The short answer
- Keep the pay performance-based as much as you can, with full commission being optimal.
- Build a bridge or a training bonus into a new rep's ramp-up period so they have some stability while they learn the business.
- Don't forget: a good comp plan is required to build a great company, but it's not the most important thing a rep needs.
The pay plan isn't what recruits them
More than 20 years ago, I ran summer sales programs where reps worked 80 hours a week for 13 weeks straight, and the average rep made about $7,000. Some of them finished the summer only making $2,000, and oftentimes, whether they made $2,000, $7,000, or $27,000, they'd come back the next summer and sell again, because they were there for something much bigger than a paycheck.
That's something oftentimes overlooked by companies struggling to scale and build a great culture. Yes, the earning potential needs to be there, and it needs to be real. Yes, the space is more competitive than ever before, and it's not uncommon for top rookies to clear six figures or multi-six figures in their first year if they're in a good program and on a good team. The pay scale is only one part of that equation.
The culture around them, the leadership in front of them, and the belief that this business will be a launching pad for their future, as well as actual development and support opportunities to make that promise a reality, is what creates truly elite opportunities. You don't want to get your pay scale wrong, but it's not the most important thing.
That said, it is an important thing, and it's particularly important in the first 4 weeks and after the first 6 months. In the first 4 weeks, a good comp plan buys you time to develop the right people. After the first 6 months, a well-structured comp plan is needed to keep their eyes on the green grass in front of them. If your compensation isn't built to support both of those, then your training and culture need to be elite, or you'll pay a very high price.
Option 1: Full commission
Full commission creates maximum alignment between the business and the contractor, and it's for that reason that most of the industry is built on it.
What it does well. It incentivizes performance, rewards growth, and helps weed out the wrong people, quickly or over time. Most businesses love it because the risk is minimal.
Where it fails. Not every great rep starts out as a great rookie, and failing to support a future rock star through a grueling learning period can cost the business tremendously. There are plenty of people who can push through a cold start in door-to-door paid purely on performance, but there are also a lot who could be great and won't start fast enough to stay financially viable.
Option 2: Hourly plus bonuses
Some version of base pay plus commission. It blends stability with opportunity, and although it can be done well and may seem more attractive to the general candidate pool, it oftentimes comes at a cost beyond the guaranteed pay.
What it does well. You'll tend to find people who say yes faster, and they will, on average, stick around longer. It creates stability for sales reps and predictability for the business.
Where it fails. Hourly pay will attract a higher response and many more of the wrong people. Without strict quotas and benchmarks, some people will hang on for the paycheck and game the system. Others will look around and realize that the earning potential for top producers is subsidizing the bottom 50 or 80 percent of the team. It's also a very expensive model to run if quotas, standards, management systems, and training systems aren't executed with excellence.
Option 3: Full commission with a bridge
Training pay, early bonuses, structured draws, short-term draws. These are all ways to create a bridge for reps to survive and thrive through their training period, and they represent investment from the company.
It still needs to be managed with quotas, standards, and KPIs. But it doesn't change the context of the business or the opportunity to be focused on mutually aligned success and profitability. In our experience, the fastest-growing companies leverage this structure and safeguard it with benchmarks.
What we've seen work
| Structure | Example | Contingent on |
|---|---|---|
| Weekly training pay | $300 to $700 a week for the first 4 weeks | Hours, doors, training meetings, plus achievable results benchmarks like appointments booked, leads set, or contingencies signed |
| Pay per door | $1 per door | Doors logged |
| Pay per booked appointment | $20 per appointment | Appointment booked |
| Pay per sat appointment | $100 per sit | The appointment actually sat |
| Early sales bonus | $500 up front on the first 5 sales | Sales closed |
These are primarily the ways we'd suggest somebody build training pay, a bonus, or a combination of them. The dollars need to be based on what makes sense for the business, the product, and the volume of results they expect. Ideally you create an opportunity where a new rep can see a path to somewhere between $1,500 and $5,000 of ramp-up support.
What we ran in our own company
We built a solar company that did over $130 million in sales in under three and a half years. Throughout that time we pivoted through many of these bridge strategies, and ultimately settled on:
- $250 for the first 4 weeks, contingent on time and doors being logged in the field
- $150 per sit for the first 10 sits
- An extra $20 up front per appointment for the first 25 appointments booked
That was our recipe. Since launching D2D HIRE we've seen many versions of a bridge structure work. What matters most is that a business accounts for the learning curve and, when it makes sense, supports the people deserving of investment.
Two things make or break it
- There's always a benchmark or contingency that requires them to perform or do work. You can make every contingency an effort-based benchmark you control, or mix in some production-based ones.
- There needs to be an expiration. Two weeks, four weeks, eight weeks, or more, but it ends on a date you set.
It's also a recruiting tool
An added benefit of the bridge structure is that you can promote it in recruiting. You give new reps the short-term benefit of stability and the long-term upside of performance-based compensation. That combination is key: it taps into the vein of future superstars who need some help getting across the buying line.
Leadership compensation
It's worth noting that leadership compensation shouldn't be looked at through the exact same lens as rep compensation. The context and responsibilities of leadership vary dramatically from position to position, company to company, and industry to industry.
A lot of things can work, depending on your business, your market, and the extent to which a sales leader is operating as a trainer, an owner, a recruiter, a salesperson, or a manager:
- Aggressive salaries
- Full commission and override
- Base plus commission
- Revenue share
- Profit share
- Real equity
- Phantom equity
- Aggressive draws
- Small draws
We work closely with sales leaders across nearly a dozen industries who are highly effective at running their organizations. Full commission is the most common of these, but in most cases it's a blend.
And just like sales reps need a good comp plan, what keeps them there is the culture, the growth, the leadership, and the team. For leaders, that's even more true. If there's a compelling vision, the structure and resources to make that vision a reality, and a scalable opportunity as you progress toward it together, you'll find there are plenty of acceptable ways to compensate your leadership team. The moment a good leader can't see a scalable opportunity in front of them, whatever comp structure they have won't likely be enough to keep them.
A note on our numbers
These figures come from our own operations and from what our partners report paying, across more than 40 states in roofing, windows, solar, pest control, fiber, permanent lighting, landscaping, fundraising, life insurance, competitive energy, and insurance restoration.