I was catching up on my older sales podcasts recently and came across this August Podcast with Andy Paul and Brendan McAdams about how we might have already started seeing a movement towards sellers acting as independent consultants. The general gist was that top sellers might be better served as 1099-based free agents both in terms of maximizing their income and improving their work/life balance. The implication was that this movement had already started.
Frankly, I don’t see this trend happening yet except on the fringes (more on that below) and I thought there were a few key missing perspectives in their analysis…
1. The perspective of the client- who they want to sell to them and how they want to be sold.
2. The perspective of the average rep– not the extreme case of the massive overperformer
3. The perspective of the hiring firm
Let’s start with the perspective of the hiring firm.
The last 12 years have seen a move toward the stratified sales organization with clear lines between SDRs, Sales and Account Management. There has been some embracing of outsourced sales organizations as a supplement to employees but typically they are focused on top of the funnel lead generation. Occasionally you will see a lone 1099 seller but generally, I find that they are either in a specialist function (eg channel sales) or focused on a test vertical market. Those roles generally coincide with a stage of the firm where they don’t know if they want to commit to that position yet and hence they seek contractors to minimize their risk.
With VC-backed firms, I don’t see any wavering yet on the build-up-our-own-team approach where they take on the overhead of creating a dedicated sales organization for their own product set and their own sales culture. With massively successful VC-backed firms, this approach makes complete sense in hindsight – with less successful firms, the naval-gazing tends not to happen as they blindly try and replicate what successful firms have done. The reality though is that there is massive overhead in hiring, training and constantly rightsizing your sales team and without economies of scale and full information on the sellers, they are destined to make many costly sales mistakes- especially with mis-hires.
I, therefore, see that there is good reason that VCs will hedge their bets a bit between their super successful firms and their mid-range performers and drive some movement towards outsourcing but I don’t see it manifesting itself in the form of an army of independent 1099 sellers. Firstly I don’t think the sellers want their fortunes tied to a single VC-backed firm as a contractor. Secondly, I don’t see this as being practical for an individual VC-backed firm to manage from an overhead and performance tracking perspective.
So how will it happen?
I think it will start to make sense for early, VC backed and growth-stage firms to take advantage of collectives of sellers – groups that range from loose to tight affiliations around functions (hunters, farmers, channel sellers, and managers thereof), stage of the firm, industry and vertical orientation. These collectives may even be loosely or strongly affiliated with a VC. In order for you, as a seller, to join one or multiple of these entities, you will need to be vetted with a heavy reliance on peer review with all members focused on getting the best talent in place.
You already see this starting at the fringes with fractional CRO firms or fractional Channel sales organizations (eg Partnerready)
What about the end customer? How do they want to be sold to?
I have heard little about how clients are going to react to the potential of being sold by consultants (full or part-time or even manufacturers’ reps selling multiple products). As much as we think it might suit some sellers to go the 1099 route, what do the clients want? The last 12 years have seen buyers adapt to the SDR to Sales to Account Management handoff with individual firms they work with. The lack of consistency of a single relationship across those stages has definitely been a source of frustration but perhaps the thing that outweighs this is the volume of noise that comes from having a massive proliferation of niche VC-backed firms, each with their drip campaigns, hitting buyers up constantly via Linkedin Sales Navigator, email and SMS. If there is a compelling event to move to a different model, it might be consolidating multiple niche vendors pitches in one under a trusted Manufacturers’ rep model – where one client-trusted rep represents multiple complementary firms targeting at a particular function in a client.
These reps can also act as a buffer for the insiders who now don’t have to repeat answers around org structure, tech stack and deal-specific context answers to every rep that crosses their threshold. The efficiency of process will be the key driver for the client.
And finally…what about the rep….?
I don’t think we have remotely hit the tipping point where it makes sense for even top sellers to split from the safety and sanctity of one firm paying their commission and health insurance. Yes, the Commission plan gets worse for the rep every year with every b2b sales organization but often that is counteracted by a comfort level with the product and the firm and an ability to work politics and trust in their steady hands to their advantage in the form of account assignments. There is currently no compelling event in moving to a truly independent role with zero employee protection, no stock options upside, the daunting prospect of having to find the next gig regularly (and the potential downtime between gigs) and the overhead of negotiating every new gig – not to mention multiple gigs if the rep is trying to do the manufacturers rep model.
For now, I only see this happening at the fringes…
A) the cases outlined above – niche functional-specific roles or temporary test-the-market type of roles
B) those reps that don’t have a choice but to take such a role because they are compromised in some way – oftentimes sullied by one-too-many short stints or reps at the tail end of their selling career – sometimes the victims of age-ism.
C) those reps that are truly entrepreneurial and start their own small sales consultancy. Typically I see such people take on 3-4 clients with a 5-10k retainer per month and a 10% plus commission rate. I rarely see them scale more than just themselves and they do get stressed with keeping their client pipeline full. Generally, they have a working spouse or partner so they can more afford the risk of going alone.
I am interested in your thoughts on where this is going also as I obviously want to be ahead of the curve for when the hiring models shift and us recruiters need to adapt to more fractional needs for both clients and Saas sales candidates alike. Please comment bleow
So what will make it compelling for a mass movement of sellers to start to look at contracting instead?
1. Safety in numbers – this will be achieved by the formation of the collectives outlined above where there are shared overheads around billing, time management, vendor vetting (in the case of manufacturer rep models) , standardized contracts and, most importantly, a critical mass of focused talent to attract leads for the collective.
2. Premium compensation – well over and above current comp plus the overhead of benefits and potential downtime
3. An independent way to judge their performance across multiple firms and bosses weighted by the time spent at each gig. This is no easy feat. resumes will need to be multi-dimensional and there will be some type of credit-score needed that sellers can carry with them – both to set themselves apart from others and as credentials for joining collectives.
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