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Just another practical sales rep comp plan

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Re: Just another practical sales rep comp plan

#21

Post by tiffanyh »

DEF14A wrote: post #18

I'm a rep at a big SaaS firm - no one says "OTC", whatever that is. It's OTE. Also, literally no sales org would ever weight an AE's comp more towards base and a VP's comp more towards variable - everyone is on a 50/50 split, and if anything the VP would have more guaranteed comp. No discussion of RSUs or options? Furthermore, I have never in my life seen a plan that withholds the final quintile of variable comp - th…

Agreed on all points.

> I have never in my life seen a plan that withholds the final quintile of variable comp

They might be on a draw. Otherwise, agreed - highly unusual.

Re: Just another practical sales rep comp plan

#22

Post by CPLX »

neilv wrote: post #12

Why do sales positions tend to have performance-based compensation when many other roles in the same company are flat salary? Is it simply because the metrics are so obvious (i.e., attribute sales to the salesperson's individual performance), that it's easy compared to other roles? Is it because sales work is so close to revenue numbers, that more thought has been given to compensation, or it's thought of differently…

Lots of answers already but the short answer is that sales sucks and people don’t do it without direct and immediate incentives.

So if you want sales you create those incentives.

Re: Just another practical sales rep comp plan

#23

Post by 0xB31B1B »

Lots of folks in this thread talking about how this comp plan is BS/poorly structured. I don’t disagree, but IMO this is a result of salary/comp deflation in tech. We’re going to see more of these types of plans as companies try to pay reps 30% less while appearing to keep comp the same.

Re: Just another practical sales rep comp plan

#24

Post by [deleted] »

0xB31B1B wrote: post #23

Lots of folks in this thread talking about how this comp plan is BS/poorly structured. I don’t disagree, but IMO this is a result of salary/comp deflation in tech. We’re going to see more of these types of plans as companies try to pay reps 30% less while appearing to keep comp the same.

[deleted]

Re: Just another practical sales rep comp plan

#25

Post by xyst »

Build a product that sells itself and thus there is no need to have a compensation plan, sales people, a VP of sales, and a sales organization.

Reinvest the millions of dollars per month in sales org and reinvest in engineering.

Re: Just another practical sales rep comp plan

#26

Post by kingkongjaffa »

xyst wrote: post #25

Build a product that sells itself and thus there is no need to have a compensation plan, sales people, a VP of sales, and a sales organization. Reinvest the millions of dollars per month in sales org and reinvest in engineering.

> Build a product that sells itself

This is such an insane naive take, that it's actually surprising to see it posted here.

We're on a VentureCapital backed message board dedicated to startup, company growth, obsessed with valuations and $$$MONEY$$$, and one of the users thinks this is remotely true.

Companies are not built on technical merit alone. The perfect product and perfect product market fit, with 0 sales or marketing message is going nowhere.

If you have no connection to your customers, your understanding of their pain points will be 0, your relationships with them will be 0, their trust in you as a group of people will be 0.

Are there examples of it? maybe a rapid consumer growth where your 'sales force' is word of mouth among customers, then maybe it can happen, don't bank on your company being able to do that though.

And in B2B it's an entirely different game, no amount of viral word of mouth is going to make decision makers jump to the competition, those switching/churns are won through hard pitches and a coherent product and sales strategy.

Re: Just another practical sales rep comp plan

#27

Post by kqr »

neilv wrote: post #12

Why do sales positions tend to have performance-based compensation when many other roles in the same company are flat salary? Is it simply because the metrics are so obvious (i.e., attribute sales to the salesperson's individual performance), that it's easy compared to other roles? Is it because sales work is so close to revenue numbers, that more thought has been given to compensation, or it's thought of differently…

I also think this is weird. These sorts of compensation schemes incentivise short-term revenue at the expense of making the sales that are good for the organisation long term. They encourage an "always be closing" mindset that leads to signing customers that take the organisation on a bad trajectory.

But when I asked an actually really good[1] salesperson about this, they said that it's simply that you can't hire good salespeople on flat compensation because the good ones don't want to subsidise the pay of the less good ones.

So essentially you have to choose between variable comp, which increases the likelihood of short-term focused sales, or fixed comp, which takes to near zero the likelihood of long-term focused sales. Both are bad!

----

[1]: By "good" in this case I don't mean "closes a lot of revenue" but "picks customers that are good for the future of the organisation" (and also happens to close a lot of revenue but that's secondary.)

Re: Just another practical sales rep comp plan

#28

Post by julienreszka »

kingkongjaffa wrote: post #26
xyst wrote: post #25

Build a product that sells itself and thus there is no need to have a compensation plan, sales people, a VP of sales, and a sales organization. Reinvest the millions of dollars per month in sales org and reinvest in engineering.

> Build a product that sells itself This is such an insane naive take, that it's actually surprising to see it posted here. We're on a VentureCapital backed message board dedicated to startup, company growth, obsessed with valuations and $$$MONEY$$$, and one of the users thinks this is remotely true. Companies are not built on technical merit alone. The perfect product and perfect product market fit, with 0 sales or…

It's not insane nor naive.

Re: Just another practical sales rep comp plan

#29

Post by willcipriano »

neilv wrote: post #12

Why do sales positions tend to have performance-based compensation when many other roles in the same company are flat salary? Is it simply because the metrics are so obvious (i.e., attribute sales to the salesperson's individual performance), that it's easy compared to other roles? Is it because sales work is so close to revenue numbers, that more thought has been given to compensation, or it's thought of differently…

Class consciousness. Sales guys are in the same caste as the professional managerial class so they get a better deal.

Re: Just another practical sales rep comp plan

#30

Post by jamesdhutton »

As others here have noted, the challenge with paying salespeople to close the deal is that you create perverse incentives. In enterprise software sales, the salesperson has every incentive to make impossible-to-keep promises about what the software can do. After closing the deal, the salesperson hands over to an implementation team, who try and fail to make the software do what the salesperson promised it would. The result is a failed implementation and an unhappy customer. I have often thought it would make sense to pay salespeople for a successful implementation of software, not just for the initial sale. I’ve never seen that done though. Would be curious to hear if anyone has successfully dealt with this challenge.
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