👓 Zero Commission Sales in PLG?!

🌈 Abstract

The article discusses the unconventional approach to sales compensation adopted by the fintech startup Mercury, which has chosen to eliminate commissions for its sales team. The author explores how this zero-commission model aligns with the principles of Product-Led Growth (PLG) and suggests it could be a good fit for PLG-native companies, particularly in the earlier stages.

🙋 Q&A

[01] The Zero-Commission Sales Approach

1. What are the key drivers behind Mercury's zero-commission sales compensation model?

• Alignment with long-term company goals, rather than short-term thinking
• Focus on user and customer value, potentially leading to higher lifetime value (LTV) and reduced churn
• Product focus, allowing sales to augment the product-led growth motion instead of competing with it
• Collaborative culture, fostering a team-first mentality and encouraging knowledge sharing
• Data-informed decision making, as sales teams contribute to the data-driven culture
• Attracting mission-driven individuals motivated by the company's long-term success
• Flexibility to experiment with go-to-market approaches, as commission structures can be a blocker

2. What are the potential challenges of implementing a zero-commission sales model?

• Internal pushback and resistance to change
• Difficulty in attracting salespeople accustomed to commission-based structures
• Maintaining high performance motivation without commissions
• Scalability of the model as the company grows, potentially requiring a reassessment

[02] Implementing the Zero-Commission Model

1. What are the key steps suggested for implementing a zero-commission sales model?

• Ensure the model aligns with the company's values and long-term vision
• Offer competitive base salaries to offset the lack of variable pay
• Use meaningful equity grants to align sales team interests with long-term company success
• Communicate the reasons for the model and how it benefits the company and the team
• Ensure complete alignment and support from the leadership team and the board
• Develop robust performance metrics beyond just revenue
• Approach the initiative with an experimentation mindset
• Start small and prove the model's effectiveness before scaling

2. How does the zero-commission model relate to Product-Led Growth (PLG) and Product-Led Sales (PLS)?

• The zero-commission model is seen as a good fit for PLG-native companies, as it aligns with the principles of PLG, such as focusing on user and customer value, product focus, and data-informed decision making.
• The author suggests that the zero-commission model is particularly well-suited for implementing Product-Led Sales (PLS), as it allows sales teams to focus on learning and experimentation without the pressure of short-term commission-based targets.