👋 Hi, it’s CJ Gustafson and welcome to Mostly Metrics, my weekly newsletter where I unpack how the world’s best CFOs and business experts use metrics to make better decisions.

Welcome to our March series on Sales Compensation.

I was going to hold out on ya’ll until December to drop this blockbuster series. But I realized people want BANGERS. They want HITS. And they want them NOW.

Kanye West doesn’t just sit on an album until December because he thinks it’s the right “time” to drop.

No; he calls up Ty Dolla $ign and says let’s assign some damn quota.

You can delay your gratification in other areas of life, BUT THE METRICS SHALL NOT WAIT!

Part I: Designing Rep Comp Plans

  • Who’s involved in comp plan design

  • Getting the split right: Base vs Variable

  • Quota to OTE ratio

  • Baselining achievement

  • Accelerators

  • Paying sales managers

  • A case study: Salesforce’s early comp plans

  • What counts as a booking?

  • Comp plan flaws

Part II: The Art and Science of SPIFFS

  • Why do spiffs succeed or fail?

  • When’s the best time to run a spiff?

  • How should you structure spiffs?

  • What do common rewards look like?

Part III: Commission Stack Benchmarking

  • What percentage should an Account Exec (AE) make on a deal?

  • How much should the rep’s manager, SE, and BDR make?

  • What does a “good” total commission stack look like?

  • Does this differ based on pricing model?

Comp Plan Design

There are three parties involved in designing rep comp plans:

  1. People Operations - Market comp benchmarking

    1. What’s competitive for talent?

  2. FP&A - Guard rails

    1. What are we trying to achieve from a topline perspective, and what are we willing to spend to get there?

  3. RevOps - Ground game

    1. What will actually motivate and drive the right behavior on the ground when it comes to rep activity?

All three parties need to have a firm understanding of the organization’s high level goals and how the company monetizes its product. And they need to be consistent when they communicate objectives to reps so they can manage their time accordingly.

Getting the split right

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