Sales compensation plays a pivotal role in attracting, motivating, and retaining an efficient sales team. Used correctly, it can drive tremendous results for the sales team and the business.
If you're in a high growth industry, it may look like the wild-west in terms of the different comp plans and tactics that competitors will roll out to attract and retain the very best talent.
What it Means
Why it Matters
Stack it - Resources & Tools
There are a myriad of resources and consulting services that can help you structure your sales team and comp structure.The free resources generally include the usual suspects for compensation like Glassdoor with its crowdsource data, but there is no guarantee on data quality. Expensive resources include full on compensation consultancies that may charge an arm and a leg to deliver their boilerplate template to you. The best resources are probably your personal network.
If you've decided you need to hire a sales force, then consider a few points:
What does my market research tell me is an appropriate range of OTE given my industry?
Can I be competitive with the OTE range identified? What does my business value? If it's revenue, then how much am I willing to pay in cost of sales for every $100K in revenue?
How do I decide if my product will really sell itself or will be harder to sell than I appreciate?
If my business is valued at 10X revenue, then every $100K in revenue is also $1M in enterprise value. Does that change how I think about how much I'm willing to pay in cost of sales?
I have the target OTE that I'm willing to pay, but how will I structure the variable comp plan to attract the best talent? Am I taking into account the time it will take this person to ramp up and become successful (~3-6 months)?