Logo commissions: what they are and how to comp them
Sales incentive compensation often features multiple avenues for reps to earn variable pay, such as bonuses on logo commissions or multi-tier commission structures like accelerators.
We like to refer to these rules as “paths,” or the different ways a rep can earn sales compensation within a comp plan.
Some other paths might include milestone bonuses, accelerators with cliffs, single-rate bonuses, or any combination of the three, but this blog focuses on logo commissions.
Designing compensation plans? Here’s what you need to know about logo commissions.
One step further, let’s say we’re an HR rewards platform and we’re targeting the real estate tech industry. Our base salary plus commission structure pays a flat 12% commission rate for deals that include enterprise-defined reality tech firms, like Zumper, OpenDoor, and Zillow. This rate comes in marginally larger than the standard commission rate of 8% on all other deals under this comp plan.
This technique acts as a great way to motivate reps to go after those jewel accounts and works synchronously with account-based marketing (ABM) campaigns.
However, if reps focus too much of their attention solely on prospects that fall under logo commission guidelines, they may miss out on deals with other ideal customer profiles (ICP).
So, while we suggest logo incentives, we recommend not making it the main driver of your comp plan.
Logo commissions as a SPIF
Instead of carving out and reserving space for logo commissions with your comp plan (remember, less is more), some teams insert logo-based payouts as a SPIF. A SPIF represents a short-term mechanic of the overall comp plan. Leaders typically implement these on an ad-hoc basis throughout the year.
Logo SPIFs might include customers won from a competitive takeaway or a larger customer from a specific industry. The latter can create credibility for your organization, like the example above. Sometimes, sales teams will pay a SPIF to lock in a lighthouse customer in a new market, territory, or country.
TIP: If you’re considering adding logo commissions to your pay structure, test it as a SPIF beforehand to see how it impacts your outcomes. If it doesn’t alter selling behaviors, then no need to add it to your plan.
Or, perhaps a company pays a logo bonus based on contract value.
Example 4: For any contract value more than $5,000, the rep receives a single-rate bonus of $500.
Example 5: Reps earn $1,000 on any contract valued between $5,000 and $10,000.
Example 6: For any deal larger than $10,000, the rep collects a $2,000 bonus.
Tracking logo commissions in QuotaPath
Historically, Sales and Finance have manually tracked logo commissions under their own system — reps, too. Who else do you think is Googling “how to calculate commission?”
No need, my friends. QuotaPath exists so that all you have to do is add the SPIF into the platform. We’ll take it from there and automatically track it. Or, team up with us to design your comp plan with logo bonuses with our guidance. We’ll ensure it maps correctly in the system.
You can read about our customer Prefect’s experience with the platform. Prefect specifically runs “logo bounties,” which counts as the second big driver of their comp plan. Instead of a percentage, Prefect’s team earns a flat-rate bonus based on deal size.
“It sounds like a SPIF, but it’s part of the comp plan on a recurring basis,” Prefect Head of Finance Thomas Egbert said.
Want to learn more? Book a time with us today to see if we’re a match.