Top and bottom line growth
Strategic product revenue growth
New account acquisition
Top talent retention
WHAT ARE YOU TRYING TO ACHIEVE?
Without incenting profits, margins can
collapse as the sales team chases pure
Consider adding a bonus for overall
profitability each quarter.
Don’t overload incentive pay with too
many variables. Zero in on the main
WHAT SHOULD YOU MEASURE?
Set Territories based on zip codes, area codes,
named accounts, vertical markets, company size)
Check industry databases to ensure that there
are enough opportunities in each territory.
Not everyone makes quota, so don’t make the
sum of quota your annual goal!
If everyone is at quota, how much will the
company payout in total commissions?
TIMING YOUR CASH FLOW
• Make it immediate
• Majority of variable should be
• Team bonuses can be accelerators
• Awards – President’s Club
• Weekend escapes
• Gift certificates
THOUGHTS ON REWARDS
When the deal is won?
Once the client is “live”?
After accounting recognizes the revenue?
When cash is in hand?
WHEN SHOULD YOU PAY?
Are You Selling at Different Margins?
BUILDING YOUR SALES TEAM
CAPTAIN PROSPECTOR FARMER SPECIALIST HUNTER
HOW MUCH PAY AT RISK?
1% - 15%
16% - 25%
26% - 40%
41% - 60%
2011 Sales Compensation and
Key Trends Analysis
DON’T GET DISTRACTED
You can set goals for anything that you
• Units sold
• Revenue dollars
• New customers
If you track multiple metrics
make one the primary measure.
QUICK STEPS FOR PAYING THE HUNTER
Conduct a salary survey to set target pay.
How much of the target pay should be
Pick metrics to base rewards on
that meet corporate goals, focusing
on the most important one.
Check out how much you’ll spend on sales if
everyone makes quota
HOW MANY MEASURES?
1 2 3 4 5
THINGS ARE GETTING BIGGER – NEED A CAPTAIN
Have you promoted your best rep out of the field or
have you truly found a sales leader?
CAPTAINING THE CAPTAIN
If the entire team hits quota, what is the Captain’s
performance toward goal?
If the Captain hits their goal, where is
the company against plan?
Captains will usually assign higher numbers downstream in
case of a rep not performing.
Are there open positions in the Captain’s team? How does
the Captain’s quota reflect open positions, new reps and
HOW MUCH CAN YOU GET FROM THE TERRITORY?
Do they have the right personality?
What is the opportunity?
How much can the Farmer influence?
CHECKING THE FARMER PLAN
Make sure you know what line items in a
transaction reflect the appropriate renewal and up-
sell revenue the Farmer owns.
Don’t assign quota based on things the
Farmer does not control.
What periods should you track?
If all of your renewals are at year-end, a monthly
quota does not make sense. Try annual quotas
PAYING THE FARMER
How much will the Farmer make if the renewal rate
stays the same?
Is there room for customer abuse?
Calculate total payouts as a percent of total renewals
at different renewal levels, make sure that the
payments you will make to the Farmer are worth the
revenue and profits you will gain.
NOW ITS TIME TO GET YOUR HUNTERS
People not afraid of the phone
Will this be a stepping-stone towards becoming an
STAKING THE CLAIM
Are you measuring lead quality?
Is your CRM set-up to handle passing leads to the
appropriate reps and tracking what happens?
What has lead flow been in the past?
Do you have the right environment for a
prospector to find new opportunities?
How many qualified leads are needed to become a
closed opportunity? How long does it take?
PANNING FOR GOLD
Do your prospectors develop their own lists or is
marketing providing assistance?
Is the plan incenting the prospector to deliver the right
types of leads?
Check the relationships between prospectors and
sales reps, and watch to see how many they can
How much of the closed revenue do you want to pay
to ensure that only good leads are passed?
HOW COMPLEX IS YOUR PRODUCT LINE?
Combining knowledge and presence
SPECIALIST: DO YOU NEED THEM?
How technical is your product vs. your potential
Is it a difficult demo?
Is the concept you are selling a new one to
Will the support person need to respond to
competitive claims during demos?
PAYING THE SPECIALIST
The complexity of the product will increase a
specialist’s percent of salary consisting of variable
Quota = combined quotas of supported team
Reward for other specialist’s activity, like fairly
supporting sales staff, helping move new
GETTING BIG – NOW SHARING CREDITS
What are you trying to achieve?
Who is going to sell for you?
How much leverage and upside?
What are you going to measure?
When will you write the check?