Our 2020 Survey on Sales Compensation in Israeli SaaS Companies revealed valuable insights about both the matureness of the Israeli industry in the past two years as well as the the effects of COVID-19. We encourage the industry to use this survey as a sanity check tool for CEOs, CROs and CFOs to see where they stand vis-à-vis their peers.

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Annual Survey 2020
Sales Compensation
In SaaS Companies –
COVID Edition

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FOREWORD
In this year’s survey we had over 40 companies participating,
so we are satisfied with the statistical accuracy of the results.
While we encourage companies to find the right solution for
them, unfortunately we still find that too many companies are
re-inventing the wheel and spending time and money on
issues for which the industry has already reached an
equilibrium.
We encourage the industry to use this survey as a sanity
check tool for CEOs, CROs and CFOs to see where they
stand vis-à-vis their peers.
We will continue to update this survey every year. Please send
us your requests or comments and we will try to incorporate
them in the next version.
We are happy to share with you an updated and expanded
survey about sales compensation metrics in Israeli SaaS
companies, which was conducted in September 2020.
In this edition we have examined both the matureness of the
Israeli industry in the past two years as well as the implications
introduced by the effects of COVID-19 since March 2020.
The survey’s results highlight the convergence of Israel’s sales
compensation KPIs with the global benchmarks, as well as the
rise of Customer Success involvement in the renewal and
expansion processes.
Other than temporary implication on budgeting and hiring
processes, we believe that COVID-19’s most significant effect
was in educating companies (both as sellers and buyers) to
close large-sized deals remotely.

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Company Size
WHO TOOK THE SURVEY
Primary Sales Strategy Primary Business Model
21%
40%
28%
12%
Under $5m
$5m - $15m
$15m - $50m
$50m+
42%
35%
23%
Field sales
Field sales AND inside sales
Inside sales
88%
7%
5%
Subscription
Subscription AND transactional/unit
Transactional/unit

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33%
26%
42%
26%
17%
16%
13%
8%
19%
2018 2020
>$1,100k
$900k-$1,100k
$700k-$900k
$500k-$700k
$350k-$500k
Since our 2018 survey, there has been a significant shift
towards higher quota ranges (>$700k), as we see nearly 50%
of the respondents reporting these levels, compared with only
25% in 2018.
This increase could be the result of companies gaining more
confidence and expertise in their business models over time.
However, this could also potentially reflect the impact of COVID
and the ability some companies demonstrated to close large-
sized deals remotely.
It is worth mentioning that 90% of the respondents reported no
change to their on-target inside sales quotas post COVID-19.
Annual quota for
INSIDE salesperson
**Answers are in new Annual ContractValue (ACV)
*Refers to the range of $700k-$1,100k

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Annual quota for
FIELD salesperson
As with inside sales, we identify an increase in field’s annual quotas
towards the >$1,200k range. Yet a more significant trend discerned
here is the market’s consolidation around quota ranges between
$1,000k-$1,500k, which is in line with US and global benchmarks.
This trend could be explained by companies’ matureness and
confidence in their business models, and it is also derived by
companies’ adoption of a hybrid sales strategy, i.e. operating both
inside and field sales. As inside sales quotas go up (as we have just
shown), so do field sales quotas.
In this case, approx. 70% of the respondents reported no change to
their on-target field sales quotas post COVID-19. The rest reported
a reduction to some extent.
**Answers are in new Annual ContractValue (ACV)
9%
15%
18%
12%
45%
32%
32%
27%
9%
2018 2020
>$1,500k
$1,200k-$1,500k
$1,000k-$1,200k
$800k-$1,000k
$700k-$800k

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New ACV
commission rate
Compared with the 2018 survey in which we saw a high
variance in the commission rates for new ACV, we are now
seeing the market consolidating at anywhere between a 7-10%
commission rate, which is in line with global data.
The adoption of the ASC 606 accounting standard has created
a lag between when commission is actually paid and when it is
recognized as an expense in the financial reports.
Companies are advised to reconcile these differences
when planning ahead.
9% 7%
36%
24%
9%
24%
45% 44%
2018 2020
> 9%
7% - 9%
5% - 7%
3% - 4%

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Renewals
commission rate
Similar to the 2018 survey, we see over 50% of companies
grant a certain commission for renewals that is substantially
lower than the new ACV commission. This survey indicates that
the market is now adopting a 2-3% commission rate as a
standard, in line with global benchmarks.
We were surprised to find that over a third of companies are
not paying any commission on renewals. This increase
could possibly be explained by the shift in ownership of
renewals from Sales to Customer Success, as we show next.
We believe that this is not sustainable in the long term.
*Refers to both the ranges of 2%-3% and >3%
24%
36%
53%
38%
17%
24%
10%
2018 2020
Same as new ACV
> 3%
2% - 3%
No commission at all

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Base/OTE ratio
A Base/OTE ratio of 50/50 is the standard worldwide, and
for the most part this holds true in Israel as well.
Most deviations from the 50/50 standard lean towards the base
at a 60/40 rate. This is mostly the case when the sales team is
located in Israel.
We believe that eventually this will converge into the standard
50/50 allocation.
68%
22%
5%
2% 2%
50/50
60/40
70/30
30/70
40/60

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Renewals
ownership
Over the past 2 years, Israeli companies have significantly
matured in their ability to make use of Customer Success
teams and to compensate them accordingly.
Compared with less than 50% in the 2018 survey, we are now
seeing Customer Success teams running the renewal
process in 63% of companies, leaving the Sales teams to
focus on acquiring new customers.
*Excluding <5% that responded “Account Management”
47%
63%
53%
38%
2018 2020
Sales
Cusomer Success team

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Expansions
ownership
As in renewals, we see a decline in Sales departments’ sole
ownership of expansions. Instead of shifting ownership directly
to Customer Success, we see that companies have
formatted a new structure where Sales and Customer
Success teams work hand in hand to manage expansions.
Compared with roughly 35% in the 2018 survey, we are now
seeing Customer Success teams involved in expansions in
almost 60% of companies.
*Excluding <5% that responded “Account Management”
67%
35%
6%
35%
28% 23%
2018 2020
Customer Success team
Customer Success AND Sales
Sales

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Multi-year deal
accelerators
Contrary to what we saw in 2018, this survey has revealed that
Israeli companies are developing a deep understanding of
the SaaS model.
Most have moved from Booking/TCV-based compensation
models to an annual basis baseline and are using more
sophisticated methods to compensate for multi-year deals.
43%
26%
23%
5%
3%
Yes, but we provide reduced
commission for 2nd and 3rd year
Yes, but only if the customer pays
up-front for the entire contract period
No. We compensate for ACV only
Of course. The entire commission
plan is based on TCV and not ACV
N/A*Based on January 2020 survey results

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Commission
payment timing
We were a bit surprised to see that there is no significant
change in the timing of commission payment. It seems that in
this particular case, Israel is still behind most of the US
benchmarks that we are familiar with. In Israel, there is a
higher percentage of companies than expected paying
commission upon P/O and not waiting for collection to arrive.
We believe this has significant implications on cash flow,
and we advise companies to review their commission
payment timing methods.
*Based on January 2020 survey results
30%
27%
27%
8%
5%
3%
Upon Collection
Upon invoicing the customer
Upon receiving the P/O
Partly invocing, partly collection
60 days after receiving the P/O
Quarterly booking

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COVID-19’s impact on
sales departments
65% of respondents reported that they were required to cut their
sales budget to some extent due to COVID-19’s direct impact on top
line and/or uncertainty about future implications for the business.
This cost reduction was more evident in future hiring of new
salespeople, as close to 80% reported they delayed or stopped all
hiring (58% have already renewed hiring processes since), while
about 60% had no reduction in force (RIF) of salespeople.
We see that most of the companies that had to cut more than 10%
of their sales budget (43%) were also the ones to layoff accordingly.
An interesting finding shows that for most companies surveyed, the
sales cycle remained the same or improved. As we would expect, a
prolonged sales cycle is correlated with a field sales strategy.
35%
23%
19%
12%
12%
Sales Budget Cut
None
< 10%
10% - 20%
20% - 30%
> 30%

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COVID-19’s impact on
sales departments
58%
9%
7%
14%
5%
7%
Salespeople RIF
None
< 5%
5% - 10%
10% - 20%
20% - 30%
> 30%
27%
29%
24%
15%
5%
Sales Cycle
No change
Improved
Increased slightly (<1 month)
Increased significantly (1-3 months)
Increased dramatically (>3 months)
58%
19%
21%
2%
Salespeople Hiring
Delayed hiring until the situation
clears out, but have already renewed
Stopped all hiring immediately to cut
expenses
Continued as planned
Expedited hiring to boost sales

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