The Easy Commission Webinar that I was a part of on Tuesday, January 24, 2012 was very informative and well presented. We have been searching for a way to calculate commissions without investing a large amount of money. Copyright, CellarStone, Inc.All other trademarks are the property of their respective owners. Before you dive in, Hanna says it’s helpful to take a few steps back first and recognize that your comp plan is one thing to you and another to your salespeople.
With that in mind, Hanna recommends you begin laying out your comp plans by ironing out the base salary and variable compensation for each role. Is the focus of the role primarily hunting (outbound), farming (growing existing business), or catching (inbound)? Once you have an idea of the total target compensation for the role you’ll want to determine the base elements that will drive your comp model. Floor: One method some companies utilize to incentivize stronger performance is to make it so reps will not earn anything unless they pass a particular threshold.
Accelerator: Once a rep passes a certain threshold, his or her commission rate will increase. Retroactive Accelerator: If a rep surpasses quota, the company retroactively gives them a higher commission rate.
When designing your comp plan you should always keep in mind your bigger-picture sales goals and let those guide you, Hanna says.
Paying base comp on MRR attainment, but also introducing an accelerator based on extended term deals. While quantity may be the primary component of their compensation, you of course also want to balance that with also incentivizing higher quality leads. In the alternative approach, you have a way of maintaining the priority of the primary component — number of new qualified leads — but you’re equally emphasizing the quality of those leads.

We are a very small (4 people) company growing a product line that serves the homebuilding and remodeling industry. What I think he told you is a good line for making you feel like he is focused on the upside. I’m just an outside man looking in, but what I think he really fears is that he is going to fall short of the plan some years, but when he does he wants to make sure he gets a portion of that $50k for what he DID sell. He told you he wants accelerators (to grow with the company), but you’ve already provided those. I once offered the CEO of a software company my entire base salary back ($150k) in exchange for $50k to hire my own personal college student (jack of all trades), and to move to a 100% commission plan with higher commission rates and even better accelerators (I was 299% to quota the year before).
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Company and Sales Rep enter into this agreement whereby Sales Rep provides sales services to the Company in return for compensation specified in this agreement.Sales Rep is an independent contractor and can have sub sales reps under them.
Yes, you can try diving into competitor research, but as sales strategy consultant Michael Hanna explains, that can often be tough since titles and other factors can vary so greatly.
Or, in other words, to help them fund personal goals (that’s why they get so personally invested and involved when it comes to compensation changes and discussion). Companies will sometimes implement accelerators to avoid salespeople holding back deals once they’ve already hit their quota. Sales departments at SaaS companies, for example, may have a primary goal of contributing to monthly recurring revenue (MRR), but may also have a secondary goal of increasing profitability, therefore lowering the average discount.
A well-respected business leader, entrepreneur, and speaker, he has helped dozens of start-up and expansion-stage companies achieve double and triple digit growth. This might help you understand what part of the risk he is trying to guard the most based on his reaction. Depending on the sales cycle, he will miss more times on a quarterly plan than annual (in most cases, this is true), but he also gets that fresh reboot every 90 days.

It includes Product Sales Commission, New Accounts Incentive, Annual Regional Bonus and President’s club types of incentives. Few things have such a direct, immediate impact both on reps, personally, and on your business as a whole. The best approach, Hanna advises, is to start by looking at what you’re trying to accomplish with your compensation plan, and establishing priorities and parameters to work with from there. The problem is you can start paying out disproportionately more commission compared to how much revenue the rep is actually bringing in. It’s a relatively straight forward sale in most cases but we also have high volume customers that take much more time to develop.
I wanted to put my money where my mouth was and eliminate my base salary completely….
But make it positive, paint a scenario where the same exact performance gets him TO or ABOVE where he would be if he stayed on his current plan.
In addition it discusses Territory, Product Sales Commission, Cap, Other Compensation, Termination of Agreement and other terms and conditions. I have a business development manager in charge of setting up channels, marketing, and social media. In this model, you’ll want hitting plan all 4 quarters to be slightly above the annual comp plan. If nothing else, you should see some revenue shift from tightening the measurement cycle (again, depends on sales cycle). He wants to move to a base + a straight % of sales and his reasoning is that as the company grows his income will grow proportionally.

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