This is a guest blog from Kenzi, a professional business writer with 15 years of experience in crafting compelling content for entrepreneurs and corporate clients. His expertise is creating business plans, marketing materials, and corporate communications that drive results. Kenzi holds an MBA and has a keen understanding of business strategy, which he uses to craft narratives that resonate with stakeholders at all levels.

Think about your sales performance. Are you confident that your revenue operations (RevOps) and finance teams are working together to maximize your results? 

In many organizations, these departments often work in silos. 

Their finance focuses on budgets and projections, while RevOps is laser-focused on the sales funnel, deals, and customer relationships. 

This lack of coordination can lead to communication gaps, budget inconsistencies, and missed opportunities. 

When you align RevOps and finance, you can leverage their combined strengths to enhance sales performance. Of course, you must plan strategically and opt for seamless collaboration.

This article explains why this alignment is essential for accurate data analysis, resource optimization, and smoother financial planning. 

What is RevOps?

Revenue Operations (RevOps) is a strategic approach that aligns various business departments to drive revenue growth and streamline processes. 

The RevOps framework aims to improve data sharing, communication, and efficiency across the organization by unifying marketing, sales, and customer success teams. 

This approach ensures that all revenue-generating teams work together toward common goals, using accurate data and consistent strategies to boost business performance.

Comprehending Finance

In a business context, finance refers to managing the company’s money, assets, and resources. It encompasses budgeting, forecasting, expense management, and strategic investment decisions. 

Finance teams analyze revenue streams and costs to provide valuable insights, ensuring the business maintains healthy profitability. Their analysis helps shape budgets and long-term financial strategies, balancing resources and mitigating risks.

Why Alignment Matters

Aligning RevOps and finance teams is essential because it provides a unified approach to revenue management. When these departments work together, they share accurate data, coordinate on budgeting and resource allocation, and align their goals. 

This collaboration reduces miscommunication, identifies growth opportunities, and ensures that each team supports the broader business objectives. It also leads to more realistic forecasting, better resource use, and a more cohesive customer experience.

The Synergy Effect: How Alignment Boosts Sales

Imagine a world where sales reps have real-time access to accurate pricing and quoting tools, where finance has clear visibility into sales pipeline health, and where forecasts can be adjusted accordingly. This is the power of revenue operations and finance alignment.

Improved Forecasting Accuracy: With unified data from RevOps and finance, you can generate more data-driven and reliable forecasts. This empowers you to make informed decisions about resource allocation, hiring, and marketing investments.

Streamlined Approvals: RevOps can automate workflows and approvals, ensuring deals move through the pipeline faster. Finance can set clear approval criteria within the RevOps system, providing transparency and eliminating delays.

Enhanced Sales Productivity:  RevOps can equip salespeople with the tools and resources to close deals faster. Finance can give sales reps insights into customer payment history and creditworthiness, allowing them to tailor their approach.

Better Communication and Collaboration: Communication improves when RevOps and finance speak the same language (data!). Regular meetings and data sharing foster collaboration and a shared understanding of sales goals.

Unlocking the Power: Steps to RevOps-Finance Alignment

Achieving RevOps and finance alignment is an ongoing process, but here are some initial steps to take. 

Define Shared Goals: Establish clear, measurable goals for revenue growth, profitability, and customer satisfaction so both teams work toward the same targets. Aligning these objectives ensures that every action taken supports the overall business strategy.

Securing Devices and Protecting Data: With teams increasingly using the latest devices to manage critical business data, securing these tools is essential. Devices like MacBooks are primary tools for RevOps and finance teams that rely on accurate, real-time information to plan and forecast. Keeping data safe is crucial because if sensitive information falls into the wrong hands, it could compromise strategic decisions. An easy but effective measure is to lock screen on mac devices, preventing unauthorized access and securing critical information. These small steps, consistently practiced, help protect your business’s revenue stream and maintain efficient collaboration across departments.

Break Down Silos: Promote open communication and collaboration between RevOps and finance. Organize regular meetings, create shared dashboards, and break down departmental barriers. Transparency in objectives and challenges allows both teams to better understand each other’s roles and needs.

Standardize Data and Processes: Ensure both teams use consistent definitions and metrics for key data points like sales pipeline stages, deal values, and forecasting methodologies. This standardization eliminates confusion and enables seamless collaboration.

Invest in Technology: Implement tools that integrate RevOps and finance systems. Seamless data flow and minimized manual errors lead to faster decision-making and more accurate reporting. Unified dashboards can offer a comprehensive overview, ensuring that insights are readily available to both teams.

Promote a Culture of Data-Driven Decision Making: Empower both teams to leverage data insights when making sales strategies, resource allocation, and forecasting decisions. Providing training on data analytics tools can help staff develop the skills needed to interpret data effectively.

The Bottom Line: Enhanced Sales Performance

So, what does all this mean for your sales performance? Aligning RevOps and finance creates a seamless flow of information. This approach enables more accurate planning, efficient resource allocation, and improved customer experiences. The synergy between these two functions ensures that your organization is positioned to grow sustainably and adapt to changing market conditions.

Deciding who RevOps reports to within a company is a strategic decision that can significantly impact the company’s success.  

It’s also often a bit of a puzzle.

This relatively new function cuts across departments like Sales, Marketing, and Customer Success, challenging a clear reporting line.  

Furthermore, RevOps’ role and responsibilities might differ depending on the company’s structure (siloed vs. integrated departments) and size (startup vs. large enterprise). Adding another layer of complexity, industry priorities can influence who RevOps aligns with most closely.  

For example, a B2B SaaS company might prioritize sales enablement, suggesting the CRO as a potential reporting leader. In contrast, a B2C company focused on customer experience might position RevOps under the CMO.  

Because of these factors, there’s no one-size-fits-all answer. 

The optimal reporting structure hinges on each organization’s unique circumstances and goals. Below, we unpack possible RevOps organizational hierarchies according to various factors.

What Falls Under RevOps

Before discussing who RevOps reports to, let’s examine what responsibilities fall under the RevOps umbrella.

RevOps acts as a central nervous system for a company’s revenue engine, overseeing various functions and responsibilities that bridge the gap between Sales, Marketing, and Customer Success. 

These often include: 

• Process Optimization and Automation: RevOps identifies and streamlines processes across departments related to lead generation, qualification, nurturing, and deal flow. They also implement automation tools to improve efficiency and eliminate manual tasks.
• Data Management and Analytics: RevOps is crucial in collecting, analyzing, and interpreting data from various sources (CRM, marketing automation, customer support) to provide insights on campaign performance, sales pipeline health, and overall revenue generation effectiveness.
• Technology Implementation and Integration: RevOps ensures the seamless integration of various sales, marketing, and customer success technologies (CRM, marketing automation, helpdesk, sales compensation management) to create a unified data platform for improved visibility and communication across departments.
• Sales Enablement: RevOps empowers the sales team with the tools, resources, and content they need to be successful. This includes developing sales playbooks, training programs, and ongoing coaching and support.
• Metrics and Reporting: RevOps establishes key performance indicators (KPIs) for the revenue engine and generates reports to track progress toward goals. This allows for data-driven decision-making and continuous improvement across the sales and marketing funnel. Internally, they are often measured according to these RevOps metrics. 
• Governance and Communication: RevOps fosters collaboration and communication between Sales, Marketing, and Customer Success teams. They establish clear ownership and accountability for revenue-generating activities and ensure alignment with overall business goals.

RevOps professionals wear many hats and play a critical role in ensuring a smooth flow from attracting leads to converting them into loyal customers. They are the glue that keeps the revenue generation engine running efficiently and effectively.

Factors Influencing RevOps Reporting Structure

So, with those responsibilities supporting the GTM branch of an organization, where exactly does RevOps fit within a business’s departmental structure? The answer typically depends on the industry, company size and stage, and how said company is structured.

Industry, Size, and Stage

Industry trends and specific needs can shape who RevOps reports to. In a B2B environment, focusing on complex sales cycles and high-value contracts, RevOps might report to the Chief Revenue Officer (CRO) to ensure tight alignment with sales enablement strategies. 

Conversely, in a B2C company prioritizing customer acquisition and user experience, RevOps might report to the Chief Marketing Officer (CMO) to emphasize marketing campaign optimization and lead generation.  

High-growth tech startups might have RevOps report directly to the CEO for close collaboration in a fast-paced environment. Established enterprises with mature sales and marketing functions might create a dedicated Head of RevOps position reporting to the COO or CRO.

At QuotaPath, we have a VP of RevOps, who oversees the growth team, which includes sales and two RevOps managers. The VP then reports up to the CEO.

“I feel strongly that RevOps should have a seat at the leadership table. How this looks depends on the organization or company. For example, some larger companies have the VP of RevOps reports up directly to the CRO. When there’s not a CRO, I’ve seen this position report up to a COO. I don’t like the models where RevOps reports up to a function head like sales, marketing, or customer success because I believe this enforces silos that we in RevOps are trying to eliminate. I like the model where RevOps reports to the CRO or COO because it ultimately drives accountability, and the focus remains on what is going to be best for the company.”

 Matthew Volm, CEO and Co-Founder of RevOps Coop

Benefits and Considerations for Different RevOps Reporting Structures

While the ideal reporting structure depends on your organization’s specifics, here’s a breakdown of the advantages and potential drawbacks of RevOps reporting to different executives:

However, none of this is as important as clear communication channels and collaboration across departments. These are the most crucial factors for RevOp’s success. Regular meetings, shared dashboards, and open communication between RevOps, Sales, Marketing, and Customer Success ensure everyone is aligned toward achieving revenue growth.

Final Thoughts

Still here? Thanks for your time.

This blog taught us that there is no rule book for whom RevOps should report. However, the key takeaway is that the optimal structure depends on your unique organizational context. By carefully considering factors like industry, company size, and department structure, you can determine the reporting line that best positions RevOps to drive revenue growth.

Additionally, here are some best practices to keep in mind:

• Prioritize Alignment, Not Hierarchy: Regardless of the reporting structure, prioritize clear communication and alignment between RevOps, Sales, Marketing, and Customer Success. Foster a collaborative environment where all teams work together seamlessly.

• Data-Driven Decisions: Leverage data and analytics to track the effectiveness of your chosen RevOps reporting structure. Monitor key metrics and be willing to adapt as your organization and revenue goals evolve.

• Focus on Outcomes, Not Titles: Don’t get hung up on titles or specific reporting lines. The ultimate goal is to create a structure that empowers RevOps to contribute maximally to your company’s revenue generation efforts.

By implementing these best practices and carefully considering the factors discussed, you can ensure that RevOps plays a pivotal role in your organization’s success. Remember, a well-aligned RevOps function is a powerful engine for optimizing your revenue generation machine.

About QuotaPath

QuotaPath empowers RevOps professionals by streamlining commission calculations and providing transparency in sales compensation. This frees up valuable time for strategic initiatives and ensures alignment between sales efforts and overall revenue goals, allowing RevOps to focus on driving growth.
Schedule time with our team to learn how RevOps can use QuotaPath to build, test, measure, track, and predict the success and cost of their sales compensation plans.

This is a guest blog written by the Convoso Team.

Understanding and leveraging intent data is vital for enhancing sales strategies. Derived from online user behaviors, this information provides insights into prospective customers’ interests and readiness to purchase. 

By analyzing web searches, page visits, and content interactions, sales professionals can pinpoint where a prospect stands in the buying journey. This enables a more focused approach, ensuring efforts are directed toward leads with a known interest in particular products or services. 

Incorporating intent data into sales can sharpen your targeting precision and boost the efficiency of sales initiatives, paving the way for tailored communications that resonate with potential buyers.

Types of Intent Data (and How They Can Elevate Your Sales Performance)

Did you know that intent data could be pivotal for elevating sales performance in your business? Both search intent and engagement data enable greater precision in targeting and analyzing online behaviors to reveal the ‘when’ and ‘what’ behind customer searches. This insight can help you craft more effective marketing strategies that meet your prospects at their point of need.

For example, perhaps your data shows that existing supply chains are a pain point for potential customers. In this case, you could use your gathered information to create targeted content, such as an article on supply chain optimization examples, which you share on their most-frequented social platforms. 

Leveraging a supply of services agreement template for such content creation can streamline your process, ensure legal compliance, and maintain consistency in messaging. This approach saves time and minimizes legal risks associated with content creation, allowing you to engage your prospects effectively and confidently.

Firmographic and technographic data can offer another layer again, providing a granular view of a potential client’s company size, industry, technology stack, and more. Leveraging this information helps ensure outreach is timely, relevant, and tailored to address specific challenges and opportunities within the organizational and technological context. 

These types of intent data can form a comprehensive toolkit for sales professionals, driving efficiency and helping identify and convert high-intent leads.

How Intent Data Can Enhance Your Marketing 

So, how can intent data enhance your marketing? There are several different areas where it can come in particularly useful, including: 

Account-Based Marketing

Enhancing your account-based marketing with intent data can transform your targeting precision, spotlighting high-value accounts ripe for engagement. 

This approach relies on analyzing intent signals to identify businesses that are actively seeking solutions and then ensuring that marketing efforts are concentrated on prospects with a demonstrated interest in your products or services. 

Inbound Marketing 

Maximizing inbound marketing involves pinpointing evolving consumer behaviors and creating content that resonates with shifting preferences. For example, you might identify hybrid shopping as an emerging trend in your industry and try to craft a blend of online and offline experiences for potential customers. 

Similarly, phygital marketing strategies might utilize intent data to seamlessly integrate digital and physical marketing efforts, ensuring personalized and timely messages. 

By leveraging intent data in this way, marketers can craft strategies that are not only relevant but highly engaging, driving superior customer experiences across various touchpoints.

Optimizing expenses plays a crucial role in industries heavily reliant on transportation, such as logistics or freight. Fuel cards for truckers, for instance, can significantly reduce fuel costs and streamline expense management, offering a tangible example of how data-driven insights extend beyond marketing to operational efficiency.

How to Create an Effective Sales Report

More guest content from Convoso

Read Blog

How Intent Data is Being Used in Sales and Marketing Tactics

Now, let’s dig down into the nitty-gritty of the matter and examine some of the specific ways that intent data is used in modern sales and marketing. 

Utilizing intent data involves tapping into prospective customers’ minds, providing a wealth of valuable insights that can enhance sales and marketing efforts. This strategic approach isn’t just a passing trend but a major shift in how businesses can anticipate and meet the needs of their target audiences. 

For instance, implementing budget vs actual analysis alongside intent data can offer a comprehensive view of customer behavior and expenditure patterns, aiding in more informed decision-making processes.

Some of the ways intent data is being used in this context include:

Lead Prioritization

Imagine being able to sift through a sea of leads to find golden prospects whose digital footprints signal a readiness to leap. 

This is the promise of leveraging intent data for lead scoring. By peering into potential customers’ digital behaviors and search patterns, businesses can identify and focus their energies on those who aren’t just interested in their products but are poised to purchase. 

This isn’t only about efficiency; it’s about honing your precision and effectively targeting customers.

Appointment Setting Optimization

For sectors like solar energy, where the audience pool is vast yet the truly interested are a select few, intent data is also the compass that can guide marketers to increased solar leads appointments, for example.

By pinpointing prospects actively exploring solar solutions (or other equally niche products), businesses can curate highly personalized and relevant appointments, turning curiosity into concrete sales opportunities and reducing the time wasted on leads that were never going anywhere.

Content and Ad Strategies Reimagined

Using intent data as their primary metric, your content and advertising can transform into mirrors that reflect your audience’s desires and curiosities. 

This data-driven alchemy allows marketers to craft messages and visuals that resonate more deeply, creating a magnetic pull toward your brand. It’s about crafting a dialogue, not a monologue, with content that speaks directly to the heart of your audience’s interests.

Automated Appointment Booking 

In the search for more efficiency and lower business expenditure, AI appointment booking technology is a practical solution for businesses looking to stay ahead. These intelligent systems can analyze when prospects are most likely to engage, ensuring interactions are timed to perfection. 

This seamless blend of technology and insight makes every sales encounter not just a meeting but an opportunity ripe for conversion.

A Personal Touch at Scale

Personalization is central to elevating sales outreach from good to great, with the additional benefit of promoting a more motivated sales team as conversion rates climb through properly utilizing this concept. 

Intent data allows sales professionals to tailor their communications precisely, addressing each prospect’s unique interests and concerns. This bespoke approach transforms outreach into the key that unlocks deeper engagement and higher conversion.

Supercharged Direct Email Campaigns 

Intent data takes the guesswork out of email marketing, allowing for campaigns that hit the mark every time. 

Say you’re promoting your voicemail drop service. By understanding the pulse of your audience’s interest, marketers can segment communications with unparalleled precision, leading to emails that aren’t just opened but acted on. 

It’s about turning prospects’ inboxes into a gateway for engagement and growth.

Strategic Account Targeting

Imagine if you could read the minds of your prospective clients, knowing exactly when they’re in the market for your services. Maybe they’re experiencing particular pain points when it comes to their audit trails and could do with some specialist software to help them. Intent data can make this a reality through predictive analytics. 

By analyzing patterns in web behavior, such as frequent visits to specific product pages or engagement with related content, sales teams can identify which businesses are in the buying window for their solutions and even how to encourage retention in the long term. 

Whether you’re targeting potential customers browsing eCommerce websites or those seeking specific solutions, leveraging intent data ensures that your messaging resonates with their needs and preferences.

This allows for a more proactive approach, where sales efforts are concentrated on accounts showing real interest, significantly increasing the likelihood of converting these prospects into customers. It’s about being in the right place at the right time, armed with the right offer.

Enhanced Customer Journey Mapping

With intent data, the customer journey transforms from a guesswork-driven path to a well-lit runway for targeted sales strategies. By understanding the specific touchpoints where potential customers show the highest engagement, teams can tailor their outreach, ensuring every communication is relevant and timely. 

This level of customization enhances the buyer journey, making it more likely that a prospect will proceed to the next stage. It’s akin to having a personalized roadmap for each potential customer, ensuring every opportunity for engagement is noticed.

Competitive Intelligence

In addition, knowledge of your competitors’ moves can provide a strategic advantage in high-stakes sales. Intent data sheds light on when prospects want to buy and what other solutions they’re considering. 

This invaluable competitive intelligence enables teams to fine-tune their pitch to highlight their unique value proposition and differentiate their offerings from the competition. It’s about turning the competitive landscape into a canvas, where informed sales strategies paint a compelling picture of why your solution stands out.

Optimizing Sales Resource Allocation

Finally, one of the challenges in an effective sales team structure is optimizing resource allocation to ensure the highest return on investment. Intent data acts as a strategic filter, highlighting leads with the greatest potential for conversion. This ensures that sales resources are focused on nurturing these high-value prospects rather than being spread thin across less-promising leads. 

Moreover, intent data can identify cross-selling and upselling opportunities within your existing customer base, maximizing sales efforts. It’s about making every call, email, and meeting count and ensuring sales resources are invested where they’ll yield the most significant impact.

The strategic incorporation of intent data into sales and marketing tactics isn’t just an upgrade—it’s a revolution. It’s about moving beyond the traditional spray-and-pray approach to a world where every message, outreach, and campaign is a finely tuned arrow aimed straight at the heart of your audience’s needs and desires. 

The businesses that master this art will not just survive the modern age but thrive, setting new standards for connecting, engaging, and converting in the ever-evolving digital marketplace.

Conclusion: The Transformative Power of Intent Data in Sales

Intent data has revolutionized sales performance by offering deeper insights into buyer behavior, enabling sales teams to identify high-intent prospects and tailor their outreach accordingly. 

This strategic advantage allows for more focused and efficient sales tactics, significantly improving conversion rates and optimizing the sales pipeline. 

Embracing intent data analytics thus empowers organizations to future-proof their sales strategies, ensuring they remain competitive in a rapidly evolving marketplace. 

Sales commissions are a powerful motivator, but a poorly managed commission tracking system (whether manual or software) can lead to frustration, confusion, and even mistrust from your revenue team.

This mistrust can end in rep turnover, with 9% of reps quitting over a commission dispute, according to our 2024 study. 

Think about it.

A star salesperson exceeds their quota by a mile, only to face delays or discrepancies in their commission payout due to unclear guidelines or manual calculations. Conversely, a well-oiled commission tracking system with clear rules, real-time data access, and consistent payouts can unlock peak performance and a highly motivated sales force.

Here’s why mastering sales commission tracking is crucial:

• Transparency and Trust: A clear and documented commission plan with readily available data builds trust and empowers reps to focus on closing deals.
• Motivation and Efficiency: Real-time commission progress keeps reps engaged and allows them to adjust their strategies for maximum earning potential. Sales commission tracking software eliminates time-consuming manual calculations, freeing up time for selling.
• Fairness and Accuracy: Standardized deal qualification and detailed deal tracking ensure everyone follows the same rules and that commissions are distributed accurately. Plus, regular audits maintain a system of checks and balances following ASC 606.

In a worst-case scenario, your top-performing rep will join the 9% of reps who quit after too many inaccurate commission checks. Another worst case? When a company tries to cap commissions in response to a rep closing a bluebird deal (a large outlier deal), refusing full payouts, and breaking the original rules laid out in their commission policy.

Conversely, a company that adopts commission tracking best practices paired with fair, logical, and competitive compensation structures can recruit and retain some of their best sellers. 

10 Commission Tracking Best Practices

By incorporating these best practices, you can transform your commission tracking system from a source of friction to a powerful tool that fuels sales success.

1. Clearly Defined Commission Plan: Ensure your sales team has a clear and documented understanding of the commission structure. This includes details like:

• Earning potential (base salary + commission)
• Commission rates (percentage of sales or tiered structure)
• Defined qualifying factors for commission payouts (e.g., closed deals, upsells, demos booked)
• Note: It’s also a best practice to provide documentation that breaks down their plan, plus when and how they are paid. Learn more about QuotaPath’s Plan Verification. 

2. Technology: Implement and integrate a CRM with commission tracking software ​​to automate data collection and minimize manual calculations. This will reduce errors and streamline the process.

• If you’re not ready to implement compensation management software, standardize manual tracking by downloading our Google Sheets Commission Template. This will ensure your reps aren’t building their own spreadsheet with flawed logic. (Learn more about how QuotaPath integrates with Google Sheets.)

3. Real-Time Data Visibility: Provide sales reps access to their commission progress and key metrics. This transparency fosters motivation and allows them to adjust their strategies if needed.

• “Our reps realized they could run scenarios and see how much they could earn from our monthly kickers,” said Joe St. Germain, VP of Sales at Blackthorn. 

4. Standardized Deal Qualification: Establish clear criteria for a qualified deal that triggers a commission payout. This ensures fairness and consistency in commission calculations.

5. Detailed Deal Tracking: Maintain a detailed record of each deal’s progress, including customer information, quote details, and relevant milestones. This provides a clear audit trail for commission calculations and dispute resolution.

6. Win/Loss Reporting: Track wins (closed deals) and losses to identify trends and areas for improvement. Analyze reasons for lost deals to determine potential adjustments to the commission structure or sales training needs.

• Read more RevOps best practices.

7. Regular Commission Payouts: Establish a consistent and timely payout schedule for commissions earned. This predictability motivates reps and demonstrates the company’s commitment to fair compensation.

• Later-stage companies typically schedule commission payouts at the start of the contract, while early-stage companies paying close attention to cash flow will schedule payments upon receipt of invoice payment.
  • 5 RevOps leaders share commission payment terms tips

8. Commission Cap Considerations: Don’t do it. If you have a rep break the comp plan with an exorbitant payout, pay the rep and adjust the subsequent plans to protect it. 

9. Internal Controls and Audits: Maintain a system of internal controls to ensure accuracy in commission calculations. Regular audits can identify potential discrepancies and maintain trust in the system. This is a commission tracking best practice and an accounting liability if you fail to comply with ASC 606. 

10. Open Communication: Maintain open communication with your sales team regarding the commission structure and any changes or updates. We recommend checking out this blog to learn best practices for communicating a new comp plan with your team.

Address concerns promptly and foster a transparent environment.

• Communicate and document the same message every time you review the plan. 
• Use multiple formats to explain the new plan.
• Provide an FAQ document.
• Share commission calculation examples.
• Communicate the reasons and advantages of plan changes and how the company plans to support reps through these changes.
• Avoid confusing or vague language.
• Explain how achievement relates to earnings.

Conclusion: Streamline Commission Tracking 

To wrap up, a well-designed commission tracking system isn’t just about numbers; it’s about empowering your sales force and fostering a culture of trust and high performance. 

Implement the above best practices to boost sales motivation, increase efficiency and accuracy for your accounting and RevOps teams, and minimize disputes. 

To eliminate the time investment and formula-filled work required to set your commission spreadsheet, check out QuotaPath for streamlined workflows. You can sign up for a free trial or schedule time with our sales team for a custom demo. 

See how real-time data, automated calculations, and customizable dashboards transform your commission tracking from a headache to a sales performance driver.

In your first year as a startup, your finance operations can survive with a good, solid bookkeeper and cash-based accounting.

However, the minute you start raising money, it’s best practice to bring on someone who knows GAAP accounting and can convert the company to accrual-based accounting.

That’s according to Amy Walker, CPA, Co-Founder & Director of CAS at Walker Glantz, who recently spoke on our webinar, Early Stage Finance Foundations: Strategies, Compliance, and Sales Compensation Manager.

Joining Amy included Jonathan Cochrane, CPA 🚀, VP of Strategy at Maxio, hosted by AJ Bruno, QuotaPath CEO and Co-Founder.

Leaders and finance professionals at early-stage companies joined us as we discussed the complexities of finance, compliance, and sales compensation management.

This session provided guidance and best practices for establishing strong financial pillars before compliance concerns emerge. Plus, we discussed what makes a solid financial infrastructure, technologies to consider, how to mitigate audit risks, and scaling efficiently.

Watch the full recording below, and read on for key takeaways.

Building a Solid Financial Infrastructure

In the early days, startups experience countless things happening at once, from fundraising to scaling hires and payroll. Establishing effective bookkeeping and record-keeping processes early on is crucial.

“My first advice is to not cheap out on your bookkeeping. You need to have a bookkeeping solution in place from the beginning. The more experienced person you have will cause less friction later because they can grow with you,” Amy said.

“They have the skills. They know how to take you from cash to accrual, how to start documenting processes automatically, and when a new process needs to be put in place.”

According to Amy, “You can get away with cash-based books your first year,” which means you don’t count revenue until you receive payment. However, when more sales trickle in with consistency, you should switch to accrual-based books to ensure you have a solid system in place for revenue recognition.

Additionally, one of the key financial processes to prioritize in the early stages of a startup involves accurate and consistent reporting.

“Producing reliable financial statements early and often, billing customers on time, collecting cash on time, and segmenting your reports are foundational to your success as a business,” said Jon.

“Producing reliable financial statements early and often, billing customers on time, collecting cash on time, and segmenting your reports are foundational to your success as a business.”

Jon Cochrane

Streamlining Finance Operations with Technology

The conversation also touched on what finance technology to prioritize as a company scales.

Technology offers automation, data accuracy, real-time reporting, and data access so you can make the most of your lean resources. It reduces errors, ensures compliance, and boosts bookkeeping, payroll, and GAAP compliance efficiency.

“There used to be offices full of people that processed payroll or made tax filings. You can do that now with software,” Amy said.

We discussed the types of technologies to consider and their suggested order of implementation.

“A good outsourced service is going to know when to layer on technology to help you continue to use outsourced services,” said Amy.

QuickBooks topped the list as a general ledger system. “I wouldn’t start with the free ones,” Amy stated, “They’re not going to grow with you and you’re just going to end up redoing things.”

Commission Tracking with QuickBooks

QuotaPath integrates with QuickBooks to streamline commission calculations and schedule and amortize payments.

Learn More

Next, you need to layer on a payroll solution.

“We start everybody on Gusto. Then if employee disbursements are all over the country, we love Rippling,” Amy shared. “They integrate with QuickBooks and automate as much as possible.”

CRM

After bookkeeping and payroll, you need a CRM.

“The two that we see most commonly in the market are Salesforce and HubSpot,” according to Jon. “They’re great solutions. HubSpot seems a bit more friendly. Salesforce, there’s a learning curve.”

When you have 25 customers on a monthly subscription, it is a good time to consider a billing solution. But make sure to evaluate how you want to spend your time.

“That’s 300 invoices per year that you have to make sure you get paid for,” Jon pointed out. “You’re trying to grow your product. The last thing you want to do is chase your customers down for payment on those invoices for a service you’re doing.”

He continued, “I think that making sure that your cash engine is operating smoothly is the main point when it comes to billing.”

Commissions

Commissions “tend to get forgotten,” AJ said. “It just gets passed around. Commissions are payroll. You don’t run payroll out of a spreadsheet, why would you run commissions out a spreadsheet if it’s part of payroll?”

Amy discovered QuotaPath when a client asked her to check it out for them. “Like any good technology, it changed our mindset,” Amy explained. “The beauty of it was that the review period with the sales rep went away because they had a real-time view into what they were earning. We were all seeing the same thing.”

FP&A and ERPs

An FP&A solution and an ERP are “solutions that you look at once you’re at that $10 million and beyond level,” according to Jon. An FP&A is about having good metrics, understanding what’s going on in the business, and what the drivers are to help with future planning.

“It’s time to think about an FP&A solution once you start driving budgets down to individual owners who manage their own P&L,” Jon said.

According to Jon, “You need to seriously start looking at an ERP when you have multiple business entities that need to be consolidated and/or international accounting.”

Technology improves efficiency and reduces errors. It allows you to do more with fewer resources by automating tasks that increase accuracy and compliance with rules like ASC 606.

Using spreadsheets for ASC-606 revenue recognition can get very messy quickly when “you layer on early renewals, contract cancellations,” according to Amy. “When you’re doing all that in a spreadsheet, you better have somebody with a steel trap mind to remember all those details. That’s when you start bringing in tech to help do the job.”

Amy shared that onboarding is essential to saving time. Although setting up new technology takes time, “If it’s onboarded right, it should buy you time in the long run,” Amy said.

Technology reduces errors in bookkeeping and increases the accuracy of commissions too. With QuotaPath, “We didn’t have to have that inherent double triple check because we might make a mistake,” Amy said.

Mitigating Audit Risks

Early-stage companies face the most common audit risks related to bookkeeping, compliance, and documentation. According to Jon, “The number one cause of failed funding rounds are accounting mistakes,” and those are completely avoidable for companies.

“ASC 606 can be a bit like the boogeyman,” Jon said.

The challenge is that people know they need to be compliant but don’t know what that means.

“The revenue is common to everyone. It’s recognizing the commission expense over the life of the same contract that trips people up,” according to Amy.

Recommended reading: 5 Tips for a Successful Startup Audit (Blog)

During the discussion, Amy and Jon shared some best practices for minimizing audit risks.

“The minute you start considering outside funding, you need accrual-based books that are GAAP compliant,” Amy explained. If commission is paid along with revenue generated, you need to think about how you’re going to account for that. You need to put a policy in place and consistently apply it.”

Failure to do so means non-compliance with ASC 606 and can result in a hefty fine.

To avoid accounting mistakes like these and position yourself for the next stage, address controllable factors like “making sure that you have a bookkeeper. If you’re a small firm, it’s money well spent,” according to Jon. “They will save you a boatload of problems down the road, and they also know the issues that could come up that really get you into trouble.”

“ASC 606 involves recognizing both revenue and expenses over the proper period of a SaaS or enterprise contract. Software like Maxio and QuotaPath automates those calculations to keep you compliant,” Amy shared.

Proper documentation is essential to audit preparedness. During a due diligence audit, “they’re going to want to see you have a solid set of books, you have a closing process, you have SOPs in place for your accounting function, and that you’ve got the proper controls in place,” according to Amy, “That lets people have faith in you and what you say your business is doing.”

Therefore, “A bookkeeper is your foundation. If your bookkeeping isn’t right, the rest isn’t right. Everything that the staff accountant, controller, and CFO touches relies heavily on accurate bookkeeping,” Amy said. 

If you have a good accounting system in place, you’ll find errors early and be able to correct them sooner rather than them being found during an audit.

Efficiently Scaling Finance Operations

Scaling financial operations alongside business growth can be accomplished with an outsourced accounting function.

“We’ve got some clients who have been with us for eight to nine years, but we’re not the only ones in there. After round one, the board usually requires that you put a CFO on your payroll. The accounting function then supports the CFO,” Amy said. 

You will get a full-time controller after round two, A, B, or C. The billing part is huge, too, depending on its complexity. So, you build up and then start carving out the work.

Maintain financial efficiency as the company expands by including your outsourced accounting function in your management meetings. “Let them be part of your team, not just the service you use,” Amy suggests. They’ll get more efficient the more they know your business.”

However, “when the outsourced function is slowing you down, it’s time to start layering on more GNA costs and building out your accounting department and efficiency,” Amy said.

Building a scalable financial team starts with a firm foundation. Hiring a more experienced bookkeeper or using a knowledgeable outsourced accounting function helps you avoid the “confusion of switching accountants while you’re in a growth spurt.”

Then layer on automation as you scale to ease growing pains and enable you to do more with fewer resources. Jon suggests you evaluate how you want to be spending your time. Would you rather be “Following up on invoice collection,” Jon asks, “or running my business and having automated ways?” Think about getting the best return on your skills and talents. Then if you need additional input, “reach out to your network,” Jon said. “There are people who can help you figure out what is the next step.”

Conclusion

A startup must build a strong finance operations infrastructure from the beginning. Otherwise, problems can develop and snowball very quickly.

It’s foundational to start with an experienced bookkeeping solution at the onset. This sets you up for long-term success as you scale your business and helps you avoid costly accounting errors.

Technology is essential for streamlining your finance operations. It offers automation that boosts efficiency and accuracy, enabling you to make the most of available resources and helps ensure compliance with rules like ASC 606.

Access the complete webinar recording to hear the entire discussion and start automating commissions with a free trial of QuotaPath.

Recently, in partnership with RevOps Co-op, we hosted the webinar Mastering Retention, AI, and Sales Optimization to discuss 2024’s trends and best practices.

Our panel included HubSpot’s Director of CS Daphne Costa Lopes, Carabiner Group CRO Cliff Simon, and QuotaPath VP of RevOps Ryan Milligan.

Together, they examined:

• Retention strategies
• AI & advanced analytics across revenue teams
• Sales process and compensation trends
• Product signal optimization
• Tooling & technologies

Now, let’s dive into the five key insights we gained from this insightful webinar.

5. Customers must see results. 

Daphne pointed out how difficult maintaining and growing customer retention is right now. 

“Companies could afford to have tools in their stack that went under-utilized. Now, companies can no longer afford that. Every spend goes through the magnifying glass,” Daphne said.

As such, it’s on customer-facing teams to show results.

“If you claim your product enables leaders to be more productive, what is the time and dollar savings tied to that?” Daphne said.

She offered suggestions on how to tackle that.

“I’m a big fan of the ‘Jobs to be done’ framework. This framework asks, ‘What are the jobs we’re doing for the customers?’” Daphne said.

By applying this mentality, you align your customer metrics to the metrics the customer tracks for that job. If you can capture that within your system, you can prove the ROI and results of using your tool, strengthening the likelihood of renewal and upsell.

“The CFO has a massively bigger stake at the table,” Cliff added. “It has to come down to dollars and cents.”

4. Manage upsells like sales leads

On top of retention, the trio unpacked upsell opportunities and various ways to approach this strategy.

At HubSpot, Daphne has successfully implemented a “success-qualified lead” strategy. This strategy involves the CSM teams finessing their skills to identify growth opportunities with existing customers. Once they determine an opportunity, they hand off the “lead” to sales or the account managers, depending on how the organization is structured.

“In that way, the CSM can continue to retain their status as their trusted advisor,” Daphne said. “Then sales takes over that qualification and leads the sales convo with the customer.”

That’s not to say she is against CSMs running upsells, however.

“It’s a matter of maturity and complexity,” Daphne said.

Cliff, who said he’s a big fan of this setup, stressed the importance of setting up a solid operating cadence that allows the AMs, CSMs, and AEs to walk in lockstep.

“Look at product data and identify the green field opportunities,” Cliff suggested.

3. Blend GRR + NRR for CS compensation structures.

To expand on that, Ryan offered some best practices for structuring compensation plans to drive retention.

“If you’re selling completely different products within an organization, pulling in someone else can be extremely helpful,” he said. “But if you’re a smaller org., it’s optimally efficient to have your CS run upsells and renewals.”

He suggests compensating on two major drivers, gross revenue retention (GRR) and the upsell, which backs into net revenue retention (NRR).

“I like to split them because NRR can hide bad behavior,” Ryan said. “If you have one big whale customer that keeps growing, your NRR rate can hide the fact that you have all these other customers churning.”

Remember, it’s easier to sell to the customers you have. You don’t want the number of customers to be shrinking.

2. Win retainable customers from the sale.

Another way to master retention is by winning customers who are most likely to renew from the jump.

Ryan pointed out that this is a slight shift in mindset and strategy from a few years ago when teams were most concerned with signing up customers who would sign up today rather than those who would stay a while.

That’s where ideal customer profiles (ICP) come in. 

“Identify characteristics down the funnel that make them a good customer,” Ryan said. “This could be types of roles, sizes of businesses, industry, for example.”

Then, move that definition up the funnel and compensate everyone who brings those conversations to the door.

“If you give BDRs $50 for every demo that occurs, give them another $25 if it’s an ICP demo,” Ryan said. “Reward higher commission rates for your sales team if it’s an ICP account.”

This will help incentivize your team to bring on great customers.

1. Complement AI with personalization.

Lastly, as organizations continue to introduce AI into their practices, it’s worth noting that personalization remains the key to delivering good experiences.

“Everyone is learning and playing with the same playbook,” Cliff said. “You have to create excellent customer experiences, show up consistently, and do what you said you would do. That’s how you stick out.”

So, instead of using AI to create generic messaging, consider using it as Ryan does for quick categorization and classification of high volumes of text (think: churn, win, and loss reasons, understanding key features, or summarizing long transcripts or notes).

“I think people care most about that you know the problem they are facing and how you can solve it,” said Ryan. “If I use AI to read one of your quarterly reports and pull key findings from it, then I can personalize my messaging based on that problem.”

Conclusion

That’s some excellent advice from our three experts. 

Visit our Resources page for more content supporting RevOps professionals and ways to run your business more efficiently. We’ve got free commission calculators, compensation plan templates, reports, and guides to help.

And if you’d like to see how QuotaPath can align your compensation strategy with your business objectives while tracking and predicting its performance and cost, schedule time with our team today. 

The lifeblood of any sales organization is a motivated and well-compensated team. But crafting a sales compensation plan that incentivizes top performance and checks commission costs can seem impossible.

Here’s the dilemma: offer transparent and attractive commissions to drive sales, but risk excessive payouts eroding your profits. 

Ever heard of a bluebird deal in sales? 

These whale-sized deals often break compensation plans, leading to excessive payouts. While we think the organization should pay the rep under the compensation plan terms (and structure next year’s plans to mitigate these), some will try to cap payouts to avoid huge commission effective rates. 

Conversely, a stingy compensation plan might demotivate your team, leading to stagnant sales growth and increased employee churn.

Compounding this challenge is the issue of data visibility.  

Many companies rely on clunky commission spreadsheets and manual calculations, creating a blind spot for commission cost forecasting and identifying areas for optimization.

In this blog. we’ll unveil the secrets to taming the sales commission cost monster with the help of QuotaPath’s sales compensation management software. 

We’ll explore strategies to balance transparency and cost efficiency while diving into the importance of data-driven insights for informed decision-making.  We’ll equip you with the knowledge and tools to design and predict the performance and cost of a robust compensation plan. 

The Importance of Cost Predictability in Sales Compensation

First, let’s talk about the importance of cost predictability in sales comp. 

Imagine navigating your business with a blindfold regarding sales commission costs, which usually account for 50% of a company’s customer acquisition cost (CAC). 

Unpredictable payouts, such as an 8-figure bluebird deal that leads to a mid 5 to 6-figure commission check, can wreak havoc on your financial well-being, leading to a cascade of challenges such as: 

• Cash Flow Issues: Unexpected spikes in commission payouts can disrupt your cash flow, making it difficult to manage daily operations and meet short-term financial obligations. This is especially painful at early-stage companies that often lack cash flow predictability. 
• Budgeting Challenges: Without a clear understanding of future commission costs, it’s nearly impossible to create accurate budgets. This can lead to overspending or under-allocation of resources in other areas.
• Difficulty Forecasting Profitability: Accurately forecasting your company’s profitability becomes a guessing game when commission costs are unpredictable.

Fortunately, there’s a path to financial clarity.  

By achieving cost predictability in your sales compensation plan, you unlock benefits like improved financial planning, better resource allocation, and an ability to scale effectively. 

How QuotaPath Helps You Achieve Cost Predictability

Now, let’s examine how QuotaPath is crucial in helping your revenue time predict total compensation costs.

At the start of 2024, our team released a series of tools that enable leaders to scenario plan and model compensation costs within the app, including sales compensation reporting.

So, in place of creating a series of compensation Excel sheets that report according to manual inputs of deal earnings and attainment data, leaders can test and predict plan performance in QuotaPath. 

This unlocks the ability to compare performance between your most senior and junior reps to determine whether the former’s higher on-target earnings packages are worth the cost.

When it comes to attainment, leaders can visualize deal distribution by rep and period to determine seasonal changes that may impact future compensation strategies. For instance, if a RevOps director notices a slump in sales during Q2, this might indicate the need for lowered quotas or extra incentives to drive deals. 

Then, when it comes to adjusting compensation plans or rolling out one for a new team, product, or territory, QuotaPath’s modeling tab powers leaders to estimate how much the comp plan would cost the business according to various attainment scenarios. 

This means you could do so if you wanted to see how much your company would pay on a specific plan if your team hit 80% attainment. What about 150%? Same thing. 

Using Draft Plans, you could also build a plan proposal and test it against last year’s sales numbers to see how much you would’ve paid out, making it easier to identify and predict the costs of outlier deals.

Optimizing Your Sales Compensation Plans for Cost Efficiency

In addition to using QuotaPath to model and test for compensation plan cost efficiencies, you can leverage QuotaPath to identify areas for optimization or hidden costs in your existing plan.

For example, you can use QuotaPath to analyze your existing commission structures, quotas, and payout triggers in granular detail. This helps pinpoint areas where your current plan might be bleeding money unintentionally.

You can also use QuotaPath to answer:

• Are overly generous commission rates for lower-value deals impacting your margins?
• Are quotas set too low, leading to payouts without significant revenue generation? 

QuotaPath empowers you to identify these inefficiencies and pave the way for cost optimization.

But aside from the help of Quotapath, remember to follow these five best practices to optimize sales compensation plans for cost efficiency:

1. Align Compensation with Business Goals: Don’t just reward reps for closing deals, ensure they’re closing the right deals.  Structure your plan to incentivize behaviors that drive high-value sales, customer retention, or other strategic objectives aligned with your overall business goals. This helps ensure you’re not paying commissions for activities that don’t contribute significantly to your bottom line.
   
2. Implement Tiered Commission Structures:  A one-size-fits-all commission rate can be costly. Tiered structures reward high performers progressively as they exceed targets. This motivates top performers and keeps costs in check for lower sales volume. You could also consider cliffs or commission floors to guarantee a percentage of performance before rewarding total base commission rates. 

Read: Should I have a commission floor in my sales compensation plan? (Blog)

3. Set SMART Quotas:  Specific, Measurable, Achievable, Relevant, and Time-bound quotas are crucial.  Ambitious yet attainable quotas encourage reps to strive for higher sales without incurring excessive commission payouts for quotas that are too easy to achieve.
   
4. Utilize Data-Driven Insights: Don’t rely on gut feeling. Analyze historical sales data and compensation trends to identify areas for cost optimization. Tools like QuotaPath can help you pinpoint inefficiencies and make data-driven decisions about your plan.
   
5. Leverage Strategic Incentives: Bonuses and accelerators can be powerful motivators. Use them strategically to incentivize specific behaviors, like closing larger deals or acquiring new customer segments. This allows you to focus your incentive spending on activities that contribute the most value to your business.

Ready To Use Quotapath To Optimize Your Compensation Strategy? 

Above, we’ve reviewed the challenges of managing sales compensation costs and how QuotaPath empowers you to achieve cost predictability. 

By providing data-driven insights and powerful optimization tools, QuotaPath helps you design a compensation plan that incentivizes top performance without breaking the bank. But the benefits extend beyond cost control.

 QuotaPath can also help you:

• Create transparent and aligned compensation plans that fuel sales motivation and drive peak performance.
• Streamline administration by automating commission tracking and calculation, scheduling payouts, and surfacing administrative tasks necessary to run payouts seamlessly.

Learn how QuotaPath can help you achieve cost predictability, boost team motivation, and streamline sales operations. Schedule your tailored demo with our team today.  

How do you understand the true impact of your sales commission strategy? Do you know what deals you’ve paid the largest percentage of commissions on and why? (Spoiler: It’s not always your biggest deals that yield the highest effective rates.)

What about your growth team’s consistency over time? How are you measuring that?

At the beginning of 2024, QuotaPath released new compensation reporting to measure the business value and performance of the GTM team’s compensation plans and performance. 

Our new reports pull your deals and earnings data, transforming it into easy-to-understand visuals. This empowers you to optimize your sales strategy and drive performance like never before.

Here’s what you can achieve:

• Spot hidden trends: Analyze changes in attainment over time and identify seasonal fluctuations impacting your quota.
• Benchmark performance: Compare earnings across various periods, teams, and commission plans.
• Identify performance gaps: Discover the distribution of attainment levels and see if you have a healthy mix of performers.
• Optimize product strategy: Understand which products are easier or harder to sell and how they impact attainment, allowing for targeted adjustments.
• Maximize profitability: Uncover if high-performing products are the most profitable for your organization and reps.
• Reward top performers: See if your high-achievers consistently close larger deals, helping you develop effective reward structures.

While the number of reports you can create is nearly limitless based on your inputs and filters, here are a few of our favorites:

• Total earnings by rep
• Quota attainment by rep
• Deal earnings by plan
• Earnings by rep by path
• CAC layer cake

In this blog, we’ll delve into four key reports:

• Deal Earnings vs. Deal Value: Identify outlier deals with higher-than-expected payouts and analyze the reasons behind them.
• Attainment Over Time: Track seller consistency and pinpoint any fluctuations in performance.
• Earnings vs. Attainment: See who’s consistently hitting targets and earning the most commissions.
• Top Commission Rates Per Deal: Gain transparency into the effective commission rate when multiple commissions are paid on a single deal.

By leveraging these reports, you can gain a deeper understanding of your sales compensation plan’s effectiveness, identify areas for improvement, and ultimately optimize your sales team’s performance and profitability.

Reports in QuotaPath

Now that we’ve explored the core functionalities of our custom compensation reports let’s delve a little deeper. Here, we’ll showcase advanced reports designed to unearth valuable insights you might miss.

Deal Earnings vs. Deal Value

This report allows you to easily signal deals with extreme payouts so that you can research them to see why the payouts were so high.  

Ideally, all deals would appear as dots in a line. But that’s hardly the case, especially when you factor in accelerators and milestone bonuses.

In the example above, you can see three outlier deals that yielded a much higher payout, at nearly 4x the amount of the other deals. By clicking on the deal and opening a new tab, we can look behind the deal (in this case, Herbdew) and see that the rep hit their quarterly quota bonus milestone. As a result, the rep earned an additional $3,000 to the deal payout. 

Attainment Over Time

Our Attainment Over Time report shows which seller is most consistent across a set amount of time. 

So, for a year-long quota, leaders can examine the team’s trend over the year and identify its consistency across periods. 

In the example above, you can see that Marty (the brown line) is consistently at 100% quota versus the rep in blue, who spiked at 250% above quota, only to fall to 50% of the goal the next month. 

For leaders interested in identifying seasonal trends, a report like this visualizes it clearly. 

Earnings vs. Attainment

This report helps you identify who is selling and earning the most. It can also flag issues where someone might be making a lot of money but selling less. 

Now, in a vacuum, this isn’t super interesting. However, comparing people, you can see above that Ben sells almost twice as much as Arwen, yet Arwen earns more commission.

Why is that? 

This could indicate that Ben consistently sells a product with a lower commission rate or that Arwen hit her accelerators in Q1 and now earns an accelerated rate on every deal the rest of the year. 

Top Commission Rates Per Deal 

Our fourth report reflects the top commission rates per deal. 

This enables you to answer how much commissions you pay across multiple people who touch a deal, like a marketing person, account executive, sales engineer, sales manager, and director. 

We recommend that your collective rate sits at 25% or below, but your hidden commission cost could exceed 35% if you’re not attentive.

Conclusion

By leveraging QuotaPath’s sales commission reports, you can move beyond guesswork and gain a data-driven understanding of your sales compensation strategy.  These insights empower you to identify top performers, optimize commission structures, and drive long-term sales growth.  

To learn more about QuotaPath, schedule time with our team today. 

Creating the best sales manager comp plan is crucial to attracting and retaining top candidates. 

These pros play a key role in hiring, tracking performance, training, coaching, and motivating sales reps to ensure they successfully meet or achieve their goals. These actions directly impact your ability to reach broader business objectives.

What makes a solid sales manager compensation plan? Their comp plan, like many, includes a base salary plus variable pay.

Base salary is a preset amount of money the sales manager receives each pay period regardless of performance. Sales manager base salaries should be market- and industry-competitive and reflect the individual’s experience and responsibilities.

Variable pay, on the other hand, is pay that is based on performance.

For instance, the more a sales manager’s team sells, the greater the variable pay they will receive in their paycheck.

Variable pay can reward various types of performance and offered in different forms like bonuses, accelerators, and decelerators.

Some examples of sales manager bonus options include a team performance bonus and a coaching and development bonus.

The team performance bonus is tied to achieving the collective team quota, which is rewarded when exceeding 100% of the target.

Meanwhile, the coaching and development bonus rewards effective coaching and development of sales reps triggered by high rep satisfaction or designated quota attainment by new hires.

Another type of variable pay is long-term incentives in the form of stock options or profit sharing to align manager goals with long-term company success.

Sales Manager Comp Plans Key Considerations

When building a sales manager compensation plan, key considerations include plan clarity, alignment with business goals, scalability, fairness, and motivation.

Clear and transparent communication of the plan and how performance translates to rewards is essential to the success of any compensation plan. The plan will not motivate the right behaviors if employees don’t understand how they earn incentives.

The plan must also incentivize behaviors that drive overall business objectives, such as customer retention or profitability. Lack of alignment makes business goal achievement less likely.

Scalability ensures that the plan accommodates growth, team size, and structure changes.

Fairness and motivation in a plan motivate managers and foster a healthy team environment.

This blog discusses how manager compensation plans differ from rep plans, offers comp plan examples, and outlines how to create a sales manager compensation plan.

Let’s get started.

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How a Manager Comp Plan Differs From a Rep Plan

“The core difference between a manager plan and a rep plan is that a manager doesn’t actually do the selling,” Graham Collins, QuotaPath Head of Partnership, said. “Managers are paid for improving the work that salespeople do with coaching, guidance, and training.”

It makes sense that manager and rep plans differ in focus, metrics, and structure.

Rep plans focus on individual performance areas like quota achievement, deal size, and activity metrics including the number of meetings or demos scheduled.

By contrast, the manager’s plans focus on team performance, such as achieving the collective quota, team development, and coaching effectiveness.

Metrics used to track plan attainment are different for reps than managers too. For instance, rep plans leverage quantifiable sales metrics, including revenue generated, deals closed, and win rate. However, the manager plan considers a combination of sales metrics plus team health metrics such as rep motivation, turnover rate, and coaching frequency.

Finally, rep and manager plans are distinctly different in structure. 

Rep plans typically have a more straightforward structure and are often commission-heavy, consisting of a combination of base salary plus commission on sales. Yet, manager plans commonly have a more complex structure, including a mix of base salary, bonuses, and potential long-term incentives such as stock options.

Comp Plan Examples

There are many ways to approach sales manager compensation plans. The best option depends partly on your stage of business growth and market and economic factors.

For example, a single-rate sales manager compensation plan, as described in this blog, is perfect for a startup with its first sales manager. It is easy to understand and scale as the business grows.

Below are two additional sales manager comp plan options to consider.

Sales Manager Compensation Plan: Commission with Accelerator

The Commission with Accelerator structure is a commonly adopted comp plan for sales managers. 

In this commission plan, the manager receives a fixed commission rate for each sale made by their team. Once the team exceeds 100% of its quota during the quota period, the manager’s commission rate increases for each additional deal.

Remember that the commission rate should be adjusted based on the team’s size. Therefore, the commission rate should change as new reps are hired or leave the team.

Generally, management regulates the commission rate in monthly or quarterly intervals based on team changes. Neglecting to make these changes can substantially affect the manager’s income potential.

Think about including a “cliff” in this plan. A cliff, also known as a commission floor, guarantees that the sales manager does not receive a commission until the team achieves a designated milestone, such as 50% in the example below.

Sales Manager Compensation Plan Example: Accelerators

• Commission Tiers:
  0-100%: Base rate: 3.1%
  100%+: 1*5 base rate 4.63% (non-retro)
• Annual OTE: $200,000
• Base:variable: $100,000 / $100,000
• Pay mix ratio: 50:50
• Annualized Team Quota: $3.6M Annually
• Quarterly Team Quota: $900,000
• Manager Buffer: 90%
• Manager Quota: $3.24M Annually

Sales Manager Compensation Plan: Bonus

The subsequent compensation plan for sales managers is based on bonuses. 

Under this structure, managers receive a designated bonus for each attainment point linked to their team’s overall quota achievement.   

It resembles the Single Rate Bonus Plan for account executives, but it applies to leadership.

The Sales Manager’s bonus percentage in this compensation plan aligns with their team’s quota attainment percentage. For instance, if the team achieves 93% of the quota, the Sales Manager will receive 93% of their bonus (calculated at $250 per percentage point), irrespective of the quota size.

Similar to our other compensation plan templates, this structure incorporates a manager buffer of 90%.

Nevertheless, the manager’s bonus remains consistent within this sales leadership compensation plan, irrespective of team size. While the team may grow or scale back, the per-attainment bonus remains unchanged. 

Sales Manager Compensation Plan Example: Bonus

• Single-rate bonus: $250 per percentage point of attainment
• Annual OTE: $200,000
• Base:variable: $100,000 / $100,000
• Pay mix ratio: 50:50
• Rep Quota: 150,000 Quarterly
• Annualized Quota amount: $3.6M Annually
• Quarterly Team Quota: $900,000
• Manager Buffer: 90%
• Manager Quota: $810,000 Quarterly
• Manager Quota: $3.24M Annually

Steps to Build a Sales Manager Comp Plan

“When building any comp plan, I always ask the three steps or questions,” Graham said. “How much, for what, and how?”

1. The first step involves asking, ‘How much will you pay the manager total?’ For example, you might decide to budget $200,000 per year total pay for the sales manager.

The other part of this question is ‘How will they get paid?’ This is where you designate a variable pay split or pay mix.

“For managers, pay mix is typically 50/50 or sometimes 60/40,” according to Graham.

A pay mix of 50/50 is 50% base salary and 50% commissions or bonuses. Likewise, a 60/40 pay split is 60% is base and 40% is commissions or bonuses.

2. The second step answers the question, ‘For what?’ This is where you designate a quota for the manager.

For instance, you could create the quota by adding the sum of the quotas on the manager’s team. For a team of five reps, where each team member’s quota is $100,000, the manager’s quota would be $500,000. You would calculate this by multiplying the number of reps times the quota, or 5 x $100,000 = $500,000.

It’s common for the manager’s quota to be set at 90% of the team’s quotas to accommodate new hires and underperforming reps.

3. You work through the ‘How?’ question in the third step. How do you want to pay?

“There are two major ways that managers get paid. They either get paid commissions or bonuses,” said Graham.

For instance, a manager is paid 1% of everything their team sells. Then you may have accelerators that increase the amount paid as milestones are attained or decelerators to limit commissions before a certain threshold is achieved.

An example of bonus-style incentives could be a predetermined reward sum whenever a specified percentage of quota is reached quarterly or monthly.

Quota frequency is another consideration. It is typically the same frequency as their team’s, monthly or quarterly. “It would never be shorter,” according to Graham, “but there are times when it may be longer. For example, a manager’s reps are on a monthly quota, and the manager is on a quarterly quota.”

Conclusion

A solid sales manager compensation plan enables you to attract and retain top talent that helps your sales team achieve its goals and, ultimately the broader organizational objectives. Sales manager comp needs to be competitive and reflect the specific role’s experience and responsibilities.

These plans typically include a base salary, variable pay, and bonuses or other incentives. A properly designed plan must be easy to understand, aligned with business goals, scalable, fair, and motivational.

The steps for building a manager comp plan answer the questions, ‘How much,’ ‘For what,’ and ‘How.’ Once you work through them, it’s time to assess them for market and industry competitiveness and align them with the individual’s experience.

To build, test, model, and track the performance of your manager comp plans, schedule time to chat with our sales team. 

Mental health struggles among salespeople are on the rise. The State of Mental Health in Sales reports revealed that 43% of sellers struggled in 2019, 58% in 2021, and 70% of sellers suffered from mental health issues in 2023.

We wanted to learn more about these mental health struggles, specifically what’s behind the psychology of sales. 

To help, we interviewed Jeff Riseley, Founder of Sales Health Alliance, a team dedicated to supporting sellers with mindset, mental health, resilience, and stress-management support.

“If you think about what you need to buffer stress as a sales leader, there are two buckets to focus on,” Jeff said. “The first is creating a safe environment. How do you build and create a safe internal environment for your team? Do you have it as a leader? The second, does everyone on your team have an individual toolkit to develop good habits to build a resilient mindset?”

“You need both to perform better,” Jeff said. 

Below, we’ll explore both of those. But first, let’s learn more about our featured expert.

Introducing Jeff Riseley

Jeff started in sales 15 years ago as a top performer in a role where he watched his colleagues be immediately terminated for missing their metrics. 

Despite his position atop the leaderboards, behind the scenes, Jeff dealt with anxiety, insomnia, and panic attacks. When he landed in the hospital with his third panic attack, Jeff focused on uncovering coping mechanisms to buffer stress and manage the ups and downs of sales.

He advanced to sales leadership roles at different startups. Then in July 2018, he hit a turning point when he was diagnosed with testicular cancer. 

This marked a pivotal moment in his life and career and acted as a true test to utilize the tools he learned to manage his anxiety and stress. 

“Everyone in sales talks about how stressful and high-pressure it is,” Jeff said. “But for whatever reason, we don’t talk about the mental performance side of things and what we can do to keep ourselves healthy.” 

This inspired Jeff to start sharing content, his story, and practices that have helped him. He began on Linkedin, which evolved into a blog, speaking engagements, and coaching and training.

Since then, Jeff has helped over 10,000 sellers adjust their mindset, mental performance, and stress management through his company, Sales Health Alliance. 

Today, he focuses on helping top performers with mindset and stress management through his mental performance community, Project Mamba.

Our conversation with Jeff highlighted this rapidly growing mental health crisis in sales, issues that are making it worse, and what sales leaders can do to help their team overcome mental health struggles.

We learned that extrinsic motivators, such as quotas, targets, and incentives — historically designed to drive desired sales behaviors — can backfire. 

According to Jeff, the negative consequences of focusing too heavily on extrinsic motivators tend to squash salespeople’s intrinsic motivation and mental well-being. This is a significant reason why your team misses quota.

The Growing Mental Health Crisis in Sales

With external factors like layoffs, market uncertainty, ambiguity at work, and a recession, it’s little wonder that mental health struggles are on the rise.

When the first State of Mental Health in Sales report ran in 2019, 43% of sellers were struggling with their mental health. In 2021 that number rose to 58%, in 2022 63%, and the latest report shows that 70% of sellers are now struggling with mental health issues. 

“There’s this massive trend in the wrong direction,” Jeff said.

The most frustrating thing is that sales leadership isn’t taking responsibility for addressing this trend. 

Instead, they’re blaming external factors like COVID or remote work. 

During COVID executives recognized that their team was struggling and addressed the problem by providing support. However, “since May of 2022, the B2B investment into these types of initiatives has switched off like a tap,” said Jeff.

And while sales leadership acknowledges the stress and burnout present on their teams, they often fail to take accountability as a core part of the problem, Jeff said. 

For instance, Jeff found that leadership blamed remote work last year and invested their efforts in getting everyone back to the office — foregoing mental health, which is the root cause. 

But to address mental health, it’s important first to understand what motivates people. 

Intrinsic Motivation‘s Role in the Psychology of Sales

“Intrinsic motivation is so important for buffering stress. It’s a piece of armor you can put on to stay motivated in sales,” said Jeff. 

Defined, intrinsic motivation is when we connect emotionally to our work, believe we’re making a difference, and feel proud. This form of motivation is essential to help sellers curb stress when they face roadblocks and adversity.

Being intrinsically motivated drives success and resilience in sales. It allows reps to keep going, push through, and remain persistent when deals fall through or the market changes.

Almost every rep starts intrinsically motivated when they begin a new job. 

When people start a new job, they’re excited to work at the company. They are intrinsically motivated to be there, to impress people, and to make a difference. 

Over time, however, they begin to lose that connection to their job. 

Sales leaders pick up on this. 

The best ones look into what transpired or what’s changed between the rep’s first day and current day. 

“Leaders should be asking, ‘Why isn’t my rep motivated in the first place,’ since humans are naturally motivated to grow and develop. What’s blocking that now?” Jeff said. 

What actually ends up happening, though, is that most sales leaders tend to over-prioritize “How do I motivate my team?” which leads them toward incentives, rewards, and extrinsic motivators.

Now, they’ve backfilled the now vacant intrinsic motivators with extrinsic motivators, which often backfire and reduce intrinsic motivation even further. 

Extrinsic Motivators and Traditional Sales Management

Now, let’s explore extrinsic motivators, which fall more in line with traditional management. 

Extrinsic motivators are external rewards or punishments that drive someone to take action, like quotas and incentives. 

“I think a lot of people misuse incentive plans,” Jeff said. “A rep hits quota, then it’s the norm at the beginning of every month to reset them back to zero? To erase all the progress from their perspective is totally nonsensical.”

Instead, Jeff suggests a more effective approach by keeping lifetime revenue visible when resetting the quota to zero. 

“If you leave lifetime revenue visible, and a rep that closed $2 million over the past year only closes 60% this month or quarter, then both the rep and the leader can see that this period is just a minor setback,” said Jeff. 

But that’s not usually how go-to-market teams approach quotas. Instead, they favor resetting to zero, which Jeff classified as fear-based management. 

“There’s a really good book written by Amy Edmondson, who is sort of the pioneer for psychological safety,” Jeff said. “In the book, she essentially identifies that fear-based management started in the early 1900s.”

Amy references how Ford, the biggest company at the time, used fear management techniques (to great success) over workers on the assembly line. 

“Using fear or rewards when the task is monotonous with low complexity work extremely well,” said Jeff. 

However, fear-management tactics work less effectively for high-complexity tasks like selling. 

“The part of our brain responsible for empathy, creative thinking, problem solving,  which manages more complex thinking, goes offline when we feel unsafe, and when we’re operating in a state of distress,” Jeff said. 

Leadership’s Role & Mental Fitness

Senior leaders are also struggling with their mental health.

 In fact, according to Jeff’s research, frontline managers are struggling the most. 

“If you think about this from a purely physiological standpoint, and the changes that happen in your body when stress starts to become unmanageable, this makes sense,” Jeff said. 

You shut down.

You point to other things as the problem versus being willing to look internally, which clouds the path right in front of you. 

To further exacerbate the situation, the blame game continues to worsen.

For instance, Jeff recently had a frontline manager who wanted to invest in mental health support for their team. 

“The response that she got from her director was, ‘We can’t invest in this because we can’t admit that our team is burnt out. We can’t give Project Mamba as an excuse for people to go on stress leave and to take mental health leave.’”

Wow. Take that in. 

“It’s a complex problem that I’ve been trying to solve for five years,” said Jeff. “But it’s getting a little better. 

10 Ways Sales Leaders Can Support Mental Fitness

So, what can you do as a leader to buck this trend?

We asked Jeff what sales leaders can immediately put in place to help support their reps from a mental health standpoint. 

• Create a safe internal evironment
• Give your reps a toolkit to manage stress effectively

“These are levers that a leader and an organization can pull daily to make a difference and create this safe space where people feel like they can be their authentic selves,” said Jeff.

To create a safe environment, Jeff suggests these 10 actionable strategies:

1. Create an environment that gives your reps autonomy and control
2. Set achievable sales targets and goals
3. Clear Career Pathing
4. Connect their work to something meaningful
5. Foster collaboration and connection amongst their peers
6. Offer support and resources as the leader
7. Give recognition
8. Have a clear company vision
9. Be vulnerable and empower your team to be vulnerable
10. Set boundaries

Then, the toolkit should include resources and access to communities such as Project Mamba to teach reps how to develop long-term habits that strengthen mental health on a daily basis. 

Reducing Mental Stress with Comp Plans 

What’s more, leaders can reduce stressors regarding reps’ paychecks, specifically their variable pay.

“A compensation plan is one lever that a leader can lean on to reduce stressors,” Jeff said. “Having a clear understanding into their comp plan, and how they make money, is so important.”

If a comp plan is consistently changing, and the rep is in a position where they don’t know how much money they will bring home, these leads to external stressors that can creep into their day-to-day performance. 

“When they start thinking about how they’ll be able to pay bills this month or take care of their family, they’re not going to sell with empathy,” said Jeff. “You end up being pushy.”

So, having clarity about where your commission check comes from is essential to this whole idea of peak mental performance and keeping reps focused on the right things, including serving the buyer. 

Support Mental Fitness to Boost Sales Performance

Sales involve a multitude of external and internal stressors, including market and economic changes, micromanagement, and buyer ghostings, which constantly challenge reps’ mental health.

It requires more than sales, product training, and coaching to drive desired outcomes.

Sales leadership needs to acknowledge the continually increasing mental health struggles that are hindering performance and address them by creating a safe environment for their reps. Then, take the next step by providing salespeople access to a resource like Jeff’s Project Mamba community to help them learn how to manage their mental health more effectively.

Learn more about Jeff’s work and mental health resources for salespeople by visiting the Sales Health Alliance website.

Sales commission accounting is a critical, yet often complex, aspect of managing your sales force. 

From crafting transparent commission structures to navigating tax implications and ensuring GAAP compliance, sales commission accounting requires a keen understanding of accounting principles. 

We put together this comprehensive guide to optimize your sales commission accounting practices.  Below, we’ll explore best practices for record-keeping, calculating commissions accurately, and integrating data seamlessly with your accounting system.

Read on if your organization should improve commission transparency concerns, audit preparation, and technology adoption for more efficient reporting.

We’ll guide you through crucial topics like setting up transparent commission structures that are clear for your sales team and the accounting department. Also, we’ll outline different methods for calculating commissions with confidence and ensuring accuracy every pay cycle.  

Discover efficient ways to automate processes and ensure smooth data flow between your sales and accounting systems. From a business perspective, grasp the tax burden associated with commissions and how to handle them correctly. Prepare for audits and ensure your commission accounting adheres to regulations. 

Explore how accounting technology can simplify calculations, reduce errors, and improve reporting accuracy, keeping you ahead of the curve as sales models and accounting standards evolve.

Understanding Sales Commission Accounting Fundamentals

Sales commission accounting is the process of recording and reporting the financial transactions associated with your company’s sales compensation plan. 

Your commission record-keeping practices should ensure transparency for your sales team and your accounting department while also adhering to tax regulations and accounting standards in line with ASC 606. 

Here are some key fundamentals:

• Commission Structure: This defines how salespeople earn commissions, including factors like commission rates, tiers, bonuses, and qualifying criteria (e.g., closed deals, revenue generated). Well-defined commission structures foster clarity and avoid misunderstandings.

• Recognition Methods: This determines when commission expense is recognized in your financial statements. Common methods include Earned When Earned (EWE), where commission expense is recognized proportionally as the sale progresses, and Paid When Paid, where the entire expense is recognized when the commission is paid to the rep.

• Record-Keeping: Maintaining accurate and detailed records of sales activities, commission calculations, and payments is essential. This includes data on individual sales reps, deals closed, commission rates applied, and taxes withheld.

• Integration with Accounting Systems: Streamlining the flow of commission data between your sales and accounting systems can save time, minimize errors, and ensure timely and accurate reporting. Integration allows for automated calculations and reduces manual data entry.

• Tax Implications: Commissions are considered taxable income for salespeople. Employers are responsible for withholding and remitting payroll taxes associated with commissions paid. Understanding these tax implications is crucial for accurate financial reporting and compliance.

Mastering these fundamentals can lay the groundwork for a robust sales commission accounting system. This fosters trust with your sales team and ensures your financial statements accurately reflect your company’s performance and profitability. Stay tuned for upcoming sections, where we’ll delve deeper into these areas and provide practical tips for optimizing your sales commission accounting practices.

The Role of Sales Compensation Software in Commission Tracking

Managing sales commission calculations and tracking can be a significant burden, especially for companies with intricate commission structures or large sales teams.

That’s because earning commissions becomes more difficult the more avenues you have, such as commission tiers, milestone bonuses, and multi-year accelerators.

And, when that happens, organizations risk incorrect payouts which can impact employee retention. For instance, our compensation report found that 9% of reps have quit their role over commission disputes. 

Plus, manual calculations take time. A lot of time.

One of our customers, Katie Cooper, used to dedicate nearly five business days to running commissions for a pay cycle for a team less than 20. Today, it takes her five hours with the help of QuotaPath (and integrated with HubSpot) to run payouts for more than 100 reps. 

Sales compensation software streamlines the sales commission accounting process and minimizes errors.

Software like QuotaPath can automate many of the tasks involved in commission tracking, leveraging integrations to deal with sources of truth and setting pre-defined rules and commission structures. This eliminates the need for your sales or accounting teams to calculate manually, saving valuable time and reducing the risk of human error.  

Furthermore, sales compensation software automates calculations, ensuring consistency and accuracy in commission tracking. This fosters trust with your sales team, who can rely on receiving accurate commission payouts.

Integrating Commission Data With Accounting Systems

Sales compensation software also offers advantages in data management.  

The software can integrate with your CRM and accounting systems, allowing for seamless data flow. This eliminates the need for manual data entry and ensures all relevant data (sales activity, commission rates, etc.) is readily available for commission calculations.

The enhanced reporting and visibility that come with automation provide additional benefits.  

QuotaPath, for example, provides up-to-date insights and detailed reports on commission activity, including forecasted commissions. This empowers managers (and reps) to track individual and team performance, analyze trends, identify areas for improvement in the commission plan, and, most importantly, drive sales revenue. 

Plus, QuotaPath empowers finance operations teams to test, model, and predict the total cost of compensation to next year’s hiring and financial plan.

Finally, sales compensation software frees up valuable time for your sales and accounting teams by automating calculations, data management, and reporting. 

They can focus on strategic tasks like sales coaching or financial analysis rather than manual commission tracking.  

Overall, sales compensation software is crucial in streamlining commission tracking and ensuring accurate and efficient management of your sales compensation program.  In the next section, we’ll explore best practices for record-keeping within sales commission accounting.

Best Practices for Sales Commission Record-Keeping

Now, whether you implement a tool that automates commission record-keeping for you or not, there are a few best practices to follow.

Accurate and detailed record-keeping is the backbone of a robust sales commission accounting system. Vital records ensure transparency for your sales team, facilitate accurate commission calculations, and support compliance with tax regulations and accounting standards. 

Here are some essential best practices to consider:

• Establish a Standardized System:  Develop a consistent and well-defined process for capturing and storing all relevant sales commission data. This could involve implementing a dedicated software solution, using standardized spreadsheets, or creating clear filing procedures for paper records.
• Maintain Detailed Sales Activity Records:  Capture all sales activities that factor into commission calculations. This includes data like individual sales reps involved, deals closed, revenue generated, and qualifying factors for commission payouts (e.g., achievement of sales targets).
• Document Commission Calculations:  Maintain a clear audit trail for commission calculations. This could involve storing electronic records of calculations or creating paper documentation that outlines the applied commission rates, calculations performed, and resulting commission amounts for each salesperson.
• Retain Supporting Documentation:  Keep copies of any supporting documentation that justifies commission payouts. This might include sales contracts, invoices, customer purchase orders, or emails confirming deal closures.
• Automate Where Possible:  Leverage technology to automate record-keeping tasks whenever possible. Many sales compensation software solutions can automatically capture sales activity data from your CRM, reducing manual data entry and minimizing errors.
• Set Retention Periods:  Establish clear policies for how long you need to retain sales commission records.  These retention periods should comply with your region’s relevant tax regulations and accounting standards.
• Maintain Easy Accessibility:  Ensure your sales commission records are easily accessible to authorized personnel, such as your sales and accounting teams, for reference and reporting purposes.
• Regular Reconciliation:  Perform regular reconciliations to ensure your sales commission records match your accounting system and payroll data. This helps identify and rectify any discrepancies.

Following these best practices, you can establish a robust record-keeping system for your sales commission accounting. This will foster trust with your sales team, ensure you have the documentation to support your calculations and maintain compliance with regulations.

Be audit-ready

Learn how QuotaPath can help you close the books faster with accurate and automated commission reporting and amortization.

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Auditing and Compliance in Sales Commission Accounting

While sales commissions are a powerful tool for motivating your sales force, ensuring their proper accounting treatment requires careful attention to auditing and compliance procedures. Failure to comply with regulations or maintain accurate records can lead to hefty fines, penalties, and reputational damage. 

To navigate auditing and compliance regarding the proper amortization of sales commissions, consider the following:

By proactively considering these factors, businesses can confidently navigate the auditing and compliance landscape within sales commission accounting.  This minimizes the risk of audit findings and fosters trust with auditors and simplifies the audit process, allowing your sales team to focus on driving revenue and achieving their sales goals.

Leveraging Technology for Accurate Commission Reporting

Sales commission accounting is vital in motivating your sales force, accurately reflecting your company’s profitability, and ensuring compliance with regulations. You can build a robust system that fosters trust and empowers your sales team by establishing a transparent commission structure, implementing efficient record-keeping practices, and adhering to auditing and compliance standards.

Remember, navigating the complexities of sales commission accounting doesn’t have to be overwhelming.  QuotaPath offers a comprehensive suite of tools to streamline your processes, ensure accuracy, and empower data-driven decision-making.

Here’s how QuotaPath can help:

• Automate Calculations: Eliminate manual calculations and errors with our automated commission engine.
• Simplify Record-Keeping: Consolidate all your sales commission data in a central, easily accessible location.
• Generate Real-Time Reports: Gain valuable insights into sales performance and commission payouts and identify areas for improvement.
• Ensure Compliance: Stay on top of evolving regulations and ensure your practices adhere to accounting standards.

Transform your sales commission accounting by scheduling a customized demo of QuotaPath. Experience the power of a streamlined and data-driven approach. Focus on what matters most — creating sales strategies that drive revenue — while QuotaPath handles the complexities of commission accounting behind the scenes.

Your sales compensation plans, namely your quota, should match and complement the average length of your sales cycles. 

So, if your sales cycle typically runs 60 to 90 days, your quota frequency should run quarterly. Similarly, if your team’s cycles come in much faster, ie, less than 30 days, you’d typically set your quota cycles on monthly terms.

This ensures you align and incentivize your reps with your sales motion and adds fairness to your quota targets. 

But what happens if your sales cycles lengthen despite no significant changes to your market and buyers? This could indicate a seller problem, so you may need to consider implementing levers that expedite quick sales. 

The same holds for seasonal slowdowns when your team could use a bit of motivation to bring deals in sooner rather than later. That’s when it might be time to consider a few tactics to decrease the time it takes to secure that closed/won. 

Below, we explore when it’s appropriate to incentivize shorter sales cycles (and when not) and a few tactics to consider.

When NOT to Shorten Sales Cycles

First, we’ll start with when not to try to shorten a sales cycle proactively. 

A shorter sales cycle seems beneficial at first glance, as it can lead to faster revenue generation and improved efficiency. However, before you make any changes, you must evaluate what data and information indicate that a shorter sales cycle will lead to optimized lifetime value and revenue for your organization. 

Here are some reasons to avoid pushing faster cycles: 

• Quality over Speed: Sometimes, rushing a deal can compromise the quality of the client relationship or the thoroughness of the solution provided. This can lead to a poor buyer experience and miscommunication over the value your product can deliver.
• Complex Sales Require Time: In B2B environments, especially where solutions are complex and expensive, decision-making processes involve multiple stakeholders and require careful consideration. Shortening the sales cycle in such contexts might not be practical or beneficial, as stakeholders need adequate time to assess, deliberate, and align internally.
• Focus on Customer Lifetime Value (CLV): Rushing a customer through the sales process can sometimes jeopardize long-term relationships. Building a solid foundation can lead to more upsell and cross-sell opportunities, referrals, and a longer, more profitable relationship, which increases your CLV. 
• Strategic Alignment and Buy-in: Ensuring the customer’s strategic goals align with the product or service offerings might require a longer nurturing process. This alignment is crucial for long-term success and satisfaction for both parties, especially in today’s market, when retention often matters most. 
• Market Positioning: For companies positioning themselves as premium or consultative partners rather than transactional vendors, a longer sales cycle often reflects the deep, advisory nature of the sales process. This approach can differentiate a company in crowded markets, appealing to clients looking for tailored, high-touch engagement rather than quick, off-the-shelf solutions.

While efficiency in the sales process is crucial, a strategic focus often extends beyond mere speed to encompass quality, alignment, and long-term value. The decision not to focus on shortening the sales cycle is typically a deliberate choice aimed at fostering sustainable growth, deepening customer relationships, and ensuring the strategic fit between the customer and the company.

But, of course, some occasions call for an expedited sales flow. 

When to Shorten Sales Cycles

Now for the flipside.

Focusing on shortening the sales cycle can be a strategic move for RevOps and Sales leaders under certain circumstances.

These include:

• When the Market Demands Speed: In highly competitive markets where speed to close can be a significant competitive advantage, shortening the sales cycle can help secure market share and outpace competitors. This is particularly relevant in industries where products or services are rapidly commoditized.
• To Improve Cash Flow: Improving cash flow might be critical for startups or businesses in early-stage growth phases. Shortening the sales cycle can lead to quicker revenue recognition, supporting operational needs, and investments in growth initiatives.
• High Volume, Low Complexity Sales: In scenarios where the product or service is relatively straightforward and the sales process does not require extensive education or customization, streamlining the sales cycle can increase efficiency and lead to a higher volume of transactions.
• To Meet Short-Term Goals or Quotas: If a business is pressured to meet specific short-term goals, such as quarterly sales targets or investor expectations, efforts to shorten the sales cycle can help achieve these objectives more quickly.
• When Data Supports a Change: If sales data analysis indicates that deals are stagnating at certain stages or that the length of the sales cycle is out of step with industry benchmarks, this can signal an opportunity to streamline processes, remove bottlenecks, and shorten the sales cycle without compromising the quality of engagements.
• Leveraging Technology for Efficiency: Adopting advanced sales technologies, such as CRM systems, automation tools, and AI-driven insights, can significantly reduce time-consuming tasks and sales cycle lengths. When these technologies are underutilized or newly available, focusing on integrating them into the sales process can make shortening the sales cycle both feasible and beneficial.
• Customer Preference for Speed: In some industries, customers may prioritize quick purchasing decisions and implementations. Improving efficiency can improve customer satisfaction and competitive positioning by aligning the sales process with customer expectations.
• Scaling Operations: As a business grows, efficiently managing an increasing volume of leads and deals can necessitate shorter sales cycles to maintain or improve sales productivity and ensure that growth targets are met.

So, when external market dynamics, internal business needs, customer preferences, or the nature of the product or service support a faster sales process, consider making the adjustments below to drive a quicker cycle. 

Just remember, the key is to balance the benefits of speed with maintaining high-quality customer engagements and long-term value creation.

7 Ways to Shorten Sales Cycles

Shortening the sales cycle, when strategically appropriate, can significantly impact a company’s growth and efficiency. 

Here are some effective tactics to look into: 

SPIFs

QuotaPath generally has a relatively quick sales cycle, averaging 60-90 days. However, to help distribute deals across quarters and not just our “busy season,” we occasionally implement a sales performance incentive fund or special performance incentive fund, aka, a SPIF.

For instance, you could offer a SPIF contingent on closing a deal within “X” days between the demo and the close date at the opportunity level.

We’ve also seen “Fast Start” SPIFs, which pay a flat-rate bonus for deals that close within the first weeks of a new quarter to offset the deal traffic that comes in the last two weeks of a quarter. 

A third SPIF to consider is a contact-threading SPIF that rewards a dollar amount for getting the final decision makers involved in the process earlier (think: calls/demos booked within X days following the initial demo). 

RVP Cassidy Macias added that she’s seen success with quarterly amplifiers, monthly spiffs (usually pull-ins or closing certain-size deals), and participation metrics (the specific amount expected of an AE every quarter, even on an annual number).

Identify inefficiencies in the funnel 

SaaS Sales Leader Paul Munro called out that SPIFs should only be used for extra pushes around a KPI that might be falling a little short and that the core components of your comp plan should align to the ideal sales cycle length. 

Instead of adjusting compensation, Paul suggests evaluating inefficiencies within the sales funnel. 

“What data/information convinces you that shorter cycles equal optimized LTV/revenue for the business?” Paul said. “In many cases, there are ways to shorten cycles by finding inefficiencies in the funnel (driving higher inbound intent, optimized and simplified pricing/packaging, ironclad ICP, etc.) without negatively impacting NRR and LTV, whereas sales incentives (particularly short-term incentives) might have the opposite effect.”

Look at reps with the shortest sales cycles 

In addition to looking into funnel efficiencies (or lack thereof), you should also review who on your team has the fastest and longest sales cycles. This will enable you to identify patterns and coaching opportunities to duplicate the practices of the most efficient reps. 

“I’d look at the deals with the short sales cycles and figure out what they have in common. It might be that they’re inbound, an industry, or that one AE is executing discovery or follow-up process better,” said Head of Sales Derek Jankowski.

Develop ideal customer profiles

Developing your ideal customer profile (ICP) also affects your sales cycles. These customers or accounts often find value in your product the fastest and typically have sales cycles to match.

That’s because your ICP aligns with your product’s core value proposition. 

They understand the problem your product solves and are already looking for a solution. This leads to a smoother sales process with less education on the potential customer’s end. Your ICP usually comes with the tech specifications that require fewer resources to get up and running. 

Create ROI Tools

Another way to impact the length of the sales cycle is by providing prospects with tools or calculators that help them understand the potential return on investment (ROI) from purchasing your product or service. 

Making the value proposition clear can expedite the decision-making process.

At QuotaPath, for instance, our VP of RevOps built this ROI calculator that shows the cost of QuotaPath compared to the savings and improvements of implementing QuotaPath. 

Reduce friction throughout the approval process

Friction within the approval process is just as important to the inefficiencies within the funnel. 

Identify common hurdles in the prospect’s buying process and find ways to mitigate them. For instance, offering legal document templates or preparing mutual NDAs in advance can speed up the administrative aspects of deal closure.

Scheduled follow-ups 

Lastly, a strategic follow-up process should be implemented to keep deals moving forward. Use automation to remind sales representatives to follow up at critical moments and personalize communication to maintain engagement.

Should you shorten your sales cycle?

There are advantages to shortening your sales cycle, but the time may not always call for it. But when the time does call for it, now you have seven best practices to consider when doing so.

Schedule time with our team to learn how QuotaPath can help you run your GTM strategy more efficiently.