[tptacek]

These are real concerns but they just aren't the common case in sales. In the common case, selling someone $50,000 of licenses is a $50,000 win for the company.

Moreover, most sales account managers are intrinsically motivated to set things up for the 20x sale, because they're likely to own the account when the 20x home run comes in.

Most sales teams have spiffs set up to account for the "real estate agent" problem where short-term deal flow trumps revenue maximization.

I agree that managing a direct sales team is a hard problem, but in terms of designing an incentive comp plan, it's hard to argue that it isn't easier than doing incentive comp for developers.

[teaspoon]

In the common case, selling someone $50,000 of licenses is a $50,000 win for the company.

That actually sounds like a very uncommon case. Even fully client-side software has variable costs in the form of support costs.

Support costs aren't relevant to your parent's example, but they do imply another misalignment of incentives. If a salesperson's commission is based on revenue alone, she'll just as soon sell to a costly, high-maintenance customer as to a profitable, low-maintenance one.

[tptacek]

This is also a wrinkle that comes up managing sales organizations, which is why sales account managers often get different comp rates for different products.

Again, just two issues I have here:

(1) Dev incentive comp and sales incentive comp aren't particularly comparable.

(2) Huge compensation for the best sales managers is an economic reality, not a philosophical issue, and if you're not going to compensate variably, you're shifting a lot of risk from the sales manager back onto the company.