage or train them. This needs to be repeated because it is so important to understand when assembling a sales team, or addressing the shortcomings of your current team.
Occasionally, I hear arguments that go against my recommendation.  Prospects will say to me “Well, we need to generate revenue quickly.” My recommendation is ultimately to fix the problems ASAP. Otherwise, in 6 months you’ll find yourself in a situation where you have invested substantial resources into salespeople who no longer work for you.
All of this doesn’t even breach the subject of company culture. There is a huge negative impact on culture when others see employees constantly turning over.
This is an important topic for me, as I see too many companies rush to hire a salesperson without ensuring that everything internally is optimized and prepared for that salesperson’s success. Just remember that before hiring salespeople, be sure that you have the right infrastructure in place.  Otherwise, there’s a strong chance that you’re going to have a revolving door of salespeople.

Selling by Trial & Error

Over the years, I’ve held a variety of different sales jobs.  These jobs have opened by eyes to the nuances that exist within the field in regard to approach and tactics. During this time, one of the things that I’ve noticed is how my approach to sales differed from my colleagues, and most other salespeople that I’ve come across.
There are two distinct differences between the approach that I take compared to most other.  First, I always listen to the other salespeople around me on the phone and second, I sell by trial and error.
Here is what these two tactics have taught me:
1.)  Listening To Others Sell
I’m honestly amazed at what I’ve learned by listening to others sell. There are certain things that I would notice, and subsequently incorporate into my own sales pitches. In most cases, I’d learn more from bad sales pitches than I’d learn from good ones.
Perhaps most importantly, the listening process made me more aware of how I sell.  As an example, if overhear another salesperson with low energy, it serves as a reminder to keep my own energy up.
There is also a lot of new information that one can glean from the listening process.  Listening to some sales speakers has resulted in picking up new information to incorporate into my own pitches. One particular sales speaker comes to mind, as I was able to incorporate some great questions that he would utilize, while also noticing where he was too aggressive and pushy for my own taste.  I practiced the parts that I felt were effective and did away with the pushy tone.
Ultimately I’ve always viewed my sales pitch as though I was constructing a puzzle. I would work on completing the puzzle and determining what works and what doesn’t.
2.)  Sell By Trial & Error
I’ve heard a plethora of different sales pitches, from a long list of salespeople. One thing that still amazes me is that many will continue delivering the sale sales pitch despite it resulting in no appointments or new business.
If your calls generates a 0% response rate, why wouldn’t you alter your approach?
If your sales pitch is unsuccessful, change it immediately.
When training salespeople and recruiters, I always remind them to try new things.  In sales, you can’t break anything, so long as you remain respectful.  In order to become better at anything you do, including sales, a certain amount of trial and error is essential.
I’ve tried a lot of things over the years, including contacting executives that went to my alma mater to make it more more personal, taking a blunt approach to demonstrate transparency,  and even sending Next Day Air letters in the mail.
The list of attempted approaches is long, and a majority of them didn’t work. However, the ones that did work remain in my arsenal of tactics to this day.
In summation, I believe that there is a lot to try when it comes to developing your style as a salesperson. The two approaches that I would suggest above all else when honing in on your own style is to always listen, and don’t be afraid to sell by trial and error. These tactics will lead to critical growth as a salesperson, and ultimately improve your ability to sell.

How Do You Know If A Company Is Being Honest About OTE (On Target Earnings)?

A common question that I ask on a daily basis is, “Why are you looking to leave your job?”. Too often, the response I receive is as repetitive as a broken record. I regularly hear “I was told I’d make $100,000 and I’m making $65,000 plus nobody on the team is above 80% of quota.”
What I find interesting here is to see this situation from both the side of the candidate and the company. Typically, the candidates who raise this concern go into their next interview saying, “I need a bigger base salary to hedge my risk of being lied to about the commissions again.” The response from the company is usually along the lines of, “He or she must not be confident in their ability if they need a high base salary.”
OTE (On Target Earnings) Discussion
My ability to understand the perspective of each side informs my recommendation, which is for both parties to have a transparent discussion in regard to what current salespeople are making, and not what the OTE is. For those of you reading this that are not familiar with OTE (on target earnings), it’s simply the amount that the salesperson should make if they’re 100% on quota.
The benefit of this conversation, is that both sides will ultimately feel a lot more comfortable. The company is able to confidently say that, “I know our base salary is a little lower, but out of our last 10 salespeople in this role, 7 made $100,000+, 2 made $90,0000-$100,000, and 1 made below $90,000.” This understanding sets the foundation for a fair and informed negotiation.
In many cases, I’ve noticed that the OTE is not grounded in any true historical data, and is essentially a made up number. In these cases it is usually what the company wants the salesperson to sell, and not what is necessarily realistic.
My Experience
Many years ago, I was in discussions with a company. When I spoke with them, they told me, “The OTE is $250,000.” Having piqued my interest, I responded with an important question, “On average, what did the six salespeople on your team make within their first year?” Unsurprisingly the answer was $170,000.
My immediate question was, “Why is the OTE $250,000 if most salespeople are making $170,000?” The representative at the company replied, “Well we have long sales cycles so some of that business won’t get closed until the second year.” We discussed this in more detail, but I recommended that if $170,000 is a more realistic value when considering what salespeople will close in their first year, then that is what the OTE should be.
Another company that I spoke with told me that their quota was $500,000. I naturally asked how realistic it is to close that amount in the first year. Their response was, “That’s what I need them to close to grow my business the way I want to grow it.”  I got the sense that it was near impossible to close that much business by that response.
Perspective
As a candidate, if you’re interviewing for a sales position, try viewing things from the company’s perspective. You might have been burned in the past, but please understand that there are honest companies out there that want to reward your hard work with higher commissions and a lower base salary.
If you happen to be a company that is in the process of hiring, please realize that some salespeople want a higher base salary because they’ve been burned so many times. These individuals need to know that they’re not walking into another bad situation with low commissions.
As I mentioned above, my recommendation is always to talk in terms of what people have made in their first, second, and third year.  If you haven’t had salespeople in the role before, then be extremely conservative.  I can assure you that you’ll have much happier employees if you underpromise and overdeliver versus overpromising and underdelivering.

The #1 Mistake When Interviewing Salespeople

When I think back on the years I’ve spent in the recruiting space, I’m reminded of hundreds of salespeople that I’ve gotten hired. The commonality among most of these instances is that sales managers would express that, “We lost the candidate because another company was able to make a higher offer.”  Although this is sometimes correct, it’s more often a misreading of the situation.
Over 10 years ago, I was offered a sales role at a company. The hiring manager, who I genuinely liked, offered me a base salary that was 30% lower than what I was making at the time. He explained that he had not yet created the commission structure, that it was a new division and he wasn’t sure what my quota would be. Additionally, the commute was taxing as I would have to drive to the suburbs from the city every day. This drive would take at least an hour in each direction, and there wasn’t even product in the warehouse for me to sell.
This sounds like a horrible deal that nobody would accept, right?  Well, I ended up accepting.
The hiring manager did such an excellent job at making me feel wanted and special. Not only did I accept the position, but I did so with genuine excitement. The manager would follow-up with me regularly, keeping me informed, reminding me of how much he wanted me on the team, assuring me that he would always have my back. This made me feel supported, as he really expressed that he recognized my talent and saw the potential in regard to what I would bring to the table.  How could I say no to that?
This process is similar to dating. If one potential partner tells the other how great they are, and how much they’re appreciated, chances are their interest will increase. Everybody wants to feel loved and appreciated, and this is true whether it’s a relationship or a job.
The moral of the story here is that if you’re really excited about a candidate, make sure to tell them.  Too many managers have the mentality of, “They’re just going to accept a job with whoever pays them the most,” but this isn’t always the case.
Let your candidate know that you want to hire them, find reasons to remain in contact and treat it almost as if like you would a sales prospect. If things are delayed for some reason, call them and let them know. Invite them for a casual lunch, a coffee, or for a discussion just to stay in touch and remind them that they are an integral part of the team you are building.
If you want a top salesperson, you should be wooing them.  You might not be able to pay the most, have the nicest office or be in the best location.  However, if you can make them feel like you and your team want them there badly, the chances of them accepting your offer will drastically increase.

Hiring Salespeople On A Budget

Sales, recruiting, and baseball; These three things are my biggest passions in life. Naturally, having grown up in Cleveland I’m a huge Indians fan. For those of you that don’t follow baseball, the Indians are a smaller market team, which means they can’t really afford to sign the big name players.
Seemingly every year, like clockwork, baseball teams like the New York Yankees, Boston Red Sox, and Los Angeles Dodgers, end up signing the super star players. Obviously, this is because they can afford $100 million contracts, while Cleveland gets the athletes that are traditionally considered “leftovers.”
I’m sure you are starting to sense the connection I’m about to make.
In my career, I’ve had the pleasure of helping small to mid sized companies hire strong salespeople on a budget that many organizations would deem as low. In fact, I have personally found myself in a position where I’ve had to do the same. This is in part due to the fact that I’ve primarily worked for smaller organizations. In many ways, my clients and I are a lot like the Cleveland Indians.
Despite the financial handicap, the Indians have built strong teams. They’ve achieved this in one of two ways:
1.) They invest a lot into their young minor league players, developing their talents early in their career.
2.) They aren’t afraid to take chances on the players that nobody else shows interest in. This might be the player whose career is seen as almost over, the player that had a bad year, or the player that suffered a major injury during the prior season.
There are several correlations to be made when it comes to hiring salespeople on a budget.
If you simply can’t afford to pay the big base salaries, try hiring junior salespeople, and treat them like gold. Make investments in them and the training process, so that you can ramp them up to the “big leagues” as quickly as possible.
This requires an ability to accept that some of these individuals are going to eventually choose to leave for the “big market teams”. However, also understand that if you play it right, and allow them to eventually make a strong income, many will choose to stay. Taking this approach will earn you and your organization the reputation of a company where new salespeople can go to learn, grow, be treated well, and get promoted.
It truly amazes me when I think back on some of the strong talent that I’ve found by thinking outside of the box. Some of the best junior sales talent that I’ve hired came from higher end retail stores like Nordstrom, and even a few that were previously teachers. Personally speaking, three of the best recruiters that I’ve hired came from logistics sales, payroll sales, and corporate relocation.
In no world would I consider describing these individuals as, “talent that nobody wanted”, because all of them are intelligent and hard working. However, they all existed outside of the box of traditional thinking. Most companies weren’t actively pursuing them for sales and/or recruiting roles, while I saw potential in them.
If you’re on a budget, try taking a risk. Hire individuals with high character, who are smart and have a strong work ethic. Teach these individuals how to sell, and you might just surprise yourself with the outcome. A major component of helping them achieve success is investing the time into them. If you go about this in the right way, I can almost guarantee you that you will find some hidden gems who will really help your business.

Are Hiring Assessments Worth the Hype?

I have a fair amount of skepticism associated with the common process of taking hiring assessments in order to evaluate talent, and I’ve always felt this way. A significant factor in my healthy level of skepticism is that I’ve dealt with many companies that utilize these assessments like they’re the hiring bible.
Despite this dissatisfaction with these assessments, there are some that appeal to me and my process. I don’t care for the ones that tell you to hire or not hire somebody. Instead, my favorite assessments are the type that tell you how somebody ticks. These seem to be less common, but in my opinion, they are a far more effective tool to use during the recruitment process.
If I conducted a side by side analysis of arguably the two best recruiters that I’ve ever hired the comparison might surprise you. They are both complete opposites of each other, however they were both extremely successful. There’s no right or wrong here, but rather two different processes that both lead to the same results.
When Barry Saltzman, founder of Saltzman Enterprise Group, approached me about the PREP Profile Assessment, I was skeptical. He kept explaining to me the value that he found in this assessment, and how strong his belief was in it. Despite the fact that my confidence in the assessment was rather low, I thought, “If Barry, who I trust, believes in it this much, I might as well humor him. However, my expectations are low.”
I completed the assessment within about 7 minutes, and found myself even more skeptical about its value. Afterwards I read through the results three times, and it was scary as it was 100% accurate.  The results didn’t state anything positive or negative, but rather described exactly how I tick, and what motivates me.
Barry then had me give the assessment to my new employee, and delivered a third report. This report showed me how to provide this employee with better management based on the results of his assessment. It was honestly a bit of a revelation within my business. It not only strengthened my relationship with this employee, but even resulted in clear workplace benefits that he didn’t hesitate to express.
It taught me management processes that were more tailored toward this particular employee’s style of work and learning. As an example, it showed me that I need to provide him things in lists (ie: step 1, step 2, step 3), and that he’s motivated by encouragement and showing him that I have his back. I read our “matching report,” and used it to manage every day. It reminded me of when you buy IKEA furniture, and are provided an instruction manual.  He told me repeatedly, “This is exactly the type of help I was looking for,” and shortly after, his numbers soared.  He’s now about 200% of his sales goal.
Steve Horwitz, is a General Partner of Morgan Hill Partners, which is a venture services firm that helps tech startups accelerate from startup to scale-up.  They are a firm that I highly recommend if you’re looking to scale your organization.  Like me, Steve is also somebody that strong believes in the PREP.
When asking him how it has influenced his business, Steve said, “PREP has changed the way Morgan Hill does business. As a venture services firm focused on helping companies scale, coachability is an absolute must-have. PREP has allowed us to both qualify whether an executive team is going to be receptive to the advice we give them, and if so, how best to work alongside them to drive towards the results we’re aiming to achieve!”
I found it extremely interesting to see that Steve not only uses the PREP to understand his employees but also his clients.
I hope that those of you reading this article will find as much value as I do in the PREP and try it.  It’s very affordable and If it can make a believer out of me, who was as skeptical as can be, I’m confident it will do the same for you.

High Base Salary & Low Commissions vs. Low Base Salary & High Commissions

A common line of thought among most companies is, “I want to pay for performance”. Meanwhile, almost every candidate for any given job is thinking, “I need a higher base salary. I have bills to pay.”  So, who is correct in their thinking?
In my opinion, there is no winner here, and both the companies and candidates are justified in their thoughts. What I believe to be most important here is that they both try and see things from each other’s perspective. This opinion stems from my experience of having been both a salesperson, and a business owner. I can absolutely see both sides.
The Hiring Manager’s Perspective
Too many business owners wrestle with a fear of paying a high base salary. This likely originates from a belief that if they pay a higher rate, their salespeople won’t be incentivized to sell. Ultimately, they lean towards the decision to pay a salesperson higher commissions, as it brings their interests into alignment. Simply put, if the salesperson makes more money, then so does the business owner. Additionally, the owner doesn’t have to be concerned with the possibility of losing a lot of money on a salesperson.
As an example, if the owner is paying a $100,000 base salary, and the salesperson doesn’t sell anything for 90 days, they’re losing $25,000. This loss is in addition to the cost of benefits, overhead, technology, travel, etc. In the end, this is close to a $35,000 loss.
The Salesperson’s Perspective
The perspective of the salesperson is obviously quite different. They have bills, school loans, children, a mortgage, etc. Good luck paying all of that on a $40,000 base salary. Many hiring managers do not understand that salespeople have been “tricked” so many times over the years that companies have lost credibility.
Companies will tell salespeople all of the time, “You’ll make $125,000 in your first year.”  Ultimately, the salesperson comes to discover that this is completely unrealistic. The effect of this “trick” down the line is that salespeople become much more skeptical, which is important for companies  to realize.
The Solution
First and foremost, I always believe in talking it out. If a company is offering a lower base salary, they should always explain why, and provide the salesperson concrete numbers. For example, telling a salesperson, “I have 10 salespeople on this team all on the same commission structure. I ran the reporting, and 8 of them made over $100,000 in their first year” is a lot more powerful than saying, “We expect you to make $100,000 in the first year.”  Providing this explanation is far more effective than giving them a pie in the sky number that you think they can hit, with absolutely no data to support it.
If you’re a salesperson, be clear and explain why you need a higher base salary. Without this explanation, many hiring managers start to think that you don’t believe in your sales ability, which you know isn’t the case. Instead, explain that you can’t pay your basic bills. The base salary won’t make you feel “comfortable,” as many hiring managers seem to think. In actuality, it allows you to know you have a home to live in at the very least.
Of course, there is always room for compromise. As a hiring manager, you can explain to your candidate, “You want a $70,000 base salary, and I was thinking something closer to $50,000. Why don’t we agree on $60,000, and I’ll guarantee you a minimum of $5,000 in commission over your first 3 months?  In other words, even if you don’t sell anything, I’ll still write you a $5,000 check as long as you are averaging at least 2 appointments per week.”
This approach is what’s known as a non-recoverable draw, and it tends to work quite well. The benefit being that it affords your salesperson the ability to learn the product and build the pipeline over the first 3 months, after which they’re going to have to produce.
A common understanding, open dialog, and considering the other perspective is all critical to making these salary negotiations successful for both parties involved. Without these pieces, either the hiring manager or the salesperson will walk away feeling like they aren’t satisfied with the outcome.