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Spoke with a salesperson who sold into non-SaaS solutions for his first 8 years and decided to make the jump to SaaS a few months ago. He immediately knew it was the wrong decision and is now working to correct his mistake.

The backstory:

He graduated from college with a finance degree and thought banking was his calling. He spent his first ~3 years at PNC Bank, first in Branch Sales, and then as a Financial Services Consultant.

And one day, he received a cold call from a recruiter who worked for one of the largest contract staffing companies in the country. He never considered recruiting (nor really knew what it was) but was intrigued by the earning potential and ability to be an early employee at a newly opened branch,

He told me “Everyone stumbles into recruiting & staffing without looking for it.”

He jumped in with both feet in 2019 (the exact same time that I personally started my recruiting career!)

Quick time out to review the contract staffing industry:

Contract staffing agencies help clients hire temporary workers for a defined period of time, typically to fulfill specific projects, seasonal demands, and/or short-term needs. The industries that require temporary workers include healthcare & IT.

Almost all contract staffing firms have a “split desk” system which means there are recruiters hunting for new hiring managers to work with and recruiters who take the “job requisitions” and find candidates to fill those jobs.

Recruiters that specialize in “permanent” (full-time) placements typically get paid only once (their fee is often a percentage of the annual base salary for the candidate they placed, roughly 15-30%). But with contract staffing, recruiters earn money every hour that a contractor is working!

The amount they earn is based on the “spread” which is the difference between what the staffing firm pays the contractor and what their client pays them. Here’s an example:

• A client is willing to pay $100/hr for a contractor
• The recruiter finds someone to take the job for $60/hr
• The company earns $40 in profit/hour (minus the burden = taxes, benefits, etc.)
• If the burden is $12/hr, the company ultimately earns $28 for every hour the contractor works
• Do the math…every 40 hours the company earns $1,120…every month they earn $4,480.

It’s not hard to see how lucrative this can be, especially for recruiters who start to stack lots of contractors simultaneously across many clients.

Back to our story:

So this salesperson jumps into contract recruiting in 2019 and earns a $45k salary. Yr 1, with commission, he took home $80k.

(And remember - he’s solely finding clients and has a team around him placing the candidates).

Yr 2 earnings jumped to $120k which came with a promotion to Senior AE. 

Here’s where the story gets interesting…

Yr 3 earnings jumped to $200k, Yr 4 increased to $250k, and Yr 5 was just shy of $300k.

He was earning SaaS Enterprise AE money with an $80k base (25% on salary, 75% on commission).

One thing to note is most contract staffing firms are fairly old school and subscribe to conventional KPI & metrics (high activity = $$$)

His goals were to have conversations with 12 hiring managers per month (3/week) who were not yet in their CRM.

They don’t need to have a hiring need NOW…but…he had to have discovery calls with them.

He subscribed to their mentality and crushed goals throughout his tenure by building, nurturing, and maintaining relationships with hiring managers.

The ugly side of staffing agencies:

This career isn’t for the faint-hearted & they have a high attrition rate.

This salesperson described this typical scenario:

Hire 20 “green” reps who are new to the industry (many are right out of college) knowing that 15 likely won’t make it in 12-months.

But of the 5 that do make it, spend all your time with them to ensure they become strong producers.

His transition to SaaS:

He decided to get into tech and transitioned into a Series A startup as one of their first BDR’s and immediately knew it was the wrong fit for him due to:

• No outbound strategy: They’re asking him to figure it out. He knows the staffing outbound strategy well but knows that isn’t the right motion for this business
• Very transactional: He’s in charge of a very small piece of the sales process after building a very successful career as a full-cycle salesperson (this is a skill & interest mismatch)
• Boring product: It just doesn’t get him excited!

And now…he’s looking to get back into a service business. Lesson learned.

With his attitude and determination, I know he’s going to find the right fit (and will get back to his winning ways!)