Show Me the Money: Sales Compensation

Developing a sales compensation plan is more art than science.  In working with early stage companies I have developed a few rules of thumb about how do to develop a plan that takes a company from its initial, founder driven sales, to a scalable process.

Keep it Simple

Your sales team should be able to calculate their commissions in their heads while driving to work.  Complicated plans are discouraging, especially show when they fail to generate real payouts.

Be Generous

This is an obvious point but one that is lost on some senior executives.  Nothing motivates a sales person more than seeing his buddies receive generous commission checks and nothing is more of a buzz kill than the realization that the big deal he has just closed isn’t going to generate much coin.

Be Realistic

Making an early stage, enterprise sale is expensive.  I am amazed by how often otherwise savvy and sensible company leaders think that they can hoodwink their sales team into generating sales while squeezing them – on base or commissions – in the process.

Accelerators and Quotas are Not That Useful

At least, not in the early stage environment.  Accelerators work best in sales environments where the sales cycle, target vertical and product are all proven and repeatable.  This rarely applies with early stage companies: your sales team are making one-time, heroic missionary sales, not thinking about how to tweak their pipeline to exceed their quota and score big time.

Be Fair

Divvying up opportunities, sharing leads and allocating credit often require compromise.  Making those compromises in an open and fair fashion will pay off in spades – your sales team will read this and react accordingly.  Conversely,  sales people can smell a rat a mile away: if you treat them poorly or in an arbitrary fashion, demoralization will set in and be difficult to reverse.

Your Sales Team Cannot Sell the Way You Do

You are a founder, a visionary.  You have fire in your belly and can redesign your offering on the fly to meet the needs of a key prospect.  Your sales team can be keen and committed but they will not be able to match your passion; this is first and foremost a job for them, not their baby.

Comments

  1. Ys, it i a job for them.So, it needs all your motivational skills to make them know that you are the only great employer that ever lived.

  2. Dan Perlow says:

    I remember Corrigo was just starting their inside sales group and Keith Borgman informed me that my quota was 500K. Since this was a brand new group, I asked him how they determined that figure. No lie, he actually said, “we made it up.” Oh, ok.

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