Base vs. Commission: What Do Salespeople Want?
There’s a common belief that in order to be truly successful, salespeople need to be passionate. While I’m not arguing that’s not true, quite frankly, passion doesn’t pay the bills.
The truth is that compensation still matters, and it matters a lot. While selling can be extremely rewarding and fun, it’s also demanding and stressful. That’s why it’s no accident that salespeople tend to be among the highest paid employees in a company.
So employers: Do you know what salespeople really want when it comes to compensation? Let’s take a look at the numbers.
How much salespeople typically get paid
Although average salaries are going to vary widely based on numerous factors such as quota, the industry, and the product/service itself, we can get a hint at what typical sales compensation looks like.
According to The Bridge Group’s 2015 survey of 342 B2B SaaS companies, the average base salary of an inside sales rep (with an average quota of $705,000) is $60,000 with an average on-target earnings of $118,000. This is roughly a 50/50 base to variable split in overall compensation.
These numbers are consistent with Glassdoor’s data on salespeople in Toronto who have a median annual salary of $55,000.
According to LinkedIn’s data, Toronto and Los Angeles have a higher supply than demand of salespeople, while San Francisco, Boston, and New York City have a higher demand than supply. Theoretically, this means it should be easier and cheaper to hire salespeople where the supply is high.
What salespeople want in their compensation
Glassdoor recently surveyed 1,000 salespeople. They found that a big majority of them – 68% – planned to look for a new job in the next year. The number one reason why they were planning on leaving their job? 72% said salary and compensation.
Again, these stats are consistent with LinkedIn’s survey of 7,155 salespeople: 71% said the most important factor when considering a job offer is excellent compensation & benefits.
What else did Glassdoor’s survey reveal about what salespeople want in their compensation?
94% rated base salary as an important part of the compensation plan vs. 62% who rated commission as important.
That’s an overwhelming winner for what salespeople are attracted to when considering a job offer.
Why this matters for hiring salespeople
The (sales)people have spoken: Show them the (base salary) money.
Simply put, it will be that much harder to compete for and attract salespeople with a 100% commission sales job, especially in high demand cities such as San Francisco.
So if you have the cash flow, offer a competitive base salary. You’ll maximize your chances of attracting salespeople who stay motivated and who are less likely to leave, showing you the money in return.
Tweet us at @ideal if you agree with giving a little to get a lot more!
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