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Introduction
In this week's episode of "The Science of Scaling," Mark chats with Nick Dellis, VP of Sales at Mercury. Mercury describes itself as a financial technology company that provides banking services via its partners, Choice Financial Group and Evolve Bank & Trust® (Mercury itself isn't a bank). Savings and checking accounts are insured up to the FDIC limit through these partners. They help startups grow through a product suite that includes:
• Checking and savings accounts
• Treasury accounts
• Physical and virtual cards
• Wires, ACH, and checks
• Capital and venture debt
Mark and Nick discuss how traditional sales commission structures may be outdated and how removing them can revolutionize team dynamics, performance, and long-term scalability. They emphasize that a culture of collective achievement, long-term goals, and employee well-being can lead to a more stable and successful sales team. Transitioning away from a commission-based model may be challenging, but as demonstrated by Mercury, it can yield a more cooperative and focused sales force that drives long-term growth.
Here are some of the top takeaways:
Rethinking the Commission Model
Insight: Mercury decisively moved away from the traditional commission-based compensation. This shift is rooted in offering competitive salaries and substantial equity, thus fostering an environment that thrives on collective success and sustainable growth instead of short-term gains.
Actionable Tip: Take a close look at your current commission structure. If you observe it fostering short-term, high-stress behaviors, consider piloting a hybrid model. Alternatively, you could move towards eliminating commissions entirely and compensating your sales team with higher base salaries and equity stakes to promote long-term engagement and loyalty.
Constructing a Cohesive Team
Insight: Opting for a non-commission-based team has resulted in a more collaborative and politically neutral environment at Mercury. This strategic decision has attracted high-quality candidates who excel within stable, team-oriented cultures.
Actionable Tip: During recruitment, be upfront about the absence of a commission structure. Emphasize the guaranteed salaries, equity opportunities, and the collaborative team culture. This transparency will help attract candidates who value stability, team success, and long-term career growth over immediate monetary rewards.
Balanced Performance Metrics
Insight: Without the traditional commission plans, performance measurement has to be nuanced and multi-faceted. At Mercury, they use a combination of leading activities, leading indicators, and lagging indicators to monitor performance comprehensively.
Actionable Tip: Develop and implement a balanced scorecard for your sales team incorporating behavior-based metrics, activity levels, and long-term outcomes. This approach promotes behaviors aligned with sustained success rather than focusing solely on immediate results.
Facilitating Difficult Conversations
Insight: Transitioning to a no-commission model necessitates having transparent and often difficult conversations about performance expectations and underperformance. Addressing these discussions openly cultivates trust and ensures alignment with the company's broader vision.
Actionable Tip: Schedule routine one-on-one performance review meetings. These regular check-ins are opportunities for providing timely feedback, aligning expectations, and reinforcing the long-term vision of the company.
Prioritizing Experimentation in Early Stages
Roberge's Insight: For startups in their early stages, the initial sales hires should focus on experimentation and finding product-market fit rather than generating immediate revenue.
Actionable Tip: Define exploration-driven KPIs for your early sales hires. Encourage activities such as gathering customer feedback, conducing market research, and iterating on product development. These activities are crucial for refining your product offerings and ensuring a sustainable market fit.
Cultivating a Collective Success Culture
Roberge’s Insight: Abandoning commission-based incentives helps promote a culture of collective success, moving away from individualistic, winner-takes-all mentalities.
Actionable Tip: Establish team-based incentives and recognition programs to celebrate milestones achieved collectively. Shifting the focus from individual accomplishments to team efforts encourages unity and collaboration.
Altering Hiring Profiles and Policies
Roberge’s Insight: Implementing a no-commission model necessitates a shift in hiring profiles, favoring candidates who value stability and long-term growth over high-risk, high-reward scenarios.
Actionable Tip: Tailor your job descriptions and hiring criteria to reflect this cultural shift. Highlight the stability, growth opportunities, and innovation-driven environment your company offers to attract candidates aligned with these values.
Overcoming Internal Skepticism
Dellis’s Insight: Transitioning from a commission-based model faced significant internal skepticism, especially from the CEO and board members. However, presenting comprehensive plans with potential long-term benefits helped in gaining their buy-in.
Actionable Tip: Prepare a robust strategy to present to your stakeholders, showcasing the benefits of a no-commission model through detailed plans and supportive data. Real-world examples and case studies can also help in demonstrating the potential for success.
Long-Term Business Focus
Dellis’s Insight: Moving away from a quarterly revenue focus to a long-term business perspective has critical implications for sustainable growth and overall business health.
Actionable Tip: Implement long-term incentive plans aligned with the company’s broader goals. Encourage long-term thinking within your team through strategic planning and daily operations focused on future growth.
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Note: The insights shared in this podcast were initially distilled through advanced AI summarization technologies, with subsequent refinements made by the writer and our editorial team to ensure clarity and engagement.
About Mark Roberge
Mark Roberge is a Co-Founder and Managing Director at Stage 2 Capital and a Senior Lecturer at the Harvard Business School.
