Mid-year changes can be necessary but remain disruptive, leading to trust issues with reps.ĭo You See Comp Structures Being Benchmarked? Sandra recommends an annual refresh of commission plans to adjust to internal and external market changes. Periodically analyzing your sales data helps to ensure that your sales compensation plan continues to align with your business objectives and motivates your team to drive revenue growth. It’s important to regularly evaluate and refine your plan based on your business objectives, market conditions, and team performance. We asked Sandra how companies can limit incentive plan churn. They feel the payout structure is unstable or management is artificially trying to limit compensation. Mid-year structure changes can have a negative impact on sales reps. However, they realize mid-year that deals fall through because reps refuse to grant discounts. For example, a customer starts the year with a profit-based incentive plan. How Often Should Commission Structures Be Refreshed?Īt Sales Cookie, we often deal with unstable commission structures. Additionally, if spiffs are used too frequently or inconsistently, they may lose effectiveness and become expected rather than motivating. For example, if the spiff is too small or difficult to achieve, it may not motivate sales reps to put in the extra effort. On the other hand, if you focus on reducing churn, you should incentivize reps to renew contracts.Ĭaution: Spiffs may not be effective in all situations. For example, if a goal is to increase annual recurring revenue (ARR), then your sales compensation plan should reward reps for closing new deals and upselling existing customers. Spiffs or special incentives are another way to help sales reps achieve specific goals or behaviors. a variable model because it provides a fair and stable income for sales reps while incentivizing them to perform at a high level. For example, offer accelerators for reps who exceed their quota or provide guarantees for deals that take longer to close.Ĭompanies often offer a balanced 50%/50% base salary vs. Sandra recommends starting with a basic structure that includes fundamental building blocks like tiers, bonuses, and quotas and then customizing it based on your specific needs. This typically requires some experimentation and fine-tuning over time. Sandra recommends building a structure that aligns with the company’s business objectives and motivates your sales team to achieve those goals. Given the number of permutations, it can be difficult to choose a structure which is manageable, motivating, and “makes sense” to reps. Using the same fundamental key building blocks (tiers, bonuses, accelerators, quotas, credits, guarantees, attainment, etc.), it’s possible to create thousands of different commission structures. Sandra has experience with SaaS-specific patterns (ex: recurring sales, customer churn, or multi-year contracts) and how they influence sales commissions. Which Commission Structure Do You Recommend? Sandra, thank you for sharing such practical and valuable tips with us! If you’re looking for additional insights about SaaS and sales compensation, we encourage you to reach out to Sandra directly through her LinkedIn profile. She recently founded Winnersrowe, serving as the Chief Sales Officer and specializing in helping Revenue leaders take the guesswork out of scaling success. Sandra has a proven track record of building and leading Enterprise sales teams for established and emerging companies such as Salesforce, Everbridge, Berkshire Grey Robotics, and Cloud Compliance. In this blog post, we interview Sandra Rowe, a veteran and proven sales leader with over 20 years of experience in B2B SaaS sales. At Sales Cookie, we automate commissions for companies with billions in sales.
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