Latch Cuts Bookings-Based Sales Commissions

By John Honovich, Published May 09, 2022, 10:43am EDT (Info+)

Latch has discontinued its policy of paying commissions based on bookings, instead of the more conventional revenue-based approach.

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Inside this note, we examine the tradeoffs of these sales compensation approaches and how this fits into Latch's quest to right its broken business model (IPVM Research).

Bookings ** *******

******** *** *********** ** ********* ** spend **** ***'* *******, ***** ******* is **** ********* ******** **** ***** with ***'* *******. **************** ********* ******* ** **** (********** **********), bookings *** *** *** *** ******* to **** ************** ** **********.

Latch ****** ******* *******

********* **** ****** **** ****, *** ******* ********** ********, *.*.:

*** ******* ************* ***,*** ***** ****** **** **** 35 ******

**** *********** ******** *** ******* *** Latch ** ********** *** ******* *** market ********* ***drive ******** growth

*** ******* *** ********* ****** ******* to ****, ********* $*** ******* **Booked *******1 in 2020 [emphasis added]

** **********, ***** **** ** ******** ("booked *******") ** * ******** ******. At *****, ** *** ******** ******* because *** ****** ******* ****** *** so ********** ***** (*.*., ***** $*** million) *** ** ** ****** ******* that *** ******* ********* ** ******* actual *******, ******** *****.

Defined ********

***** ********* ***** ********** ** ******** in* ******** **** ********'* ****:

******** ********* ****** ************** ******** ***** ******** *** ******** services,not ********** **** ** *********** ********* with a target delivery date, no ***** **** ** ****** following signature. Bookings are the sum of the total gross hardware revenue commitment and the total gross software revenue commitment over the total life of the software agreement.

**** ******* ** ********** **** * specific ********, ********* ******* *** *** specific ******** *** ******** ******** *** each ****, *** ******** ******** ****** delivery *****, **** ***** *** ******** expects ******** *** **********. [******** *****]

*****'* ******* ******* **** ********** ********* since **** ** *** ****** *** the ***** ********* **** ***** ****** and **** *** ***** ** ******* of ****** (****).

***** ***** **** *** ****** *** terms ** ***** ****, *** ******* risk ** **** **** *** ** canceled *** ***** **** **** ****** revenue. *** ******** **** **** ***** mentions *** ******** ***** *******. **** if *** ******** ** ********* ** using *****, *** ******** ******** *** often ******* *** *****. ** **** more *********** **** ** **** *** customer ******* *** ** *** ***** at *** * **** ** *** later.

Compensating ***** ***** ** ********

** **** **** *****'* *** **** investor *********, ***** ************ ***** ***** teams ** ********, ********* **** *** company**** ********* ** ************ ******* ** ****:

** ** ***** ********* ****** ******** and ******** *** **** ** *** sales *****. ** ****'* ************* ****** our ***** ********** ** ***** *** growth. ** ****compensating *** ******* ***** ** ******** *******. And while those metrics were helpful and continuing to predict the broader future market opportunity, we found that they also distract *** ******** ***** **** ********** on the massive revenue opportunity that we have *****.

***** ******* *** **** * ***** transition ******, ** ****stop ************ *** ***** ***** *** ********, and sunset all booked metrics both internally and externally. Removing *** ************ from our revenue teams will help us to focus on what matters [emphasis added]

***** ********* **** ****** ***** *** **** ********** ************:

** **** **** ******** *** ******** sales ************ ********* **discontinue ************ *** ***** ***** ** ********-related metrics beginning in the second quarter of 2022 [emphasis added]

Pros ** ******** ***** ***********

*** ******** ** ****** *********** ** bookings ** **** ** ********* ***** teams ** ** ***** ****** *****. Because **** ** *** **** ** worry ***** *** ******* ***** *********** in *** ***** ****, **** *** be **** ********** *** ********* ***** the ***** ** ************* **** ******, e.g., *** ***** **** ** * 20-unit ******** **** **** ** ***** a ******* ***** ***** * ******** units? ****, ***** *** ************ ***** cost *** * **** ** ** after * ****-******* ** **** ***** than ***** ***** ** ********** ****** of ***** *** ******* ********.

Cons ** ******** ***** ***********

*** ******** ** ****** *********** ** bookings ** **** ** *** ********* salespeople ** "*****" ******** **** ***** is ******** ********* ** ** ********* so *** ** *** ****** **** the ******* ***** * ********* ** investor ****** ** *** ********. **** fundamentally, ** *** ********** **** ** good *** *** *********** (********** ***********) from **** ** **** *** *** company (********** **** *******).

An ***********

** ***** *** ********* **** ********** real ******* (*** ** *********,***-**** *******,******** **** *** * ****, ***.), **** **** **** ****** help ***** ***** ** ********** *********, paying *********. **** ******, **** ** a **** ************ ********, ** ** was *** ***** **** ** *** first ***** **** *** * ********, rather **** **** ******** ***.

Sales **** ******?

**** ** *** *** **** ***** but **** ** ********** ** ***** is *** **** **** ******* *** satisfaction ** ********** ** *** ***** team. ***** ********* ******** ***************, ************ on ******* ** ******* ********** ** sales *****, ** ** ***** ** easier *** **** ** "*****" ***** or ** ***** **** ********. ** changing *** ********** *********, *** *** risk ** **** *********** **** **** less ***** ***/** **** ** **** harder ** **** *** **** *****, which ***** ***** ******-***** ************* **** this *****-****.

** ******* *** ******* ******** ** Latch ******'* *** ******** ******: ***** ****** Business ******** ********.

Comments (5)

**** ********...*** **** ***** * **** shell-game. **** **** ** **** ******* really ******** *** ****** *** ***** stakeholders. * *** *** **** ****** is **% *** **** *** ***** to **** ** "****" **** **.

*** ******** *** *********** ***** **** (temporarily) ***** *** ************ ** ***** true **********. **** ***'* ****...

*** ******** = ******** ****** ******** by *** *******. * ******** ***** is * ********.

**** *** ******* ** ******** ** becomes ******* (** ******* **********) ***** is * ****; ***** ******* * receivable (**** ** *******); *** ** is ********** ** * **** ********** of ******** ******* $. *** ******** amount ********* ******** ********* ***. ****** they *** ***** **** ********...***** ***** is ******** ****. **** *** **** including *** *** ********* *********** ** the ******* ******. ** *** **** put **** **** * ******* *******? -- **** ************ **** ******. **** sounds **** **** *** ****** ********* the ****** ** ******* * ***-**** on ******* *** ****** ******.

* ****** ** ****** ** ******* garbage *** ** *** * ******** order. ** ** ** ******* **** it ***** *** *** ******** ** a ***** ********...***** **** **** **** to * ******** ***** **** ********.

Agree: 1
Disagree: 1
Informative: 2
Unhelpful
Funny

*** **** **** **** ****** ***’* “Bookings” ***** *** *** *** **** to ****. **** ** *********** **** to ***** ****** *** **** **** be ******* ***** *** **** ***** train *** **** *** *******.

Agree: 2
Disagree: 1
Informative: 2
Unhelpful
Funny: 1

**** ** *********** **** ** ***** people *** **** **** ** *******

*** ***** *********** ******* ** *** many *********** ***** *** ***. ***** has ~** ****** ** ***** *** adding ** ***** $* ******* *** quarter ** *** ***, ****'* * lot ** ****** *** * ****** bit ** '****' *******.

Agree
Disagree
Informative
Unhelpful
Funny

** ** **********, ****** * ******* commission ** ******** ** ****** ****** when *** **** * **** ** evangelists ** ******* ** ******* *******.

* ***** ****** ** ** ****** an *********** **** **** **** ** you ***** * ******* ** * campaign *** “******” *** * ******* in ****** ********. ** **********, **** lots ** ********** ********.

****** ** * **** ********* ****. LOI’s “******” **** **** * ********** of ******** ** *** *** ***** steps **** ***** ** ******** *** process.

**** ********’* **** * ********** **’* not ******* ** *** *** ************ plan *** ***** ****** ** *******, typically **** * ******* *******/**** **** LOI *** ***** ******* ***** *** delivery ** ******* *** ********* **** after ******* ********.

Agree: 1
Disagree: 1
Informative
Unhelpful
Funny

**'* *** ***** ** *** * partial ***** ********** ** ******* ** an ***, *** **'* ******* ** call ** *** * *******. **'* not. ******* * ** (******) ** Instruction ** ******* (********** ** ************) nothing *** **** ******. *** ***** so **** ********* ********** ***** **** gotten **** *****?

Agree: 3
Disagree: 1
Informative: 1
Unhelpful
Funny
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