We Stopped Sales Commissions—Salary Only Won

"If you don't offer commission, salespeople won't work." This is the dogma of the business world. Salespeople are coin-operated. They need the carrot and the stick.

We followed this advice for 5 years. We had OTEs (On-Target Earnings), accelerators, clawbacks, and spiffs. The result? We had a sales team that was closing deals at all costs—including the cost of the company's long-term health.

They promised features we didn't have. They closed "bad fit" customers who churned in 3 months. They fought internally over lead attribution. "That's MY lead!"

So we did the unthinkable. We abolished commissions. We increased base salaries to match the market OTE. We treated salespeople like... professionals.

The Principal-Agent Problem

The problem with commissions is that it misaligns incentives.

The Company wants: Long-term, happy, recurring revenue customers who fit the product perfectly.

The Commissioned Rep wants: To close slightly more than their quota this month so they hit their accelerator.

This time horizon mismatch is deadly. A rep will shove a square peg into a round hole on the 30th of the month because they need to pay their mortgage. Three months later, the Customer Success team (and the Engineering team) has to deal with the fallout. The Rep? They've already been paid and moved on.

The "Professional Ecosystem" Model

We switched to a model we call "Professional Ecosystem."

1. High Base Salary: We pay our AEs in the 90th percentile of base salary. They don't have to worry about paying rent if they have a bad month. This removes the desperation breath that customers can smell a mile away.

2. Company-Wide Bonus: Everyone, from Engineering to Sales to Support, creates the value. So everyone shares in the profit sharing. If the company hits its ARR goal, everyone gets a bonus.

This killed the "Sales vs Engineering" war overnight. Salespeople stopped tossing bad deals over the fence, because if that customer churned, it hurt the Salesperson's annual bonus too.

But did they stop selling?

This was the fear. "They will just coast."

The opposite happened.

Trust is the ultimate closer.

When a customer realizes that the salesperson is not desperate to close them today, the dynamic changes. Our reps started saying things like: "Honestly, looking at your requirements, we might not be the best fit. You should check out Competitor X."

You might think this is losing a sale. It is. But the customers we did close trusted us implicitly. They knew we weren't lying. Our close rate on qualified leads went from 20% to 35%.

Collaboration replaced Competition.

Under the commission model, Rep A would never help Rep B. Why should they? It takes time away from their quota.

Under the Salary model, Rep A (who is great at technical demos) hops on calls with Rep B (who is great at negotiation). They share tactics. They share leads. "Hey, I think you'd be better at closing this enterprise deal."

The Recruiting Advantage

This model allowed us to hire a different kind of salesperson.

We stopped attracting the "Wolf of Wall Street" types who just want to hunt. We started attracting "Consultative Sellers"—smart, empathetic problem solvers who enjoyed the product but hated the volatility of commission checks.

These people stayed. Our Sales Team turnover dropped from 40% (industry standard) to 5%.

The Churn Impact

The biggest metric wasn't New Revenue. It was Net Revenue.

Because our Reps weren't forcing bad deals, our Churn Rate plummeted. We weren't filling the bucket with water while it leaked. We were filling it with concrete.

Conclusion

Commission is a management crutch. It's a way to say "I don't know how to motivate or manage you, so I'll just use a spreadsheet formula."

If you hire adults, pay them well, and align their long-term incentives with the company's health, you don't need the carrot. The pride of building a great company is enough.

We stopped paying for "closes." We started paying for "relationships." And the revenue followed.