Sales Incentives and Structure Concerns for VSaaS Offerings

Author: John Honovich, Published on Jul 15, 2010

An underlying challenge for integrators/dealers adding managed/hosted video solutions is constructing the correct incentives and structures for their sales organization. An interesting example of this comes from a July 2010 admission by managed access provider, Reach Systems, over problems they are experiencing in channel adoption. Reach claims, “The owner of the company will sign up in a snap but getting their people to sell it is a whole different story. Do they change their compensation structure? That’s not easy, and they’ve still got to support their other lines."

The practical problem comes from two factors: (a) sales people are usually paid a percentage of revenue immediately after the customer pays and (b) SaaS solutions cut the up-front payment significantly (by 50% or more), transferring the balance to ongoing periodic payments. Keeping the normal pay-out structure in place, would mean that the sales person would get less money up front and would have to wait longer for their 'total' commission. An additional concern would be the potential amount of compensation a sales person would lose if they decided to switch jobs (normally, you leave, you lose all future commission payments).

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** ******* **** ******* (***** ******** *** ***** ****** ********), companies *** ********:

  • ***** ******* ********** ******** *** **** ********: *** *********** ** the ********* '*****' ******* ***** ** ***** (** ** ***** a **************** ******). **** ***** ********* ** ******** ***** ****** getting **** ** *****, ********** *** ********* *** ***** ** sell ****. *** ******** ** **** ** *** **** **** outlays *** ***** ***** ** **** ******** ** *** ***** up ***** **** ******** (******** ** *********** ********).
  • ********* *** ******* ********* *** ********** ** *********** ******** **** SaaS ********. ******* ** ****** * **** *** ********** *******, pay ******* ******* **** ***** ** ** ******* *****. **** will ****** *** '***** ** ******' ********** *** ***** ****** generating ****** **** ********. **** **** ****** *********, * *** month, * ****** **** ** * **** ******** ******, **** not ****** ***********'* ******* ** ****. *** ******** ** **** is **** **** ********** *********** ('*******') **** *** **** **** approach ** **** **** ** ** **** ********* *** ****** to ***** (*** *** ****) ** *** *****.

*** **** **** **** *** **** ** ***********. ***** *** many *** ******* ******** *********** *********** **** **** ******** ** hinder ******* *** **** *********. ******, ** ** ******** ** February ****, ** *********** **** ********* **** ****** *** ** *** ***********.

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