tag:blogger.com,1999:blog-36664346.post4445497197140873916..comments2024-02-11T01:01:22.792-08:00Comments on Cracking The Code: Building Your SaaS Sales Compensation PlanPhilippe Botterihttp://www.blogger.com/profile/07026200487300080349noreply@blogger.comBlogger31125tag:blogger.com,1999:blog-36664346.post-90658460266073791622014-03-14T13:18:11.414-07:002014-03-14T13:18:11.414-07:00LOL - Exactly my thought. I think may didn't w...LOL - Exactly my thought. I think may didn't want to write what you wrote with the fear of the wrath they may get i.e. "you should not be in sales if you don't know MRR or you should not be in SaaS if you didn't know what MRR is. <br /><br />For your info: it is Monthly Recurring Revenue. At least this is what I know when talking SaaS.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-80891622774381196742013-10-27T08:20:03.424-07:002013-10-27T08:20:03.424-07:00This comment has been removed by a blog administrator.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-80433368838342015462012-09-18T05:32:59.801-07:002012-09-18T05:32:59.801-07:00Great deals and a great way to ensure that my hard...Great deals and a great way to ensure that my hard earned commission reaches me on time. Now I don't have to wait to celebrate. Thanks guys!...<br /><a href="http://www.paidonexchange.com.au/" rel="nofollow">Selling Commissions</a><br />Riffraffphotographyhttps://www.blogger.com/profile/03035925536546413454noreply@blogger.comtag:blogger.com,1999:blog-36664346.post-72319557291361326722012-09-12T21:00:40.976-07:002012-09-12T21:00:40.976-07:00In the article, which I like very much, it states:...In the article, which I like very much, it states: "The payment rules were also very straightforward: 50% at signature and 50% at cash collection."<br /><br />Does this mean that the company paid 50% at the time of signature (ok that is obvious), but then paid the remaining 50% commissions each month the client actually paid their monthly commitment. <br /><br />Or is the assumption here that most of the Netli clients paid their monthly 1 year subscription all upfront at the beginning of the year.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-78633697419420106012012-04-08T18:58:28.394-07:002012-04-08T18:58:28.394-07:00Can you perhaps share some examples to a new SAAS ...Can you perhaps share some examples to a new SAAS company that may not yet fully understand what the potential market can bare as fair quotas - my challenge is that I ma looking for a way to compensate sales managers. We presently pay 8 on the sales dollars to the reps. Any ideas on how we can motivate the sales managers to earn a living while we go thru the learning curve?<br /><br />Thanks.<br />DarrenAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-4972915647290002502012-01-16T10:29:53.337-08:002012-01-16T10:29:53.337-08:00Great summary,
I've found the complexity of ...Great summary, <br /><br />I've found the complexity of managing all the exceptions and crediting rules that creative sales managers always seem to come up with to be something that often undermines simplicity Phillippe advocates.<br /><br />Karthik - Clawbacks can be automated and managed easily enough with helpful techniques involving (but not limited to) capping the clawback amount recovered each pay period to make it more palatable for the reps.<br /><br />The key is in proactive communication with the sales team so that expectations are clearly understood ahead of time. That said, recovering paid commissions is something everyone struggles with...<br /> <br />Thanks again for posting,<br />Jerry HegartyJerry Hegartyhttp://www.netcommissions.comnoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-31310191120831043232011-10-27T09:29:38.561-07:002011-10-27T09:29:38.561-07:00Is there a base salary?Is there a base salary?md888https://www.blogger.com/profile/10286471360010447149noreply@blogger.comtag:blogger.com,1999:blog-36664346.post-19311545707077766602011-08-08T10:03:17.275-07:002011-08-08T10:03:17.275-07:00Thanks for this post.Thanks for this post.Odszkodowaniehttp://odszkodowanie24.eunoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-58889831785639047332011-06-20T15:05:37.869-07:002011-06-20T15:05:37.869-07:00Interesting article and good example, thanks for p...Interesting article and good example, thanks for posting!<br /><br />Janet Williams<br /><a href="http://www.oneclickcommissions.com/sales-compensation.html" rel="nofollow">Sales Compensation</a>Unknownhttps://www.blogger.com/profile/18081594811815118667noreply@blogger.comtag:blogger.com,1999:blog-36664346.post-63002381528029614482010-10-01T11:16:40.332-07:002010-10-01T11:16:40.332-07:001) Is the commission rate marginal or linear?
Mar...1) Is the commission rate marginal or linear?<br /><br />Marginal – commission is broken down into progressive brackets. Commission is awarded separately for the sales that qualify for each bracket individually. The commission paid equals the sum of the commission for each bracket.<br /><br />Linear – the commission rate is determined by the rate of the highest commission bracket fulfilled.<br /><br />2) The rate is calculated based on MRR, but the sales order will be an annual contract?<br /><br />3) Implementing a commission structure where the rep can fall back to a Plan B as defined below you would have to use a Target Factor. So, based on the answer to question 1 it may or may not be possible to accomplish.<br /><br />Target Factor – this option is available only for schedules based on quota that use a linear scale.<br /><br />Designating a target factor lets you award a percentage of the target factor that is determined by the percentage of quota met.John Bennetthttps://www.blogger.com/profile/17074227764741369282noreply@blogger.comtag:blogger.com,1999:blog-36664346.post-7436691284634433472010-09-02T17:02:31.652-07:002010-09-02T17:02:31.652-07:00Good point on restricting sales people from pushin...Good point on restricting sales people from pushing sales into the next period.<br /><br />http://nirvaha.com/products/sales-compensation-software.html<br /><a href="http://nirvaha.com/products/sales-compensation-software.html" rel="nofollow"> Nirvaha Sales Compensation Software</a>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-30897117240101044772010-08-03T04:11:53.549-07:002010-08-03T04:11:53.549-07:00interesting publicationinteresting publicationodszkodowaniehttp://www.odszkodowania24.eunoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-17108088314648325552010-01-08T05:46:08.661-08:002010-01-08T05:46:08.661-08:00SaaS scale (as defined in Law #3 of the 10 Cloud C...SaaS scale (as defined in Law #3 of the 10 Cloud Computing Laws) is reached when least two of the sales reps are making their $100,000 MRR quotas. $1 of commission for $1 of MRR sold would translate into $100,000 of monthly commission per sales rep. What am I missing here?Roman Stanekhttp://roman.stanek.orgnoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-86569707049672976462009-12-01T07:06:48.915-08:002009-12-01T07:06:48.915-08:00Philippe,
Thanks for sharing! Just stumbled upon...Philippe,<br /><br />Thanks for sharing! Just stumbled upon your blog as I'm working on developing my companies Saas comp plan. Can you share any thoughts on applying this model to a month-to-month subscription model with average revenue per sale of $99.<br /><br />Thanks in advance!<br /><br />BryanBryan E.https://www.blogger.com/profile/02367803464909226996noreply@blogger.comtag:blogger.com,1999:blog-36664346.post-75805132096623906722009-10-07T21:45:33.186-07:002009-10-07T21:45:33.186-07:00Very Informative. I was wondering about the cost s...Very Informative. I was wondering about the cost structure for my sales team, etc. Thank you for posting this.<br /><br />Zaki Usman<br />Director of Marketing<br />www.Severa.comZaki Usmanhttps://www.blogger.com/profile/06649096921309840017noreply@blogger.comtag:blogger.com,1999:blog-36664346.post-19139252195331234812009-09-25T10:54:33.162-07:002009-09-25T10:54:33.162-07:00Good afternoon, had a rather elementary question. ...Good afternoon, had a rather elementary question. At one point in this post, Philippe says "Gary typically based his *sales board plan* at 70% of sales quota.<br /><br />By sales board plan, are you referring to Gary's actual business planning forecasts? So in effect, his business plan showed 30% less than the sales quota? <br /><br />Thank you!!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-9491457921418662392009-09-23T10:55:57.976-07:002009-09-23T10:55:57.976-07:00A wise man told me one time that "A good sale...A wise man told me one time that "A good sales compensation program should do 2 things;<br />1) Tell your sales people where to spend their time and effort<br />2) Tell the sales people what the company values"<br /><br />Both apply in this plan which is good!<br />Nice to see some online content around sales compensation. Thank you for sharing!<br />Matt Tyre - Sales Resource GroupAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-32912941559347451202009-08-28T08:36:22.813-07:002009-08-28T08:36:22.813-07:00How do you apply this to a company that has no con...How do you apply this to a company that has no contracts - all sales are month to month? Also, revenue is mostly based on usage and therefore "upsell" is a bit harder to define.<br /><br />Thanks.<br /><br />CindyCindynoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-36537503161664146802009-08-18T04:44:16.238-07:002009-08-18T04:44:16.238-07:00Phillipe,
Usually, SaaS sales guys think of total...Phillipe,<br /><br />Usually, SaaS sales guys think of total contract value, because that is what they are finally comped on. They don't break it down MRR, it gets too granular and complicated at MRR level of detail. Also, it's simpler to apply accelerators on the annual quota. Both the MRR approach and annual quota work out to be the same - don't they? I feel the annual quota approach is easier to track. <br /><br />Another point I wanted to raise was that of clawback. What happens when the customer pulls out of a contract? How do you clawback revenue from the sales guy?<br /><br />KarthikKarthik Jhttps://www.blogger.com/profile/06533205812683765760noreply@blogger.comtag:blogger.com,1999:blog-36664346.post-29566420730762812422009-08-18T04:43:44.072-07:002009-08-18T04:43:44.072-07:00Phillipe,
Usually, SaaS sales guys think of total...Phillipe,<br /><br />Usually, SaaS sales guys think of total contract value, because that is what they are finally comped on. They don't break it down MRR, it gets too granular and complicated at MRR level of detail. Also, it's simpler to apply accelerators on the annual quota. Both the MRR approach and annual quota work out to be the same - don't they? I feel the annual quota approach is easier to track. <br /><br />Another point I wanted to raise was that of clawback. What happens when the customer pulls out of a contract? How do you clawback revenue from the sales guy?<br /><br />KarthikKarthik Jhttps://www.blogger.com/profile/06533205812683765760noreply@blogger.comtag:blogger.com,1999:blog-36664346.post-72975084830936441112009-08-14T09:29:49.998-07:002009-08-14T09:29:49.998-07:00I would also love to know more about your thoughts...I would also love to know more about your thoughts of how Base salary gets baked into the OTE plan. So say the quota is $10,000 / month in new MRR. In Theory, on a straight line plan (always closing one year, paid annually), that means the rep closes $1.44MM worth of one year contracts. At the $1 for $1 matrix point, the rep earns $120K in annualized commission.<br /><br />What is the right base and how do you back into a base against OTE and target? I guess my underlying question is, what % of closed business is an acceptable total package for a rep. <br /><br />Example:<br />$1.44MM quota = $120K Commission<br />50/50 package = $120K base<br />$240K OTE = 16.6% of Year One Revenue<br /><br />Sounds high, but is that considered a reasonable package?<br /><br />Thanks for allowing me to tap your genius.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-29668400505306348982009-07-27T09:51:30.876-07:002009-07-27T09:51:30.876-07:00Philippe,
Great article. Our SaaS application and...Philippe,<br /><br />Great article. Our SaaS application and our practice is involved with sales incentive design and your design is right on for SaaS sales. I like the quota performance qualifier and the smaller payouts at lower performance levels give them a "taste" of incentive payout which whets the appetite for increased payout at higher performance levels.<br /><br />Great job.<br /><br />Paul, with added base salary you would look at the target total compensation (base plus incentive)that you would want to pay for achievement of 100% of quota achievement and then adjust the commission rate accordingly.<br /><br /><br /><br /><br />DaveDave Johnstonhttp://www.salesresourcegroup.canoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-47509437150446813932009-06-06T04:17:37.474-07:002009-06-06T04:17:37.474-07:00Philipp,
This is an excellent article. I'm ve...Philipp,<br /><br />This is an excellent article. I'm very happy to have "bumped" into it now as we are in the process of rolling out our on demand SaaS for making, sharing and using vector maps. Comm plan for our SaaS sales has been quite a difficult task as we are used to a traditional sales compensation model.<br /><br />We still have some challanges to shift the sales rep's mindset to the SaaS model. Any experience on that?<br /><br />Very useful matrix. Thank you very much.<br /><br />Ajay, CEO Axes SystemsAjay Mathurhttp://www.axes-systems.com/ennoreply@blogger.comtag:blogger.com,1999:blog-36664346.post-84772818645749909582009-06-01T13:23:47.536-07:002009-06-01T13:23:47.536-07:00Thanks for the great post. I was just wrestling w...Thanks for the great post. I was just wrestling with this and thought the great brains at Bessemer might have some thoughts. It solves for a number of the challenges I was trying to cover in ramping.Andy Greenawalthttps://www.blogger.com/profile/12277338840499598171noreply@blogger.comtag:blogger.com,1999:blog-36664346.post-29671443119891820422009-05-06T15:11:00.001-07:002009-05-06T15:11:00.001-07:00Thanks for sharing
Sophie Dupont
Business Developm...Thanks for sharing<br />Sophie Dupont<br />Business Development Director<br />SD-Efficiency<br />Paris - FranceAnonymousnoreply@blogger.com