Loading...
Answers
MenuHow should I plan a US-based sales reps quota and fixed salary and commission structure?
Answers
Hi there,
I have 6+ years of experience selling enterprise software and one of the products I sold at Oracle included their SaaS LMS application as part of the whole HCM suite.
Your question about comp definitely depends on the industry, location of the individual, experience level, average deal size, etc. However, VERY GENERAL guidelines that SaaS companies follow tend to be quota = 5x to 10x their salary. For example:
- If a sales reps salary is 60k, then their quota should be 300k- 600k (very rough estimate).
- For each deal that the rep closes, they should get a minimum 10% on each deal until the rep hits quota.
- If the rep hits quota, there should be an accelerator on their comp plan (15%-25% of each deal sold) so that they will be motivated to keep on selling (capping your commission will be capping your growth).
- After the rep hits 200% or 300% of their quota, the accelerator stays at 15% or comes down to 10%
- PLEASE READ: All of the above is very dependent on average deal size, time to closure, among other factors that I would be happy to get into if we jump on a call.
The most important factor here is to make sure your quotas are REALISTIC and ATTAINABLE- having a rep come in with an unattainable quota only to have them leave in a few months will be detrimental to your growth and even be a huge cost to your business.
Happy to answer any and all questions in regards to quota structuring, LMS sales strategies, selling to the right lines of business, etc. It is a super competitive field and I understand through first-hand experience how difficult it is to displace any companies' current application suite. Maybe I can help provide some insight into this aspect of your business as well.
Best,
Kevin
Kevin Yang's answer is good and a model that is commonly used. It will depend on where in the United States they are going to be based. If you are in San Francisco you will be paying more than if you were in Denver or Dallas.
A question you should consider is how are these salespeople going to be managed? If you need help with that, I'd be more than happy to walk you through some options. I just set this up with an Australian company that expanded to the US.
Hey there, a few good answers here: https://clarity.fm/questions/1722/i-am-working-on-creating-a-sales-compensation-plan-for-a-recurring-revenue
Or I'm happy to jump on a call to talk specifics https://clarity.fm/damianthompson
One of the simplest and most used sales commission structure is variable pay as a percentage of a single sale’s revenue. Imagine your company sells a certain product for $100,000 with a sales commission rate of 5 percent. For each one they sell, your reps would collect $5,000. Another simple sales commission structure is the gross margin plan. These commission models consider the profit of each transaction, including the price of sale and the costs associated with making that sale. The company would then see a $90,000 profit on that deal. It is a good plan to use as you begin to grow your sales team and scale your business.
You can read more here: https://www.xactlycorp.com/blog/sales-commission-structures
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
Related Questions
-
What is the best tool for pre-hire, sales representative personality testing?
I would be curious to know why you feel it is important to use personality testing. I have hired over 20 sales reps and I have never used any testing. I have conversations with my hires because that is going to tell me more about their personality any day than a test. Plus you might eliminate someone because of a test score that could be a great fit for your organization. I have a pretty strong process for hiring sales people and could share with you my steps and even the questions if you would like.JM
-
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?
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.DF
-
Startup Looking To Hire First Sales Employee - And completely lost. Any advice on compensation structure (benefits?), items that need to be in place?
Instead of repeating the wisdom of others, I'll link to it below. Here is a great blog post on hiring your first salesperson: http://tomtunguz.com/when-to-hire-a-salesperson Also, Mark Suster has written a ton of great post on his blog about startup sales. http://www.bothsidesofthetable.com/on-selling/CH
-
Looking for help determining ideal marketing automation -> CRM workflow.
It sounds like you're off to a good start with your lead generation. While it is important to keep lead volume strong, it's even more important to have a way to follow up with these leads and continue pushing them through your sales funnel until you can convert them into revenue. Without that follow-up, especially if you're generating leads through PPC, you're likely wasting the budget and energy you're putting toward your marketing efforts in the first place. The first thing I'd recommend you do is create an automatic "kick-back" email that triggers as soon as a lead downloads your ebook. Be sure to thank them for downloading, give them a link to access the ebook, and then (most importantly) include your call-to-action for the next step you want them to take. Second, figure out how you're going to handle these leads from a sales perspective. If you're stretched for bandwidth, I'd recommend a system where you assign dollar values to different types of leads, and only have a sales rep follow up with your highest value leads. How much is an ebook lead worth to your business? How much is a demo lead? What about someone who actively requests to be contacted? You'll find that as you get these systems and processes underway, it'll be extremely useful to have a CRM system both for integrating with your marketing efforts and for helping your sales team to be able to sort and prioritize the leads they're reaching out to. Lead conversion is a daily focus of mine in my role at HubSpot, and I'd be happy to chat further about how to get a strong marketing/sales funnel set up so you're better equipped to manage the leads you generate and better able to convert them into dollars. Let me know if there's anything I can do to help!SB
-
Whats the best way to find commission sales reps?
This is not my specialty, however, I have been in your position many many times -- maybe this will help. If the product is in-tangible, then look for JV partners on the Internet. Try to find an expert that deals with these JV opportunities (like me). If the product is physical, then look for sales organizations that have networks of sales people across the country. You do the deal with the organization and the independent network of sales people sells your product. It's a sweet setup if you can negotiate a margin that works for everyone. Hope that helps - Cheers - NickNP
the startups.com platform
Copyright © 2025 Startups.com. All rights reserved.