Advice on commission-only b2b sales people experienced in selling to App Developers

Ron Brinkmann Founder at Precipice Labs

November 6th, 2015

We're about to launch an SDK/Platform product that is targeted at (a subset of) mobile app developers. For the purposes of this discussion, think about it as a sort of cross-promotion framework that would get embedded into the host app.

We're not at the point yet where we're able to bring a sales person on full-time so we're playing with other models for getting some initial customers. And one of the things we're considering is finding someone (or a few people) with experience selling into this space who would be willing to work on commission-only sales. The product is currently free-to-use for smaller developers, so determining what sort of commission to pay is also something we're trying to figure out.

But the basic thinking is that we'd pay a small commission whenever a salesperson manages to convince an app developer to download and try the product (FYI this would involve a few hours of integration work on the developer's part and would be easy to track) and then a (much) larger bonus if the developer actually releases to the app store with our product integrated.

So first question would be about what sort of dollar values people might expect for those two levels of commission. Go ahead, just throw out a gut-instinct number and we'll see if a consensus emerges :)

Beyond that, there are definitely some pitfalls that we're aware we need to avoid. Things like:

1) An overly aggressive salesperson could target inappropriate accounts or become too much of a pest to specific accounts, thereby creating a bad association with our company.

2) Multiple sales people could conceivably target the same customers - again seeding badwill rather than good.

3) There's probably some ways to 'game' the scenario, e.g. getting bogus or nonqualified accounts to sign up - accounts that have no real value.

There are probably things we'd need to put in place to help avoid these dangers - limiting exposure to certain types of accounts, require a focus certain geographic regions in the initial phases, etc. What else?

At any rate, we'd love to hear any thoughts from people who have experience in this area.

Richard Harris Top 25 Inside Sales Leader, Public Speaker, 40 Most Inspiring Leader, Sales Trainer, Start-Up Advisor, SalesHacker

November 6th, 2015

Backstory

I am a salesperson and most of last year worked with a mobile developer with amazing technology to bypass the black box of the app store so companies could focus on organic attribution as opposed to paid. So I hope I understand a bit about what you are trying to accomplish. Feel free to correct me if I am off base. It truly will not offend me.

Suggestions:

If a salesperson is willing to take a commission only job for a small commission as you suggest then those are indicators that the sales person is not very good.
You nailed it when you said they may become a pest. Even more so, many developers hate the thought of speaking with a sales person. Many developers often want a "self-serve" model because they often think they are smarter than the sales person (and in many cases they are) so they find the whole "sales process" a complete time suck and waste of their own energy.
Trading equity may work for a sales person but that may be more of a business leader and could lead you back to #2 very quickly.
Without knowing the details of your SDK, complexities that may exist or require a human to engage I would encourage you to spend a few months giving away the product to the developer community first and get their feedback, make improvements.
If you have already done #4 and are beyond the MVP stage and truly ready to start thinking about sales I would encourage you to seek advice from VC's, other developers you know, etc to learn how they crossed the chasms that go from idea, to MVP, to MarketFit to business launch.

From a business perspective I would turn the question around to you and say "what indications do you have the market is clammoring for your tech?" I am not saying you shouldn't try to sell it I am just saying that getting a good developer in a conversation and trying a new tool is like getting the CEO of GM to answer the phone. You don't have to be perfect but you cannot afford to burn that bridge.

Finally, as a sales person I know that often times we speak with a strong tone that may at some times be condescending. I hope I have NOT done that here. If I did, please accept my apologies. I wish you nothing but success and the best of luck on your project.

Cheers!

Jon MBA Regional Director - educator, instructor, consultant, connecter * Marketing Executive for SMB's

November 7th, 2015

Ron:

I have read and re-read your post along with the advice on this subject. Before I give you my two cents take each persons advice for what you paid for it.

My first thought is that you have little respect for professional sellers. This has got to change. You focus on how this group will screw up your company. I find this egregious !

A good hire will NEVER put you in this position. So the advice for interns or less experienced folks does NOT stand the test. Yet you want to pay this person like an intern. Good Luck finding your unicorn!

In 2006 I started a company with 3 really smart individuals. In 2011, we sold that company to a Wall Street firm. Earlier advice indicated this person should be part of your development team. I agree. Good Luck !

Paul Murskov

November 6th, 2015

Hi Ron,

Hiring a commission only salesperson may be more of a headache than you anticipate. With no track record of the success of the position in place (which a salesperson would ultimately look for) and an uncertain comp plan (reps like to know earnings potential) - you would spend more time finding the person than it is worth. Additionally, it could become costly and cumbersome to manage someone who is working commission only as they may flake and/or not be as motivated.

My advice is to start with hiring an intern or someone hourly/very entry level to prospect on Google, LinkedIn or Developer hub (you probably know better than I do) to reach out to these prospects. They are motivated, consistent and are open to a startup changing environment. Maybe someone who is in Comp Sci that has some web dev on their resume. Those types would love an opp like this.

You can use a system like Streak.com (which integrates with Gmail and is free) to track all the prospects in the pipeline to ensure that the Sales Intern is prospecting the right type of people. As a kicker you can provide them with an incentive whenever they can get someone interested enough to hop on a quick demo if necessary or to actually use the product out of the box.

Even though there will be an out of pocket cost for such a hire the overall cost and value that could be generated from someone like this would actually be more cost effective for your organization. Also, they are more readily available and can be found quickly.

I have used such a model in the past and continue to do so and it brings my organization a tremendous amount of value, keeps the people happy and keeps costs in line.

Hope that idea sparks some additional thought on your end.

Good luck!
Paul

Paul Murskov

November 6th, 2015

@Ron - All great questions, Ron. I'm not sure where the Ostetso HQ is but here are some general tips:

Using Upwork is an avenue you can try - I particularly don't like to lead with it because there is very little opportunity to transition to full time with those types of candidates. You see, if the person you hire ends up doing super well, you may consider bringing them in full time later - either for a sales role or a general support role. Either way, with Upwork - you won't really be able to do that so I wouldn't lead with that option unless you are 100% looking for a temp solution and are willing to invest time in someone that will ultimately leave the sales engagement with your company. Your time is valuable - so invest it now and for the future.

As far as cost - my advice is to keep it really, really simple. I recommend a monthly stipend depending on hours worked. For example, I have someone that gets $500-$600/mo plus bonuses and that person commits to 15-20hrs per week. I like keeping it simple because its scalable and predictable.

Looking at your website and what the company does, I think your baseline should be is this:

Think about how much you want to invest into this engagement over a 6 month period. Maybe it's 5K plus another 5K in bonuses.

Then think about how much delivery you want and what the metric driver is going to be. I would say in the case - 1. how much can this person spread the word about your platform and 2. how many developers would be open to tinkering with your SDK. They could be posting in Developer forums, the could be posting on LinkedIn - the could be reaching out to app dev companies. Who knows? The goal is to get as much engagement as possible. So truth is - you don't know 100% so I think you should have the person try many different things and see what works best - then tweak the compensation for what is working.

My belief is you need someone smart and creative that understands more marketing and brand awareness but has some kind of comp sci background so they have interest in the field. Of course, your expertise may say otherwise, but that is my initial thought.

Hope that answers your questions fully. If not, let me know if I can provide any more clarity.

Cheers!

Paul

Adam Metz Vice President at TerrAvion

November 8th, 2015

I typically don't counsel my advisees to go down this road. Generally, I make certain that the CRM sets up clear territories and that there's a minimal hourly wage at least. That ensures sales data integrity (91%) and CRM completeness. That $60-100 per day that you think you're saving on commission-only is money you're losing as you'll need to spend it on future data remediation.

Kevin Cuddihy President of Univision Local Media with a record of increasing Revenue and Market Share | Progressive, Inclusive Leader

November 6th, 2015

Find a top notch sales person that is willing to take a smaller commission for some equity in the company. That will avoid bogus customers, or playing any games. They want the company to succeed. Sent from Yahoo Mail for iPhone

Anonymous

November 6th, 2015

Software developers are a tough crowd to sell to. They smell a second car salesman from miles away. As Paul advises, start bottom up with finding prospects, and find a natural way to engage with them. Do your content marketing. Buy Facebook and Google ads. Let your product sell itself. Definitely have a free tier that provides a decent amount of value, or a 30 day trial. Engage on Twitter.

Ron Brinkmann Founder at Precipice Labs

November 6th, 2015

@Paul - thanks, and I can certainly see the wisdom of what you're suggesting. What's been your best avenue for actually finding such a person, however? We were planning to use Odesk (or Upwork I guess it's called down) to put out a general bid for salespeople but I'm guessing student intern types aren't hanging out there all that much. Also, what sort of hourly rate would you think would be appropriate?

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November 7th, 2015

Jon thanks for saying what I really wanted to say.

Ron, I'm going to be very tough on you in this post because you need to clearly grasp what makes an idea actually become a profitable business.

Question - Do you really want solid advice drawn from the real world or not?? If it doesn't fit your pre-conceived notions, will you accept it?

Ron, You still have apparently not read my "did you answer these questions first" nor my "Manufacturer's rep" suggestion posts, both having some genuine answers for you that you can use now.

WHY? - do they make you rethink and even seriously question if you actually have something that can meet a real market's needs in enough volume to make a great profit?

Did the logic of using Manufacturer's reps to get the right sales folks who can escalate your product quickly into where you want it to be on your payment terms as outlined in the post escape you? Did what I suggest not fit your pre-conceived notion of what to do and what you really want here is validation of that, not heartfelt, field derived honest advice?you wont do that?

Frankly, it Seems as if you have all the answers and really wont take advice from us. advice that is field and experience derived.

What are you afraid of???

Re sales folks - its seems so usual that tech folks have little respect for sales folks nor do they value them as "experts" just like they themselves are yet without us they would not get of the ground. Why is that?

Like developers, software types, sales is a skill and it has a critical place in every solutions venture.

Please understand this, accept that you can't sell, dont know how to sell, that you need great sales people and then go pay for the skill that can sell.

Remember, your stuff is useless if you cant get your target market to say yes to it and part with cash to buy and then repeat buy and recommend it to others as well.

Try it yourself and see how hard it is to do that -go pioneer a new product and see what it really takes.

OOPS, you already did that and you realized you dont know how to do it.

Ron, Please Listen up to those of us who know the value of a great sales person and spending to get the best out there. Pay them because pioneering a new product takes a long time and straight commission won't motivate them to do so.

Stop risking success over the cost of a great sales person.

JC Niederberger Global Payments, Treasury & Risk Solutions

November 10th, 2015

Look at your sales representative as a strategic part of your leadership team, with critical insights to the market instead of a "pest"...or "system gamer"...and you will probably be more successful in your search. Selling an SDK is like selling "ice to Eskimos"...regardless of the functionality and game changing nature of the wizardry. What you need is someone who can walk in to existing relationships and jump the queue to get your SDK installed. This costs real money and real equity. Go cheap...go home.

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