A decelerator in sales is a reduced commission rate that decreases a sales representative’s payout relative to what they would have earned with their base commission rate.
Decelerators can be used to penalize poor performance (before a rep hits quota), avoid excessive payouts (after a rep hits quota), or discourage reps from selling less profitable streams of revenue or pursuing bad deals for the business.
See this compensation plan template for use of a decelerator: Commission with Accelerators & Decelerators
Decelerators are typically used in sales commission plans to encourage sales representatives to meet or exceed their quotas. By reducing the commission rate for sales that are below quota, companies can discourage sales representatives from making low-value sales. Additionally, decelerators can help to ensure that sales representatives are focused on making high-value sales that will help the company achieve its goals.
There are a few different ways that decelerators can be structured.
One common approach is to use a sliding scale, where the commission rate decreases as the number of sales below quota increases. For example, a sales representative might earn 100% commission on sales up to 100% of quota, 80% commission on sales between 90% and 100% of quota, and 60% commission on sales below 90% of quota.
The use of decelerators in sales commission plans is a controversial topic. Some people argue that decelerators are necessary to encourage sales representatives to meet or exceed their quotas.
“The accelerate and decelerate plan is one of the best generic models,” said Mark Roberge, Managing Director of Stage 2 Capital. “It makes the performance payout extreme. When a rep doesn’t do well, they really don’t do very well. But when you do well, you do really well. It accentuates the motivation of a commission plan.”
Read more of Mark’s thoughts.
Others argue that decelerators are unfair and can discourage sales representatives from making sales. Ultimately, the decision of whether or not to use decelerators in a sales commission plan is up to the individual company.