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Simple Math to Set Up a Sales Team

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Re: Simple Math to Set Up a Sales Team

#41

Post by motohagiography »

dhimes wrote: post #31
motohagiography wrote: post #25

Great article. This has real implications for SaaS pricing. e.g. If your market is SMBs, your JR AE sales person costs ~$50k/y with a reasonable expectation of selling 10x their salary in ARR, your pricing needs to be proportional to the number of customers in the top of your funnel / sales salary. It seems obvious, but often we think about price from a user and individual work perspective, with no sense of why it's…

Guessing a bit here— correct me if I'm wrong. This jargon is utterly foreign to me: SMB = Small to mid-sized business (not server message block) JR = Junior rep? Jr? AE = Account executive ARR = Annual recurring revenue

No need to guess, they're in the table in the article.

The question I have is whether it makes sense to add a team commission variable where instead of just Geos, Verticals or Round Robin, there is a ~%5 redistribution of the sales commissions to provide a co-operation incentive for assists. In a strictly competitive team, assisting on another sale comes with an opportunity cost against your own quota and commissions, where if you are going to get a few points for keeping your eye on the aggregate number it adjusts the incentives.

I once turned down the opportunity to move into a sales eng role because sales engineers didn't get a commission cut and it seemed like a dumb deal.

In general, do sales eng's get sales commissions in your companies?

Re: Simple Math to Set Up a Sales Team

#42

Post by nimbix »

The standard rate might be at 10%, but from my experience it still varieas a lot. I know of two B2B companies that deviate a lot:

* Company A has a product that practically sells itself - it has been joked that sellers are "just accepting orders" from prospective clients. At that company the commision rate is just 4% (used to be 8%). Most sellers are fine with that because it's easy money.

* Company B is not having such an easy time selling their product - at that company the commision rate is a whopping 30%.

While it's great to have some ballpark figures, you also need to realize that you may need to (or be able to) pay your sellers al lot more/less, depending on your specific situation.

Re: Simple Math to Set Up a Sales Team

#43

Post by TacoToni »

As someone who works in Sales Commissions this was a great read. We do things quite differently such as yearly targets vs quarterly. These suggestions are great and straightforward to calculate until you have a large sales team. I wonder how many companies use a system to calc commissions vs using excel. We personally use excel and it can be daunting at times, but allows for more plan flexibility.

Re: Simple Math to Set Up a Sales Team

#44

Post by hobs »

raiyu wrote: post #7
npsomaratna wrote: post #5

Earlier quoted context omitted.

Question: how do you guys structure this at DO?

Don’t get me wrong I get that many companies do this and it’s the industry norm when it comes to enterprise sales but on average I think the incentive structure leads to a number of issues and sure there can be stand out sales folks that aren’t selling but really aligning with the customer, but can’t go based on exceptions, have to look at the average sales person to see what kind of an individual that incentive stru…

Be careful - I have seen many companies think this is the way and what happens is they lose all the dedicated customer support peeps because the "sales-y" customer reps schmooze with clients instead of solving problems; and frankly some clients love that.

Then you start seeing sales goals for the account managers, and a year later the entire team that used to be helping customers is really spending most of their time trying to upsell them on things they barely need - because its what their bosses bonus is based on.

Re: Simple Math to Set Up a Sales Team

#45

Post by costcopizza »

raiyu wrote: post #2

I know from a mathematical perspective this works in order to ensure that the company can be profitable at some point but a part of me wonders if it’s really necessary. I’ve never had a positive interaction with a sales person. But I’ve had countless positive interactions with customer support reps. One is over paid, the other under paid. If companies just created a sales team from their highest performing customer s…

How?

I've done both. The reason people are in support is because it's a fundamentally different role.

I don't have to try and push a single damn thing on anyone. It's the opposite, you are on the receiving end of the problem. Every interaction I have is because of a need, I don't have to try and create said need or make a prospect think there is even a need.

Re: Simple Math to Set Up a Sales Team

#46

Post by specialist »

raiyu wrote: post #2

I know from a mathematical perspective this works in order to ensure that the company can be profitable at some point but a part of me wonders if it’s really necessary. I’ve never had a positive interaction with a sales person. But I’ve had countless positive interactions with customer support reps. One is over paid, the other under paid. If companies just created a sales team from their highest performing customer s…

Once you work with a talented sales, marketing, project manager, QA/Test, tech writer, graphics designer...

It's hard to stomach the wannabes. But I imagine they all think the same of us programmers. Sturgeon's Law takes no prisoners.

> countless positive interactions with customer support reps.

Count me interested. Please share any wisdom.

I've also wondered about fair compensation for CSRs. Early in my career, I did some "sales engineer" tasks, definitely played big (sometimes biggest) role in closing deals, but never got any of the cheddar, which sucked. Mid career, I managed some mature products where most revenue could be attributed to tech supp; our sales driven org had no cheddar for the tech supp dept, which begat a lot of resentment.

Re: Simple Math to Set Up a Sales Team

#47

Post by cletus »

This is a great article. I'm an engineer and not in sales. I know from experience that areas other than my own have developed frameworks and ways of thinking about things to solve their particular problem. In a pretty short and information dense article I feel like I at least have an inkling of the _language_ used in (SaaS) sales.

Re: Simple Math to Set Up a Sales Team

#48

Post by boringg »

Do sales ever get incentivized with equity? Couldn't that be a good long-term arrangement? Incentivize the original sale and over time as the client remains on platform unlock stock - make sure there is continuity with client. I recognize that is a different model and the inbound sales team hands off the client internally.

Re: Simple Math to Set Up a Sales Team

#49

Post by Natsu »

raiyu wrote: post #7
npsomaratna wrote: post #5

Earlier quoted context omitted.

Question: how do you guys structure this at DO?

Don’t get me wrong I get that many companies do this and it’s the industry norm when it comes to enterprise sales but on average I think the incentive structure leads to a number of issues and sure there can be stand out sales folks that aren’t selling but really aligning with the customer, but can’t go based on exceptions, have to look at the average sales person to see what kind of an individual that incentive stru…

It's hard for a CSR to qualify a lead, though. I mean, a CSR may identify some obvious need, but will only be in contact with the techs at the target company, not the decision makers. And they won't understand the customer's budget, so they may not realize that there's no budget for the customer to get what they actually need.

The sales guys tend to understand that structure a lot better, so they can qualify the leads from support and perhaps package that advice for the people who need to hear it if it's funneled to them appropriately.

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