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Commission only? I’ll pass.

Lionseye insights from AC Lion
I regularly check in on the Online Advertising Professionals Group on Linkedin to see what’s going on in our world, but I’ve never posted before. However, I came across this questio by Brandon Desch, HR at Adbrite and thought I had to respond. See below: What do you think? How would you feel about having a commission only job? Would love to hear your responses!
From Brandon:
Hiring “commission-only” ad sales professionals
AdBrite is looking to add commission-only sales professionals to our team in the greater metropolitan locations: NY, Chicago, Atlanta, Boston, LA, San Francisco. These folks will sell online advertising within our performance-based network. Commission rate is 10% on new business (all business is new for 6 months), and 5% for accounts that have been spending for > 6months. $2M in recognized revenue is what we see from strong performers.
Interested in peoples’ opinions of this structure, and would welcome discussions with folks looking for an ad sales role.
Here’s my response:
Hi Brandon,
I’m pretty much inclined to agree with all the folks here, with some additions. AC Lion has been placing sales people at online companies for the past 12 years (no worries, this isn’t a pitch), so we’ve pretty much seen it all at this point. While you may be able to get folks to agree to a commission only structure, you’re leaving yourself vulnerable on several points. These are some of the issues we’ve seen with non-standard packages.
* RETENTION: Keeping your employees will be a major issue – even the best sales people prefer some sort of guaranteed income
* COMMISSION: 10% is competitive, but probably not competitive enough to get top performers to leave jobs with $100k+ salaries and double up backends. A $2million quota translates into a $200k job, which is not that hard to get in online media sales
* CONTROL/ MANAGEMENT: An employee without a base doesn’t owe you anything. They won’t feel as compelled to respond to management directives, come to meetings, or show up to the office every day. Managing sales people is difficult enough, factor in lack of incentives and it could get pretty messy.
*COST OF HIRE: It’s an irony of a commission only role, but definitely a reality. Cost of hire goes up. When sales people are commission only, hiring managers tend to loosen up on their hiring and are quicker to pull the trigger. Non-performers, or poor performers, calling on potential clients can end up doing more damage to your biz. High turnover for AdBrite will be noticed by clients and it will make them doubt your services.
Feel free to drop me a line to discuss in greater detail. I’d be curious to see which direction you end up going in.
Good luck on the search!
Got this response from Brandon today (1/8/09) and he agreed to let me share it.
Hi Sean… I agree with all of your points. I neglected to mention in my original post that we provide a nominal monthly draw (just a bit over $2k), full healthcare coverage (employees to contribute to the monthly premium), and stock options. The package is designed to have the sales folks feel tied to the organization, but give them the autonomy and accountability to drive sales.
As for turnover, that is something we’re monitoring closely. There is risk, you are correct. We’re also maintaining a pretty thorough screening/interview process and not lowering our standards much as we do recognize the cost associated with bringing folks on, helping them get ramped, etc.
Thanks for your thoughts.
Here are my follow up thoughts……….
Let’s see what happens!
Keep me posted Brandon.