Release your inner Sales Nerd: Become a Comp Plan Hacker
The highest-paid sales reps aren’t always the most successful.
Top performers have a firm understanding of comp plans and take savvy, smart steps to maximize returns. Call them comp plan hackers. They keep running totals of their commissions. They get creative when close to hitting quotas, and constantly refocus efforts to earn the highest commissions.
Comp plan hackers are not sandbagging deals (AKA holding them until the next quota period). They’re also not convincing their wealthy uncle to sign phony contracts that push them over their quotas. They simply operate within the rules of the game — and do it really well.
Remember, sales managers and high-level executives create comp plans intentionally. They want reps to make money, get into accelerators, and achieve bonuses. Why? Because ultimately, it means more revenue for the company.
Ready to release your inner sales nerd and learn how to hack your comp plan? All it takes is an analytical mindset and some simple tips:
Keep track of how much you’re making
Sound obvious? Not so much. Many comp plans are so complex that tracking is tough. If you don’t know how much you’re making, you’re not able to maximize your pay. You can track your commissions on a spreadsheet, but that’s subject to data-entry errors, and forces you to learn the complexities of spreadsheet equations. Instead, use a system like QuotaPath, which calculates commission and tracks quota attainment in real-time. It makes it easy to forecast your pipeline of deals and monitor potential earnings.
Work your specific comp plan
A smart rep knows how to get paid more for completing certain actions. For example, a salesperson in a bookings-based plan sees that a one-year, $15,000 deal yields less commission than a two-year, $10,000 per year deal. Sometimes it pays to discount! This way the client pays a lower per-year price, the company guarantees revenue for 2 years, and the rep gets more commission. Everyone wins.
Close to your quota? Give a sweetheart deal to a deserving prospect
Let’s say you’re $3,000 short of your quota. You’ve talked with a nonprofit recently that really needs your services but will never have the budget for it. Now’s the time to convince your sales manager that a steep discount is worth it in the long run.
Reverse engineer your comp plan
Different types of deals are typically paid out at different rates. Commissions can range widely depending on product type, industry, geographic location, or length of the contract. Learn those differences. Maximize your efforts and earn the highest payouts possible.
Be careful, though. Deals with higher payouts will likely be tougher to close and might not be as valuable in the long run. Remember, 5% commission on a $50,000 deal is more than a 10% commission on a $20,000 deal. And likewise, bigger doesn’t always mean better. A 10% commission on a $15,000 deal is more than a 5% commission on a $25,000 deal.
Understanding where you stand against your quota will help you maximize commissions. If you’re going to demolish your quota, there’s no sense in offering discounts just to get more deals closed before the quarter closes. Instead, plan for the next quarter by meticulously working through buying processes and procurement to maximize the value of each new deal. If it closes quickly, great! You’ve boosted the potential revenue for the company. If it takes a little longer, you’ll have a strong deal to begin the next quota period.
Work the caps and cliffs
Capped commissions mean you can’t earn any more money once you hit a certain amount of sales. If you’re close to a cap, find a way to make money from the deal in other ways. Can you cross-sell the deal into a different product area? Can you make it a two-year deal because you’re not capped on longer deals? Can you switch gears to focus on product types you’re not capped on? Get creative.
Cliffs mean that you can only earn commissions after you reach a certain level of sales. For example, you don’t earn commissions until you reach 50% of your quota. There’s no magic trick here. Just be aware of cliffs and work your tail off until you reach the threshold.
Get yourself into the role that pays the highest comp rates
In some organizations, two people closing the same deals earn wildly different commission rates. For example, a junior sales account executive may earn 10% while a senior executive earns 20%. Work hard to get into a role where your earning potential is highest.
Ready to get the most out of your comp plan? Try QuotaPath. It calculates and automates commissions so you know exactly how much money you’re making and can forecast future earnings. The easy-to-read dashboards and metrics keep you motivated to hit sales goals. Ready to check us out? It’s free to sign up, so start tracking your commissions today!
QuotaPath is the most adaptable compensation solution for sales reps to finance to everyone in between. Try it for free today!