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The Right Way To Use Compensation.pptx
- 1. SPOTLIGHT: Inspire Your Salesforce Presented by Gayatri Awagan
- 2. THE CHALLENGE THE PRESCRIPTION THE RESULT
- 3. ● HubSpot’s first compensation plan was oriented toward “hunting” new customers ● The first plan paid salespeople a base salary and $2 up front for every $1 of monthly recurring revenue ● To protect the company if customers defected, they implemented a four-month clawback on commissions ● This plan was simple, clean, and hunting oriented ● It worked well to accelerate the pace of new customer acquisition ● In under six months their base shot up to 1,000 customers, and revenue hit $3 million.
- 4. Analyse Product market fit ● Unsustainable churn Rate Solution : Fast feedback cycle, proper diagnosis of the issue and quick disciplined iteration are necessary at this stage Customer Retention ● Customer churn rate by Salesperson Customer retention was predicted based on type of customer salesperson choose to target and expectation set Compensation Plan ● Align retention with commission Ranking sales team based on retention rate and then segment the team in quartile. Compensation is based on monthly recurring revenue generated. 1st quartile : Doubling the compensation 2nd quartile : Increase by 50% compensation 3rd quartile : Same compensation 4th quartile : Half the compensation
- 5. Recurring Revenue Salespeople would earn $2 of $1 of monthly recurring revenue Commission Pattern 50% - on1st month’s payment. 25% - on next 6 month and 12 month’s payment each. Prepaid Plans If customer will pay in advance - the entire commission will earn immediately Mission Accomplished -Customer churn was checked. -Retention rate improved & customers were profitable. -Salespeople felt in control their destiny Plan Implementation Before implementing - avg prepayment for 2.5 months After plan - avg jumped to 7 months 05 01 02 03 04
- 6. We operate with courtesy, inclusion and professionalism when dealing with colleagues and customers. Presentations are communication tools that can be used as demonstrations, lectures, speeches, reports, and more. It is mostly presented before an audience.
- 7. . ALIGNMENT if the majority of your company’s revenue is generated by salespeople, properly aligning their compensation plan will have greater impact than anything else will. IMMEDIACY When salespeople succeed, they should see it reflected in their paychecks immediately. SIMPLICITY Keep the plan simple. It should be extraordinarily clear which outcomes you are rewarding.