QuotaPath recently hosted the webinar: “Sales Hacker Workshop: The Comp Plan Recipe that Doubles Rep Productivity and Retention.” Read on for our comp plan workshop recap.
Sales reps once feared having to explain to interviewers why they had short stints at companies on their resumes.
In 2022, that fear no longer exists.
“Employers are stealing talent at excessive rates right now,” said Mary Grothe, an entrepreneur, investor, and revenue leader. “Sales reps no longer have to worry about leaving in a few months, because they can quickly get a better job elsewhere.”
What constitutes “better” varies between people, but most will agree that compensation has a lot to do with it. And recruiters and sales leaders alike understand that.
Between 2021 and 2022, sales compensation increased between 5 and 15 percent, marking the highest compensation jump in 10 years. That’s according to Betts 2022 Compensation Guide. Part of that is thanks to larger tech companies advertising some of the largest on-target earnings (OTE) the industry has ever seen. Looking at you, Google with your $300K+ OTEs.
However, OTEs aren’t a guarantee, and companies sometimes stretch those numbers in order to attract talent.
“It is tiring to see employers take away talent based on lies,” said Mary. “They’re showing OTEs and dangling this carrot.”
In this Sales Hacker webinar titled “The Comp Plan Recipe that Doubles Rep Productivity and Retention,” Mary addresses how companies can compete with this. Our CEO and Co-Founder AJ Bruno and Chief of Staff Graham Collins also joined Mary to discuss compensation trends and tactics.
Watch along as the three share:
- How to build a plan when you have no historical data
- When to use equity
- How to respond when candidates have a much higher offer
- When to standardize a comp plan
Watch the full recording below, and check out our three key takeaways farther down.
Key takeaways from “The Comp Plan Recipe that Doubles Rep Productivity and Retention”
1. Encourage candidates to ask follow-ups when receiving higher offers elsewhere. (14:24)
You’ve got an offer out to a sales rep, who has received an offer from another company with a larger OTE. What do you do?
Mary, who has served as a CEO or CRO for the past five years, said sales reps have to get smarter in the interview process.
“Salespeople, you have to ask, ‘How many performers are at plan? ‘How many are over, and how many are under? How long has this plan been in place? What was the data behind creating this target, this quota?’” Mary said.
By asking these questions, you’ll likely find out that the OTE is more wishful thinking than reality.
2. How to design a comp plan without historical data (17:23)
As our resident sales nerd and head comp plan strategist, Graham Collins encourages people to model their comp plans from historical data.
But what if you’re a startup building your first comp plan? How do you model your plan from data when no previous data exists?
Mary just went through this at a startup she advises. She began with a flat-base salary and an OTE that’s based on quarterly bonuses. Then she built a go-to-market strategy based on her hypothesis that’s modeled from primary research and other companies. She’ll next launch it for 90 days, and evaluate the data. If more data is needed, she’ll keep the current rates and re-evaluate again.
3. Equity as compensation — yay or nay? (46:21)
“Employees at startups have gotten a lot smarter about equity,” AJ said. “We had a sales hire recently ask how many shares are outstanding. That was a good question and we were able to have an intelligent conversation around it.”
On the flip side, if candidates focus only on the number of shares, and the company raised too much money with an inflated valuation, then the number of shares is meaningless, AJ added.
Graham said he’s in favor of offering equity, especially when you’re up against a competing offer with “loads of cash” on the line.
But Mary advised only offering equity when your company has a clear three to a five-year exit plan.
“If you don’t have that clearly outlined then those numbers aren’t meaningful,” Mary said.
To learn when you should standardize your compensation plan, additional comp plan best practices, and how to modify comp plans for new hires to ensure they hit full OTE, watch the full recording.
For additional compensation plan support, schedule a free 30-minute comp plan strategy call with Graham. Or, if you’d like to see how QuotaPath can deliver compensation happiness to your reps and leadership, chat with a teammate today.