The Argument for Commission-less Sales: Reinventing Incentive Structures

Josh Hone by

Editor’s Note: You can learn more about Quorum’s approach in an exclusive interview with their co-founder here: When & Why it Makes Sense to Deliver a Minimum Sellable Product, Not a Minimum Viable Product

Politics broadly, but certainly the legislative process, has been left behind by a lot of the technological innovation happening elsewhere in the economy. If you work in Marketing or Sales, there’s not a chance you’re using the same software tools you were a decade ago. If you work in the legislative process? You probably do. We are the company making up that gap. Quorum builds tools that enable our clients to better influence the legislative process.

Quorum is also a 100% bootstrapped company. We are growing quickly, and have done so by building products with fantastic product-market fit. We didn’t have the luxury of telling ourselves “Oh, this will catch on!” We had to ask hard questions of ourselves and our customers about what wasn’t useful and what we should build that would be useful. Like many startups, every full-time member of Quorum’s business development team was granted equity in the company.

If early product market fit and an entirely bootstrapped B2B SaaS startup isn’t unusual enough, the culture of our company also led to an early strategic decision to do something rather unusual: we don’t do commission for our Sales team.

“You didn’t build that”

Early on, the team was small. Everyone on our team put in a lot of sweat equity building the product and growing the company. It felt wrong, even only in the hypothetical, to close a deal because of a new feature that was built by an engineer on our team and pocketing a share of the sale when they didn’t. This factor becomes less compelling as compensation structures for the engineering team became market-rate, but starting that way had some cultural and strategic implications on our team that we felt were important.

Culture Fit

I will be frank: early on, and still today, we weren’t interested in hiring people that were motivated by making a couple hundred bucks. The key to building a commission-less sales team is hiring people fascinated by what the product can do for your clients. It is critical to find people that are true believers in the impact your product can have on the lives of the people we serve or are sold on the idea of playing a role in growing a team from the ground up. Naturally, a sales team that doesn’t offer commission will in and of itself serve to filter out any applicants looking to only make some quick cash.

Incentivizing through Growth

In a commission-less sales structure, team members are not motivated by individual gain. Instead, they are motivated by growing the company. At Quorum, as with any bootstrapped company, the reality of growth is pretty straightforward: what we can do tomorrow is entirely dependent on what we do today. A revenue goal is not what a board of directors says we should make; it’s what will fuel plans we’ve made for our future. When a Sales Rep closes a large contract, they know that we can turn around and hire somebody who will sit next to them in the office or provide our Development Team with additional resources to build new products. The rubber meets the road in an unmistakable way and the resulting mentality is baked into the culture at Quorum.

Avoiding the “Bad Sale”

The allure of a large commission is not the motivation we want a Sales Rep to have for making a sale, but the incentive structure can also yield sales that are bad for the company long-term. If a sales rep is too zealous in closing a deal with an organization that doesn’t have a need for our tools or sets unrealistic expectations for a prospective client, the effects of the sale will be felt across the entire organization. Bad sales beget unhappy clients.

First, an unhappy client will be a drain on your Customer Success team’s time and resources. Next, an unhappy client will increase your churn rate as they will be less inclined to renew their subscription. Finally, an unhappy client will talk and share their frustration with colleagues across your industry – which is particularly detrimental in contained or socially connected markets like Quorum’s.

So, is this replicable?

Being a tenacious company with a shared vision, employees having equity in the company, and a product that has great product-market fit are helpful prerequisites for implementing a commission-less model. But if you are building a team from the ground up, you have an opportunity to build a team with a culture that aligns with your values and long-term goals. Incentive structures, formally and otherwise, are the best strategic tools at your disposal to make that possible.

Director of Business Development

  • If its not sellable, its not viable.
    Restated, only sellable offerings are viable.

    If bootstrap, sales needed sooner
    If funded, sales needed soon enough…

    Stuff not saleable, the company is not viable, and end of life event imminent…..