Good Closers vs. Bad Closers: The Sales Industry’s Latest Trend and Its Impact on Business
In recent years, the sales industry has experienced a noticeable shift. Freelance closers, operating on a commission-only basis, have been making waves. This trend, which originated in the US, started gaining traction in Germany approximately three years ago. On the surface, the idea sounds appealing — hire a closer who is only paid when they successfully close a deal. This seems like a win-win situation for businesses. But as with any trend, there are both pros and cons.
The Rise of Freelance Closers
Freelance closers are typically private individuals, often without a background in sales, who undergo short-term training programs. These programs, ranging from a few weeks to a couple of months, promise to equip anyone with the necessary skills to close deals effectively. While some programs, like those from renowned mentors such as Kasten Bayreuther, offer high-quality education, they come with a hefty price tag. Many individuals opt for cheaper, online alternatives that might lack depth and long-term practical value.
Upon completion of these courses, participants receive a certificate, and the mantra “Think big and take what’s yours” is often ingrained in their mindset. While this can be a motivational slogan, it can also lead to problematic behaviours. These newly minted closers, driven purely by commission, often prioritize their own financial gain over the long-term success of the client or company they are selling to.
Our Personal Experience with Commission-Only Sales
A couple of years ago, we were running a lead generation marketing agency, and at the time, we decided to build the business entirely around commission-based people. On paper, it seemed like the perfect solution — we wouldn’t incur costs unless deals were closed, and our salespeople would be highly motivated to generate leads and close deals.
However, the reality was much different. The individuals we hired were often so desperate and had such high financial needs that they would do anything to close a deal, even if it meant compromising their integrity. In some cases, it felt like they would “sell their grandmother” if it meant getting a commission. Their desperation drove them to make promises they couldn’t keep, pushing solutions onto clients that weren’t a good fit just to earn their paycheck. This behaviour not only hurt the client relationship but also damaged our reputation in the long run.
The Problem with Commission-Only Sales Teams
When businesses build their sales organizations around these commission-only closers, they may encounter several issues. One of the primary concerns is that these closers are solely motivated by financial rewards. They don’t necessarily care if the solution they are selling genuinely fits the client’s needs. Nor are they invested in the client’s success after the sale is made. Their focus is on closing the deal and moving on to the next opportunity.
This transactional mindset can lead to several problems for businesses:
- Mismatched Solutions: Since the closer’s primary goal is to earn a commission, they may push a product or service onto a client, even if it’s not the best fit. This can result in unhappy customers who feel misled.
- Poor Customer Retention: When customers feel like they’ve been sold something that doesn’t meet their needs, they are less likely to return. In fact, they may spread negative feedback, which can harm the company’s reputation.
- High Churn Rates: If salespeople are not invested in the long-term success of the client, churn rates will inevitably rise. Customers who feel unsupported or dissatisfied are more likely to leave, resulting in lost revenue and a damaged reputation.
The Importance of a Holistic Sales Organization
To avoid these pitfalls, businesses need to rethink their approach to sales. A successful sales organization should not be built solely on commission-based incentives. While financial motivation is important, it should not be the only factor driving a sales team’s performance. Instead, businesses should establish a sales structure that balances financial rewards with customer satisfaction and long-term success.
Metrics That Matter in the Sales Industry
In our sales organization, we’ve implemented a matrix that includes metrics like the Net Promoter Score (NPS) and customer happiness. These metrics are crucial in evaluating the overall effectiveness of a sales team, beyond just the number of deals closed. Here’s why:
- Net Promoter Score (NPS): This measures how likely a customer is to recommend your product or service to others. A high NPS indicates that customers are satisfied not just with the product, but with the overall experience, including the sales process.
- Customer Happiness: While it’s impossible to make every customer 100% happy, striving for a high level of satisfaction should be a priority. Happy customers are more likely to become repeat buyers, provide positive referrals, and contribute to the long-term success of your business.
By focusing on these metrics, we ensure that our salespeople are motivated not just by commission but by the overall success of the client and the company.
When to Use Commission-Based Salespeople
Commission-based salespeople can still have a place in certain types of businesses. For example, in B2C environments or small B2B deals (such as workshops or standardized services), commission-based models can work well. In these situations, the outcome is often clear from the start, and the expectations are straightforward.
However, this model does not work well in more complex B2B environments. When the sales process involves multiple decision-makers, long sales cycles, and customized solutions, a more strategic approach is needed. In these cases, it’s essential to have salespeople who are invested in the long-term success of the client, rather than just closing the deal.
Our Approach to Sales
At our agency, we’ve decided to use commission-based salespeople, but only in standardized processes where the outcome and expectations are clear from the beginning. This approach works well in scenarios where the product or service is straightforward, and the sales cycle is relatively short.
For more complex sales environments, we rely on a different model. Our salespeople are compensated based on a combination of factors, including project success and customer satisfaction. This ensures that they are not just focused on closing deals but are also invested in the long-term success of the client.
We believe that client happiness and customer recommendations should be the ultimate score for any sales organization. Whether you’re a SaaS company or a sales agency, keeping your churn rate low and building a strong reputation is the key to long-term success. If you rely solely on commission-based salespeople who are only motivated by financial gain, you risk burning bridges and losing valuable clients.
Conclusion: Building a Sustainable Sales Organization
The freelance closer trend may seem like a cost-effective solution for businesses looking to scale their sales efforts. However, it comes with significant risks, especially when used in complex sales environments. Commission-based closers, driven solely by financial rewards, may not always act in the best interest of the client or the company.
To build a sustainable sales organization, businesses need to focus on more than just closing deals. They need to establish a sales structure that rewards long-term success and client satisfaction. By incorporating metrics like the Net Promoter Score and customer happiness into their sales strategy, businesses can ensure that their salespeople are motivated not just by financial gain but by the overall success of the client and the company.
In the end, a balanced approach that combines financial rewards with a focus on customer satisfaction is the key to building a successful and sustainable sales organization.
Whether you’re operating in B2C or B2B, keeping your customers happy and ensuring they recommend your services to others should be your ultimate goal.
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