Rethinking Sales Compensation for a Consumption-Based GTM with MongoDB Meghan Gill

2. 13+ years at MongoDB
● Employee #8 & 1st GTM hire
● 7 years in Marketing
● 6 years running Sales Ops
● 3 years running Sales Dev
● Advisor/Investor
Personal
● Mom to Juno (5), Holden (3), Willow (1)
● Husband to CEO/entrepreneur
● Love hiking, yoga, jigsaw puzzles

3. What do we mean by “consumption”
business?

4. What do we mean by “consumption” business?
Where does it
come from? Old Days → Perpetual license, +
maintenance
What?
Why?
● Vendor owns the market
● Complex Pricing
● Large Deals Upfront
● Customer is locked in
Customer owns software

5. What do we mean by “consumption” business?
Where does it
come from? Old Days → Perpetual license, +
maintenance
What?
Why?
● Vendor owns the market
● Complex Pricing
● Large Deals Upfront
● Customer is locked in
SaaS → Subscription based
pricing
Customer “rents yearly”
and renews
● Customer Driven
● Complex Pricing
● Multi Year Deals
● Less Lock In
● Booking misaligned with revenue
Customer owns software

6. What do we mean by “consumption” business?
Where does it
come from? Old Days → Perpetual license, +
maintenance
What?
Why?
● Vendor owns the market
● Complex Pricing
● Large Deals Upfront
● Customer is locked in
SaaS → Subscription based pricing
Customer “rents yearly”
and renews
● Customer Driven
● Complex Pricing
● Multi Year Deals
● Less Lock In
● Booking misaligned with revenue
Customer owns software
Saas with Consumption based pricing
Customer pays as go
for consumption
● Customer Driven
● Simple Pricing
● Simplifies Delivery

7. For customers, the benefits of doing business with vendors
that offer a usage-based pricing model are clear: use the
products you want, when you want, and be billed when you
do.
- Ben Chambers
Sales Compensation
Consultant
Formerly New Relic,
DataBricks

9. If it sounds like sales reps should play a role in “customer
success,” that’s because they should. While many software
companies have come to rely on separate sales and
customer success functions, consumption requires a new
way of thinking about the lifecycle of the customer and what
customer-software company interactions should look like.
- Andrew Straus
VP of Sales Strategy and Planning
Snowflake

10. Product needs to evolve to measure sales impact
Do you have the capability to differentiate organic consumption growth
from growth driven by sales?
→ Partner with the product team to understand organic
→ Run a control group to compare

11. Compensate on what the reps can control

12. Example: Crypto Company Usage Curve

13. Incentives drive behavior, so start with the
behavior you want to drive
- Dev Ittycheria
CEO, MongoDB

14. What behaviors do you want to drive?

15. What behaviors do you want to drive?

16. Example: Measure on units
Quota Setting
● Target is the number of New Logos acquired
Crediting
● Rep gets paid a flat bounty for each New Logo acquired
Could be extended beyond New Logos…
● MongoDB compensates on the quantity of New Workloads

17. Why measure on a unit basis?
Pros
● Dead simple comp plan
● Reps are laser focused
● Drives high velocity and activity
Cons
● Harder for reps to overachieve on a unit-based plan
● Need to have criteria to ensure quality

18. What behaviors do you want to drive?

19. Example 1: Measure on gross usage
Quota Setting
1. Territory billed $500k in the prior year
2. Organic growth is 25% → $625k of billing expected
3. Quota is set with an uplift of 20% → $725k quota
Crediting
Rep gets credit for every dollar that is billed

20. Why measure on gross usage?
Pros
● Aligns customer, company, and rep
● Provides a consistent payout for rep as customer consumes
● Crediting is simple to understand
Cons
● Getting quotas right is a challenge
→ Growth expectations can be a “black box” to the reps
→ Can feel punitive - i.e. if you grow an account, your quota goes up
● Reps are paid on retention
→ Reps earn on existing run rate and can make money even if the customer is flat

21. Example 2: Measure on incremental ARR
Crediting
1. Customer consumes $25k in Q1 → rep earns credit for $100k
2. $100k is now the baseline in Q2 → rep earns when customer exceeds
baseline

22. Why measure on incremental ARR?
Pros
● Only pay reps for growth - focuses the reps on driving new business
● Reps take more risk but get more upside
Cons
● Can be complicated to explain and operationalize
● Crediting can be negative, which can be demoralizing to a rep

23. What behaviors do you want to drive?

24. Example: Measure on commitment
● Commitment quota can be combined with usage quota
● Weightings can be tuned based on the territory

25. Why measure on commitment?
Pros
● Locks customers in
● Revenue is predictable
● Reps have control
Cons
● Risk that reps oversell customers
● Can create friction in the sales cycle

26. Key Takeaways

27. Key Takeaways
● Consumption-based pricing requires rethinking your organization
○ GTM: What are the roles of sales, pre-sales, post sales? The lines will
blur.
○ Product: Needs to invest in tooling to support GTM teams.
● Key principles for designing comp plans
○ Always start with the behaviors you want to drive
○ Measure reps on what they can control
● Approaches for consumption based comp include:
○ Unit based - number of new logos or workloads
○ Gross usage
○ Incremental ARR
○ Commitments

28. Q&A

29. Sources
Usage Based Pricing - Openview
The Definitive Guide to Sales Compensation - ICONIQ

30. Thank You!