Episode 38: Sales Compensation – Buying Persuasion Labor, The Cost of Selling & Paying Market Makers for your Startup: An Interview with David Cichelli

By Scott Sambucci | December 28, 2017

My guest David Cichelli is the leading expert when it comes to sales compensation. His book – Compensating the Sales Force – talks about building out a sales team: how to build a sales team, compensate your sales team, decide between paying commissions vs. bonuses, and so much more. Aside from David’s book, Compensating the Sales Force, he is also the author of The Sales Growth Imperative, and he publishes the Sales Compensation Almanac annually. He is the Senior Vice President at the Alexander Group where he works on Sales Compensation.

In this episode we define and describe a number of key sales roles and topics

• What is a “Market Maker” and why they’re unique to your early sales success with large enterprise sales?
• What’s the difference between Professional Sales ‘Producers’ and Sales Representatives, varied revenue types and sales models
• Why is it important to adjust quotas on a regular basis?
• How should you deal with sales compensation?

We discuss the different types of sellers, what type of sellers are best for which businesses and when they’re needed, and of course, how to properly compensate a sales team based on the type of seller.

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Show Notes & Topics:

• Introduction to David and his book, Compensating the Sales Force
• What The Alexander Group does and how Sales Compensation fits into the broader spectrum
• The 3 Modes of Startups – Start Up, Ramp Up, Scale Up
• Sales Professional as Shakespearean Actor vs. Playwright
• Market Makers – Part sales / part marketing. Situational Job b/t Founder Selling and Professional Scalable Sales Organization
• Two types of sellers :
  1) Producer  – Real estate agents
  2) Sales Representative – Buying Labor, Paying for Persuasion, Base + Commission; Quota-based.
• When to use stock options for sales comp, and why it shouldn’t be a significant amount of compensation
• The risks of the Producer Model
• Expiring vs Flat Guarantee
• Varied revenue types and sales models
• $100,000 and $160,000 are the standard pay levels for the tech market
• Why you need to adjust your quotas all the time
• Why you shouldn’t do a draw commission, no clawbacks
• Paying SDR-AE-CS
• The Cost of Selling & Persuasion Responsibilities
• Commit to the Money, and not the Mechanics

Links & Resources:

• David on Linkedin
• Alexander Group
• Compensating the Sales Force on Amazon
• 2017 Sales Compensation Almanac
• Inside Box’s Updated S-1

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