The complete sales comp plans guide to setting, calculating, and tracking compensation

QuotaPath recently published a comprehensive sales comp plans guide. Get a preview below. 

Organizations have to get sales compensation right in 2022. 

A whopping 47 million people voluntarily left their jobs last year in search of better wages, benefits, and working conditions. That’s the highest quit rate to date, as reported by the Labor Department. 

Sales teams definitely felt the hit.

Last year, sales rep tenures, which, let’s be honest, have always been short, dropped even more to just 18 months. For reference, that number was closer to 2.5 years 10 years ago.

Meanwhile, average on-target earnings (OTE) for account executives and sales development reps jumped between 5 and 15 percent year-over-year based on region and experience. We anticipate those numbers to continue to climb in 2022. 

Are the shortened tenures and larger OTEs correlated? We think so. 

Dooly, a platform that helps sales reps maintain pipeline data hygiene, found that, of reps surveyed, 51 percent said they would ditch their team for higher pay.  

To address increasing sales rep attrition rates and OTEs in a hyper-competitive job market, leaders must adjust.

That means designing sales comp plans that: pay well, reward over performance, motivate reps, and are easily understood.

To help with all four, we compiled this extensive sales comp plans guide. 

Learn how to set quotas with competitive OTEs that align with your business goals and attract high performers. Take our recommendations for compensation plan best practices, variable plans, ramp-up methods, and quota frequencies. 

Calculate and track sales commissions more accurately — and in less time. Or, skip everything and head to the resources index for free tools to help your approach to sales compensation management.

Key Takeaways

Before you jump in, we listed some highlights from “Your Guide to Setting, Calculating, and Tracking Sales Compensation” below.

1. OTEs are up. Account executives with zero to three years of experience see OTEs on average of $100K while SDRs are seeing OTEs between $80K and $90K. (Betts 2022 Compensation Guide)
   
2. Reps trust compensation plans created by RevOps the most. However, not every organization has a RevOps function just yet. For companies that generate less than $30MM in ARR, sales leaders design the comp plans 73 percent of the time. (Benchmark Report: How to build compensation plans for your sales team)
   
3. Multiple-rate commission plans are the best and even better when you add milestone bonuses. Although these types of plans are more complex to track and calculate, they drive performance and reward overperformance. In our survey, we found that nearly 80 percent of comp plans featured accelerators. (Benchmark Report: How to build compensation plans for your sales team)
   
4. Design comp plans that you can easily speak to. Simplicity, consistency, and uncapped commissions are your friend. Make sure you communicate any changes or new plans to your team, explain how the company will support them through these changes, and allow them a space to ask questions.

5. It’s time to automate your sales compensation process when: you have plans to scale your team, your current process slows you down and is silo’ed, and you and your reps lack visibility into real-time attainment and earnings. Get ahead of the problems by implementing a solution now. 

Enjoy the read!

QuotaPath, which supports scaling sales teams with sales compensation software, also offers free comp planning strategy consultations. 

Chat with one of our teammates to learn more. We look forward to meeting you!