Sales Assembly’s RevOps Roundup is a monthly collection of tips, trends, and tactics to help you navigate the wild west of Revenue & Sales Operations – featuring yours truly, Sheriff Brad Rosen, President and Head of Revenue Operations here at Sales Assembly. 

Let’s get into it.  Yippee Ki Kay!

 

Your commission plan stinks!

No seriously, it (probably) stinks.  It started out innocuous enough, a simple percentage of sales.  Then as your company grew, you wanted to incentivize your team to align their actions with business objectives.  All of a sudden you added kickers and accelerators and decelerators and clawbacks.

What started out as a well-intentioned activity has turned into a time-consuming point of employee frustration.  A complicated comp plan may not only be causing morale issues, but also could be a risk to your business as a whole.

So how do we ensure the comp plan is easy to understand, compensates your team adequately, and aligns incentives with your business?  Your plan should be:

  • Transparent – you are transparent about how your plan is calculated and what components go into the different inputs (quotas, OTE, etc.)
  • Real easy to understand – it should be clear how to achieve a plan and it can be explained in a non-complicated way
  • Easy to calculate – the calculations should be able to be done by hand – not that they will – but use that as a good measuring stick.  Ask yourself “Do I need a Ph.D. in mathematics to calculate this?”
  • Achievable – there is a target % of reps who will achieve their quota/OTE and dashboards are set up for tracking each reps progress towards the goals
  • Ties to the right incentives – quotas are well thought out and within some reasonable margin to the overall company objectives, aligning the team and company

Despite how well a comp plan is written, there are always things that come up as exceptions or unforeseen circumstances.  Reps and sales leaders both need to keep this in mind when issues arise.  Ensuring reps feel heard and valued is crucial to attracting and retaining top talent.  

Status Quo No More

So you want to bring transparency to your quota and commission process?  If that’s the case, your Excel calculations probably won’t cut it.  Your team needs a reliable way to check their commissions and be able to audit their deals.  That’s where commission software comes in.

Tools like SpiffCaptivateIQXactly, and QuotaPath can help to automate commissions.  These tools can help growing organizations by: reducing calculation errors, increasing commission transparency, and cutting down on the time it takes to calculate commissions.

Below are a few insights from leading RevOps pros throughout our awesome community:

Robb Finkelstein, Head of Revenue Operations, Heyday

Q: What are your keys to creating a successful comp plan?

A: A great comp plan is simple and easy to understand.  A sales rep should be able to easily tie their outcomes to the impact on their commission.  The metrics of the comp plan should not be something that can be gamed.  Ultimately, you want the behavior you’re incentivizing in the comp plan to align with the core goals of the business.

Q: What are the best ways to create incentives to align sales professionals and the business?

A: The metrics that feed the commission calculation should tie back to business goals. What does the business consider a successful outcome from the sales function?  Is it the number of meetings booked?  Pipeline amount generated?  Closed deals?  Acquired revenue?  New logos?  It can be multiple of these, but whatever they are, that’s what reps should be measured on.

Did you know that…

Only 46% of reps are hitting quota according to RepVue

And that…

Over 40% of sales managers missed their target last year

Maybe that’s why,

There are over 700,000 sales positions available right now

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