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Sales Management: I am working on creating a sales compensation plan for a recurring revenue model are there any pitfalls I need to be aware of when creating this?
DF
DF
Daniel Freedman, High-tech entrepreneur, VC, Mentor, Executive answered:

Personally, I'm a fan of sales comp plans being tied to ongoing performance. Sure, the salesperson should get some of that long tail, but only while he continues to work productively at the company. Once he leaves, he should lose the tail, since someone else will likely need to step into the relationship with his customers. But there are too many variables to give a universal answer.

The true answer is this: You need to pay your salespeople enough so that they are motivated to keep working for you rather than seeking alternative employment. This means you need to analyze at-quota pay, and ensure that your base and commission structures provide a market-level of compensation at quota. You can muck with anything you want as long as that goal is met.

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