Interview: Ryan Ing on Fractional Sales Compensation

Ryan Ing is a Fractional Head of Sales for B2B SaaS / Agency Offerings. He has previously worked at IBM, Oracle, Shopify, a startup turned unicorn, and another startup as the founding GTM hire. He works with clients on both a monthly retainer model, and a commissioned model.

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I sat down with Ryan for a quick chat about how compensation and commission works for Fractional Sales Leaders. Most fractional roles get paid on a monthly retainer or hourly rate. However, Sales is different. I learned a lot from Ryan here. Let’s dive in!

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How is hiring a Fractional Sales Leader different from other Fractional roles?

The main difference is that in B2B sales, you often have to “sell yourself”, not just the product you represent. In order to do that, you have to rebrand your LinkedIn, and represent yourself as an expert on that product. This is especially true with a high ticket offering since it requires a lot of trust. Customers are not only buying the offering, but that the salesperson will guarantee the success that they are promised.

This is why sales is often the last function that an agency outsources. It’s difficult to have someone doing it part-time. Founder-led Sales is very effective up to $1M ARR.

To work around that problem, most Fractional Sales Leaders limit their engagement to a couple types. 

• Advising or coaching the Founder/CEO on founder-led sales
• Advising or coaching the Founder/CEO on how to hire their first salesperson to replace them
• Filling in Fractionally for one part of the sales cycle. For example, the Fractional Sales Rep is just in charge of lead generation (e.g. reaching out to book meetings with prospects), but the Founder handles selling.

This diagram illustrates a successful transition to first sales hire

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So is your advice to other Fractional Sales Leaders to focus on these other engagement types, or can there be success with a more traditional Sales Leadership role just done fractionally? (E.g. if you’re managing a team of salespeople doing the actual selling.)

I would stick with one of these three engagement types. I don’t think it can be done in another way.

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What’s the high-level overview of how Sales leaders should think about compensation (both base and/or commission) for a fractional engagement?

Commission is not really fair unless you have a repeatable sales model. Paying a higher base % makes more sense. So I’d say if you can prove to the Sales Rep that the product is easy to sell and earn commissions, do a 50/50 split between base and commission.

If it is going to take a lot of pre-work to sell e.g. building out the pitch deck, reaching out to clients, etc. then I think a 80/20 split or even a non-commissioned compensation package makes sense.

Early in my career I worked selling home security door-to-door on a 100% commission basis. The only reason that was fair is because my manager literally allowed me to shadow him for 1hr during my second round interview, and I watched him close a deal from prospect to close. Literally knocked on 10 doors, 1 person was interested, went through the whole pitch and closed. They clearly had a repeatable sales model, I just had to follow it to earn my commission.

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How is this different from compensation for a full-time role? Or is it exactly the same?

It’s pretty much the same. Only difference is that for a full-time role you should update your LinkedIn to represent the company you’re selling for, rather than being fractional.

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Can you give me an example or two of a compensation structure you’ve agreed on with a client of yours? Feel free to be as transparent with numbers as you’re comfortable with.

Example #1

I had a small consulting engagement with a client, and they offered me a full-time job. Since I’m working fractional with many clients, I told them that I’m not available for that type of work, however I want to help them continue to grow, as I am very confident in the product offering. They had 50% margins and their deal sizes were $30K+, so there would be fair commissions to go around upon a successful sale. I realized I would make more from commissions than from a base salary of selling this product, so I actually offered to do it 100% commission, but with some extremely strict qualifications and criteria written into a contract.

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Example #2

Another client I worked with did not have product market fit so I worked with him on a monthly retainer between ($5k-$10k/month) to get him clients on calls and do as much discovery as possible.

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It sounds like to arrive at the right commission structure requires the product to be mature enough that you’re confident it will sell. Then, there’s the negotiation of what the exact split will be. If you’re a company looking to hire a Fractional Sales Leader with commission as part of comp, what is the best way for them to communicate all of this in e.g. a Job Description so as to attract the right candidates? In other words, what would a candidate like yourself be looking for to know that the comp is going to be worth your time?

This diagram below illustrates the right time for your First Sales Hire.

In the job description - I would focus on sharing traction related metrics.

What is the average deal size and LTV?

What is your churn rate?

What is your margin?

How many customers do you have? Etc.

For example, imagine a deal is $3K MRR or $36K ARR with 80% margins, that leaves about $28K in profit per client. Giving a salesperson 20%-30% of that is not going to hurt your CAC. For any subscription product, retention is key though. I wouldn’t want to work on a product where clients churn after 1-2 months, it means they don’t have product market fit or they are overpromising on their capabilities.

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What have I not asked about that I should have?

I love chatting about this founder-led sales topic, because I’m a sales nerd! I love talking strategy and happy to give free advice to any founders. Feel free to DM me on LinkedIn if you want to chat.

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If you’re interested in hiring a fractional Sales Leader, you can check us out at https://fractionaljobs.io. We can introduce you to a handful of pre-vetted fractionals that match your company's needs.