The Dark Side Of Sales

There’s a famous quote from Charlie Munger, which sums up in ~10 words how to best drive behavior in humans:

A quote that’s been referenced too many times to count, but time and time again is true.

This is particularly true for sales, and I was inspired to write my own take on David Sack’s article, “The Dark Side of Sales,” and comment on it based on my own experience.

While the right compensation plan drives the right behaviors, it can also lead to bad actors and unintended consequences, resulting in a sales team that goes from being a startups’ biggest asset to their company’s biggest liability - which can at best cause churn problems and at worst damage a company’s brand so bad it becomes hard to recover from.

Below are the 10 unintended consequences of a mis-aligned sales comp plan he lays out, with my own narrative on how I’ve seen this play out in real life:

1. Over-selling 

David’s Take: Sales reps will sell anything to make quota, whether the company can actually deliver it or not, leading to over-promised capabilities and disappointed customers who eventually churn.

100% - this is the big one.

I’ve seen this at organizations where I’ve worked, where the rep closes the deal and then passes the customer off to customer success like hot potato, sometimes saying, “this isn’t my problem anymore.”

This leads to unhappy customers, bloated shelfware, and overly coin-operated, selfish rep behaviors.

A way to combat this is to have a component of the deal that is incentivized if they renew in year 1 and are using the product. I love what Jeanne did @ Stripe here, where a lot of the variable comp came in the year after the initial DocuSign was signed.

Some reps will balk at this, but thankfully, the world is moving toward usage-based pricing to mitigate this risk, which helps to make overselling a thing of the past.

2. "Drive By" Reps 

David’s Take: Sales reps burn bridges with prospects who say "no" instead of nurturing long-term relationships, torching potential future customers because they can't help with the current quarter's quota.

Another one, too true, it hurts. Particularly for my time at SFDC, where I spent almost 5 years of my career.

I’ve seen this happen most often at publicly traded companies, where they've quarterly or yearly targets that they need to meet to look good to Wall Street.

It means that sales leadership at these companies is pushing their reps, who might be moving off these accounts shortly, to promote month/year-end discounting aggressively.

(I am constantly sent screenshots by my network showing these cringey emails from reps at large companies with language that looks like what you’d see on a used car lot)

This is why I advise people to join GTM teams with modern leadership, because this sort of selling should be a thing of the past.

3. Poor Customer Handoffs 

David’s Take: Sales reps immediately forget about customers after closing deals, leading to poor handoffs to Customer Success teams and increased churn risk.

Overlaps with point #1, but important to hit home.

Once a rep closes a deal, and they aren’t incentivized to continue to work with them - it leads to bad behavior post-sale. They don’t care to fill out a handoff doc, they don’t help facilitate the intros, etc.

I literally had an AE I work with say, “My job is to sell the deal, after that, my job is done.”

It’s quotes like that that make us look bad. True pirates/builders at startups rarely say “it’s not my job” - but you see this at the larger companies that have coin-operated reps.

Way to combat this IMO is to make sure customer success is brought into the deal before it closes so there’s a more seamless handoff, but then also hold back some commission until it’s actually implemented.

4. Conditional Revenue 

David’s Take: Sales teams count "deals" that only generate revenue if certain conditions are met or allow easy cancellation, claiming them for quota credit when they shouldn't count toward ARR.

I haven’t seen this to be too much of an issue at most companies, as a solid deal desk process/team mitigates this (which sits in the middle of finance/accounting, leadership, and sales).

Easy cancellation should be a feature, though, not a bug - if people are consistently asking to cancel, you have a product problem rather than a sales comp/contract language problem.

5. Statements of Work 

David’s Take: Sales reps promise specific features to close deals, hijacking the product roadmap and turning the company into a consulting shop solving individual problems instead of building for everyone.

Another one I have PTSD for.

There’s a balance between selling the roadmap to win a future deal and promising custom development work that will lead to features applicable only to one customer (and thus cannot be productized).

Work that can’t be productized is an issue because you become an agency rather than a software company.

The whole point of why software is amazing from a return perspective is the set-it-and-forget-it aspect: a product is built for one customer and can be turned on for others.

When you become too much of a custom dev shop, this pulls product/engineering away from repeatable revenue and makes the company less valuable overall in a lot of cases (and less innovative/nimble).

This is why so many people join PLG companies, so de-risk this as much as possible.

6. Contractual Liability 

David’s Take: Sales reps sacrifice deal terms and "give away the store" in contract negotiations to hit quota, since incentive plans focus on quotas but not deal terms.

Another one that doesn’t happen in real practice, from what I’ve seen, is that startups, up until Series B, typically have fractional or contract legal help review deals and redlines until they hire someone full-time.

However, it’s smart as a sales person to try to get as creative as you can to close a deal - redlines are part of that negotiation and you have to work with your champion to make sure you’re easing the blow when certain redlines don’t go their team’s way (driven by their legal teams).

7. Metrics Creep 

David’s Take: Sales teams try to change success metrics mid-quarter when struggling, suggesting new "more accurate" metrics that conveniently make them look successful.

One I’m less familiar with in the way David describes it, but I have seen this in a different lens.

Where you have BDR/SDR teams compensated based on whether an opportunity moves to a certain stage or not.

This can be gamed by having a good relationship with their AE

Still comes back to making sure “what gets metric’d, gets managed.” You want it so quotas are attainable but just challenging enough to hit without gaming any system.

8. Regulatory Compliance Failures 

David’s Take: Sales reps view legal compliance as unrewarded busy work and ignore it to focus on commissioned activities, putting the company at regulatory risk.

Another one I haven’t seen, as it’s usually enforced to have a legal representative looking over deal terms and this thwarts that risk.

9. Toxic Sales Culture 

David’s Take: A VP of Sales focused only on "hitting the number at any cost" creates a culture where the entire team prioritizes short-term results over quality and compliance.

Totally agree - it’s why you want to join modern GTM leaders that aren’t toxic, are high IQ/EQ, and don’t come off sleazy.

I made this a whole point (#8) in “11 traits that make a sales job desirable"

Make sure you’re vetting your boss and that they’re not a tyrant.

Also, make sure you’re not working for leadership who doesn’t respect sales. If they don’t, they’ll put unfair pressure on the VP of sales which will exacerbate this sort of short-term behavior.

10. Sales-only CEOs 

David’s Take: Founder-CEOs with sales backgrounds prioritize growth at any cost while dismissing compliance concerns as "antagonistic" and viewing audits/legal work as obstacles.

I’ve actually seen this flipped, where most founders are eng-background CEOs and don’t understand how hard sales is (or doesn’t value it). This causes a lot of other issues that were discussed in #9.

I’ve seen it to be the case where sales background CEOs “get it” and create a great environment for sellers (and the company) and have their foot on the gas - it’s probably best to work for a company that has the balance of both: a respect for sales along with shipping product fast based on market feedback.

Thanks for reading another post of GTMBA!

🫡 Chris