If you’re not ready yet to automate your sales commission reporting and payouts, no worries! You’re not the only one calculating commissions in Excel.

Despite rapidly rising numbers in business intelligence and analytics, it seems people still prefer spreadsheets. Specifically, 63 percent of businesses do. A recent International Data Corporation survey found that nearly two-thirds of companies run various payment processes, like commissions, via Excel.

For small businesses with simple commission structures, bulk spreadsheets can deliver exactly what you need. In this article, we will walk you through the steps and formulas to create a sales commission spreadsheet.

We love and respect a spreadsheet, but the disadvantages to running manual commission calculations can be an error-filled time suck. Any change to a compensation plan requires manual updates. Every new deal must be added, along with any bonuses or spiffs that impact commission payouts. These can take as little as a few minutes to make or two business days depending on their complexities. 

At QuotaPath, we’re big on transparency. It’s a theme woven throughout our team, our platform, and our relationships with our customers. Unfortunately, spreadsheets often fail in fostering transparency. Permission-based spreadsheets block sales reps and leaders from real-time insights into their earnings and forecasts. Anytime a commission question pops up on a specific deal or paycheck, a gatekeeper to the spreadsheet awaits. 

Beyond an Excel commission calculator

If your business is planning on scaling its sales organization this year or adding new compensation plans, please consider automating this process. Better yet, fancy a chat with QuotaPath as your sales performance management system. We can track, calculate, forecast, and prepare earnings payouts for all of your sales teams on variable compensation plans. 

By our estimates, QuotaPath can save your teams that are calculating commissions in Excel 17 hours a month. Some customers have even reported four business days of work freed up since implementing QuotaPath.

Depending upon how complex your compensation plans are, your spreadsheets should take you between two to eight hours to build. Then, for monthly upkeep, approvals, and finalizations for payroll, plan to spend between one to four days a month preparing and addressing discrepancies. 

Note: Bulk spreadsheets do not carry over month-per-month. Any exceptions or modifications to a rep’s commissions will have to be re-added each month.

Additional note: Individual rep commission statements will need to be manually created, with other rep info fully deleted from the spreadsheet. 

Now that we got that out of the way, we’re ready to begin calculating commissions in a spreadsheet! To help you get started, we’ve outlined the steps and definitions below. 

Free Sales Commission Calculator Template

A free spreadsheet to simplify the commission tracking process. Track what you or your team have earned in 4 inputs.

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Follow these steps to start calculating commissions in Excel

How to create a commission calculator in Excel: First, identify what you want to include in your spreadsheet. 

We recommend, if applicable:

• Date Closed
• Customer
• Order #
• Revenue 
• Sales Rep
• Commission Rate
• Commission Amount
• Bonus 
• Deductions
• Payout
• Date Paid

Next, will your bulk spreadsheet track multiple months? If so, you can either duplicate the spreadsheets for every month or, extend columns out to the right. Beware, the more columns you add, the trickier it’ll be to scroll through and find what you’re looking for later. 

Once you’ve built these fields out, review your commission structure and compensation plan. 

Ask yourself, what kind of compensation plan do I have?

If it’s a single-rate sales commission model, good news, this spreadsheet will work well. A single rate, or flat rate, pays a set percentage from the deals you close. 

Whatever your single rate is, you’ll apply this percentage to every revenue amount earned by you or your reps in your spreadsheet. 

Within your spreadsheet, single-rate commissions might look like this:

You’ll input this formula in the third column to calculate the commissions earned:

To apply to the fields below, grab the corner of the cell with the formula in it, and drag it through the applicable cells. This action will modify the same formula for the corresponding rows.

Pat yourself on the back; you’re doing great. Just remember that although all often understand single raters, they fall short in rewarding overperformance.

If you need help with compensation plan strategy, we’ve got free consultations available with our Chief of Staff Graham Collins. 

Need a Google Sheet Commission Template? Download Yours Below.

How to track multiple-rate commissions in Excel

Your spreadsheet grows more complex when you venture outside of simple-rate compensation plans.

Unlike single-rate, multiple-rate commissions factor in different percentage earnings on deals. The rate earned could vary based on quota attainment, deal size, or how much a rep sold already that month or quarter. 

You may have also heard multiple-rate commission plans referred to as accelerators, escalators, tiered commission, or multipliers. They all mean the same thing and act as a great way to motivate reps and reward performance. 

If your plan classifies as such, should you be calculating commissions in a spreadsheet? Not on our watch! 

We can make this process so much easier for you through our automated commission tracking software.

But can you? Absolutely. 

To account for the various rates, you will need to create a rate table. This can be built out on the same page of the spreadsheet.

A commission rate table in Excel might look like this:

Note: There are no formulas within this rate table.

After defining your rate ranges, build out the table within the spreadsheet. Then select all of the cells within the rate table, scroll up to the top left corner where the cell numbers usually appear, and name it “RateTable.” 

How to get my commissions spreadsheet to acknowledge my rate table

Now that your rate table is ready, it’s time to get your spreadsheet to recognize it and apply it to your commissions. 

Cue: Excel’s “LOOKUP” function!

To get your spreadsheet to recognize what rate a closed deal should be paid out on, you will add the LOOKUP command to your Commission Rate column.

In this example, the formula is citing cell D2, which is where the revenue amount for this deal lives. Then, it’s pulling in the appropriate rate based on the range we set previously. For $3,500, reps earn 4 percent commission.

Deep breath, you’re doing amazing, sweetie!

Add in your deals

From here, you’re now ready to add the won deals for your reps that fall within this compensation plan. For reps outside of this compensation model, such as a sales development rep or a sales leader, you’ll need to create a different spreadsheet. (Psst, in Quotapath, we can build and distribute your different plans for you.)

Congratulations, you just built a model for calculating sales commissions in a spreadsheet!

Additional variables to consider

As you thrive in your new spreadsheet utopia, here are a few more items to consider. Along with rate plans, make note of any single-rate bonuses, multiple-rate bonuses, and/or milestone bonuses. 

Bonuses represent something entirely different from rate plans. Commissions calculate from the revenue earned on a deal closing. Meanwhile, reps get bonuses, or set amounts of money, for completing a specific task. A single-rate bonus, for example, could be earning an extra $500 for hitting a monthly quota. 

You can add bonuses manually at the time a rep hits the conditions within your spreadsheet. Or, you can have individual spreadsheets for each rep and add a formula that inputs bonuses based on your conditions.

This might look like a bonus of $1,000 upon hitting $50,000 in total revenue. That bonus is in addition to the rep’s commission rate. When that rep closes a deal that pushes them to $75,000 in total revenue, they might earn another bonus of $2,000. That’s a multi-rate bonus.

To account for this, you’d have a cell in your spreadsheet dedicated to total revenue for the year, month, or quarter, depending on your bonus parameters. The formula, assuming your revenue totals are in the “A” column, looks like this:

Commissions spreadsheet checklist

Lastly, to ensure your spreadsheet remains accurate and secure, run through this checklist monthly.

• Use naming conventions that include time periods and rep names.
• Check that all formulas and multipliers are correct before sending and upon receiving.
• Password-protect each spreadsheet.
• Make a backup of each spreadsheet.
• Only send the spreadsheets to the designated recipients, and triple check the email address before sending. 
• If sending to reps, only include that rep’s commission information by deleting the cells related to other reps. 
• Always look for hidden rows upon receiving commission spreadsheets (tips)

Until next time

Thank you for making it this far! 

This may seem a bit overwhelming, and honestly, it is. 

That’s why QuotaPath launched in 2018 to remove this burden from sales, RevOps, and finance teams. If it’s not the right time to chat, and you need additional spreadsheet tips, check out this lengthy list.

For free commission calculators, quota attainment calculators, and commission tools, check out ours here:

• Sales Compensation Calculator
• Sales Quota Planner
• Quota:OTE Ratio vs. Sales:Earnings Ratio Calculator
• Commission calculator Excel template
• Comp Plan Builder

FAQs

Can I calculate different commission rates based on different sales tiers?

Yes, you can calculate different commission rates based on different sales tiers. Here are two methods:

Method 1: Using the IF function

The IF function is a logical function that allows you to test a condition and return a value if the condition is true, or another value if the condition is false.

To calculate different commission rates based on different sales tiers using the IF function, you would need to create a table with the different sales tiers and their corresponding commission rates. Then, you would use the IF function to calculate the commission rate for each sale.

Method 2: Using the VLOOKUP function

The VLOOKUP function is a lookup function that allows you to search for a value in a table and return the corresponding value from another column in the table.

To calculate different commission rates based on different sales tiers using the VLOOKUP function, you would need to create a table with the different sales tiers and their corresponding commission rates. Then, you would use the VLOOKUP function to look up the sales tier for a given sale and return the corresponding commission rate.

Can I automate commission calculations for multiple salespeople?

You can automate commission calculators for multiple salespeople using commission tracking software such as QuotaPath. Build your compensation plans using QuotaPath’s plan builder, assign plans to your reps, then sync your CRM to automatically pull data from your sales pipeline and calculate commissions accordingly.

What if I need to calculate commissions regularly?

If you need to calculate commissions regularly, the easiest and most accurate solution is to invest in a sales compensation management platform like QuotaPath. In doing so you can shave down the time it takes to run commissions from days to minutes. Try it out for yourself in a free 30-day trial.

Hiring sales reps can be a tricky endeavor. After all, they are salespeople selling themselves. You’re looking for successful sales rep hires that will ramp up quickly to qualifying leads, crush their quotas, and build lasting relationships with clients for your company. So how do you make sure you’re getting the right information out of interviews? Ask these interview questions for sales reps when hiring to build a successful, profitable sales team.

Tips to keep in mind when interviewing potential sales hires:

1. Dig at least three levels deeper than the answer they give by asking what, how, tell me more. This will get you to the real, juicy answers.
2. Take note of their communication and enthusiasm every step: over email, on the phone, and in person.
3. Interrupt the candidate at some point, and listen to how they respond.
4. Test how they take feedback. Offer constructive criticism to something they said or did, and see how they respond.
5. One of the most effective activities for hiring sales reps is having them run through role-playing exercises and putting their skills to the test, on the spot.

Interview format for hiring sales reps

Step 1: 30-minute phone screen

Don’t waste your time with unqualified people.

Being a personable communicator over the phone is a basic qualification for a career in sales.

If they shine on the call, you might consider sending a brief testing exercise before scheduling them for in-person interviews with your sales team like drafting a cold outreach email or coming up with a cold call script. This will help gauge their interest and enthusiasm for the role and your company.

Step 2: Onsite interview with sales team members

Have them meet with a peer, senior peer, and potential direct sales manager. If they are interviewing for a role requiring more experience, meeting with a senior executive might also be necessary.

When you meet in person, have them demonstrate their skills through exercises like a mock call or a mock demo.

Best interview questions for sales reps

Ask an entry-level sales hire:

1. Why are you interested in sales?
2. What scares you about being a sales rep?
3. What keeps you going when you’re having a bad day?
4. How do you keep a smile on your face when you’re having a tough day?
5. What motivates you more, money or praise?
6. What do you need to be successful?
7. Tell me about a time you persuaded someone to change their mind.
8. Tell me about a time you were persuaded to change your mind.
9. What’s something you’ve taught yourself recently?
10. Teach me something.
11. Sell me something.
12. Tell me about a person or event that has impacted you.
13. What’s your proudest achievement?
14. Tell me about a time you were disappointed with yourself.
15. What are your career goals?
16. What are you really, really good at?
17. What do you struggle with?
18. What are you not interested in?
19. Tell me about someone who’s had a positive influence on you.
20. Tell me about someone who’s had a negative influence on you.

Ask an experienced sales hire:

1. What were you hired to do?
2. What accomplishments are you most proud of?
3. What results were achieved in terms of successes and accomplishments?
4. What were some of your mistakes at your previous job?
5. Why did you leave your previous job?
6. What would your former boss say were your biggest strengths and weaknesses?
7. What would your team say were your biggest strengths and weaknesses?
8. Tell me about the team you inherited.
9. Tell me about a time you refused to sell to someone.
10. What traits did your best sales manager have?
11. How have you stacked up to your peers in past performance?
12. What was your most painful sale lost?
13. What was your greatest sales win?
14. What’s the most creative way you’ve closed a deal?
15. Who’s your favorite client?
16. What is your favorite part of the sales process?
17. What is your objection handling philosophy?
18. How does your sales performance this year compare to last year?
19. How did your sales performance compare to your plan?
20. Are you familiar with sales software (i.e., CRMs, sales engagement platforms, etc.)?

To answer that last one, for QuotaPath it’s always happy customers! We’re here to help you and your team crush sales goals. Use QuotaPath to assist in ramping up your sales hires, align your team to their quota, and clarifying goals, and sales compensation plans. It’s a win-win-win situation and it’s free to get started.

Whether you are launching a product or entering a new market, you need a go-to-market (GTM) strategy to help you achieve your goals. 

Without one, you risk wasting valuable time and resources on what eventually becomes a fruitless effort. 

By formulating your approach, you can avoid pursuing the wrong prospects, miscommunicating your message to potential customers, or expanding into a market saturated with too many competitors.

Do you need to prepare a new GTM strategy and aren’t sure where to start? We’ve got you covered.

What is a go-to-market strategy?

A go-to-market strategy details the launch of a new product or entrance into a new market.  

Even if you have an existing (successful) GTM strategy that you used previously for a current product, you should create a new GTM strategy as the marketplace and buyers change. 

Plus, every market has its differences, which requires nuanced GTM plans. 

Below, we go through the basics of what every GTM strategy should include. 

Every GTM strategy features the following key elements:

Product-Market Fit: What problem your product solves and how.

Target audience: Who your ideal customer is, how much they are willing to pay to solve their problem, and what pain points and challenges your product can address.

Market research: Identification of potential competitors in the market and the amount of demand for your product or level of saturation in the market

Marketing plan: Which marketing methods and content types to use to generate demand for your product

Sales strategy: The type of sales plan and related process you are using

Now that you know what a GTM strategy looks like, let’s review the steps you can take to prepare one.

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Use our free sales funnel resource to see how many meetings your team needs to book to hit quota.

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How to build a go-to-market strategy

To build a new GTM strategy, understand that it will take an investment of time and effort. Although your process may look slightly different, the following 10 steps give you a good starting point.

1. Answer these questions

Before you dive into building a new GTM strategy you should answer some preliminary questions. This information helps you work through the additional steps of creating your new strategy.

According to Jen Lyttle, a go-to-market and sales consultant, some of the best questions to ask when developing a new GTM plan are:

1. Who is our ideal customer profile (ICP) and how are we marketing to them today?
2. How do our sales reps currently receive leads? What is the split between inbound versus outbound?
3. What is our total addressable market (TAM) after identifying the ICP?
4. Where are we currently getting stuck in the sales process?
5. Is it that our sales reps don’t have the tools to move quickly?
6. Is it that our sales reps have the tools to move quickly but they just don’t know how?
7. Does our demo process work?

2. Identify the problem

Next, determine the problem your product or service solves for your ICP. This helps you understand product-market fit and is critical to ensure you launch the correct product to the right audience.

3. Define the target audience

Identify your target market with an ICP and buyer personas. This helps you create a clear picture of your prospects and how to communicate with them.

4. Research competition and demand

Once you know who your prospects are and what solution you offer them, you need to ensure there is sufficient demand in your target market and review the competitive landscape.

5. Decide on key messaging

Create a matrix tying messaging to each buyer persona based on pain points and product value.

6. Map the buyer’s journey

This is often visualized as a funnel or a flywheel.

7. Choose marketing channels

Select which types of content you will use to create demand for your product to move potential customers down the marketing funnel, and thereby drive growth. Some options include social media, paid search ads, blogs, SEO content, and emails based on your target audience and where your potential customers can be found along their buyer’s journey.

8. Create a sales plan

Decide how to sell to your target audience and convert them to paying customers. Popular options include self-service, inside sales, field sales, and channel sales.

9. Establish clear goals and ways to measure progress

This is an essential step so you can recognize success and the need to adjust your strategy. Create rules of how often to track goals and course correct so it becomes routine.

10. Create clear processes

Determine how to communicate and execute your strategy with your team. Include rules of engagement (RoE) for your sales team to prevent issues as leads start rolling in. 

Lily Youn, Head of Growth at Gradient Works, offers a toolkit that includes a best practices RoE guide, along with a productivity calculator for metrics to hit targets next year.

QuotaPath supports RevOps professionals

We hope you find this GTM market guide helpful. Stop back for additional RevOps resources, and don’t forget to check out our library of tools including:

For early-stage companies, companies looking to ice out the competition, and those in search of predictable revenue models, sales comp plans that promote multi-year deals can be your biggest asset.

“Multi-year deals tend to be better for the company,” said Andrew de Geofroy, SVP, of Global Revenue Platform for Gtmhub. “With current economic conditions, predictable revenue growth is more important toward profitability.”

But first, what is a multi-year deal compensation plan example?

A multi-year comp plan rewards a higher commission rate, such as an accelerator or bonus, on deals with contracts that exceed 12 months. 

In Compensation Hub, for example, we have two multi-year commission plan templates available to adjust and customize. These include Single Rate Commission with Contract Term Multiplier and the Commission with Multi-Year Accelerators plans. The gist of both is that by offering higher payouts on contracts over a year, your reps will feel more inclined to ask for longer terms versus settling for one year. That translates to improved revenue predictability year-over-year. 

Compensation Hub

Discover, compare, and build compensation plans. Customize compensation models using 9 variables.

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Why you should implement a multi-year deal sales compensation plan

The benefits of longer contracts far outshine any negatives. 

For starters, multi-year deals mean your competition can’t swoop in as easily until your customer’s contract expires. Plus, the more multi-year deals your team secures, the larger the impact on your targeted market — and the fewer chances your competition has to sign your clients.

Multi-year contracts also signal healthy, quality deals. 

“If somebody is willing to sign a contract and really not be able to get out of it for two, three or four years, they are buying into what that rep is selling and positioning from a value standpoint,” said Insight Partners EVP, Sales & Customer Success Hilary Headlee.

Another argument in favor of multi-year accelerator commission plans ties to customer acquisition cost (CAC). If your customer acquisition costs exceed one year, then multi-year deals can help ensure your business has lifetime value.

CRO Kevin McKeown, for instance, works for Beekeeper, an early-stage workflow and communications system. As such, his team is focused on getting CAC under one year. 

“Until we can get our top-of-funnel more efficient and CAC in line, these multi-years are what makes the unit economics really healthy,” said Kevin. 

Added complexity

With that said, adding in multipliers for longer contracts will add complexity to your comp plan. 

For starters, the plan gains an additional tier in its commission structure. The more tiers you add, the more challenging it becomes to track accurately. 

What’s more, most companies will pay a commission rate on the first year of the deal and the multiplier or accelerated rate for every year after. However, they usually will not retire quota for the full amount and instead only count the first 12 months (annual recurring revenue, or ARR) of the deal toward attainment progress. That’s to encourage reps to close a higher volume of deals instead of trying to reach quota by securing a couple of large, multi-year deals. 

In doing so, this makes it even trickier to keep up with and often requires manual inputs and formulas to keep it accurate and updated.

Fortunately, we can automate that for you.

Automate sales commission tracking in QuotaPath

For teams that measure quota based on one number and pay earnings on another, like multi-year comp plans, QuotaPath built plan-building enhancements to simplify this process in our system.

Now, with our new guided experience, any QuotaPath admin can set up complex plans with more than one quota and earnings variable through a step-by-step wizard. No formula building, just a seamless experience to get up and automated. 

In addition to multi-year deals, other comp plan examples made easier by these updates include: when a company pays on commission rates and other bonuses, such as MBOs and meetings booked; when quotas are based on ARR but earnings apply to monthly recurring revenue; or when quotas follow bookings but commissions tie to what’s on the invoice. 

To see your comp plan automated in QuotaPath, or to learn more about our CRM integrations, commission tracking, and sales compensation best practices, book time with our team today.

For years, sending a touching base email has been part of proper sales etiquette. You don’t want to be too pushy, but you can’t risk falling off the radar, either. The solution? You send a follow-up email and hope for the best. While this “follow-up” technique isn’t necessarily a bad one, there are alternatives that could garner much more exciting results.

What is a touching base email?

“Touching base” is a popular idiom primarily used in business circles. It means to reach out and check in with someone following a meeting, interview, or another form of communication. Most experts think America’s favorite pastime inspired the phrase. In baseball, runners and fielders both have to “touch base” to ensure they’re safe or effectively getting the opponent out.

When you send a touching base email, you’re making contact to achieve a specific purpose, such as:

• Reminding the recipient that you’re waiting on a response or other promised communication
• Seeing how the other party is progressing with their part of a shared project
• Checking in with a colleague, client, or acquaintance you haven’t spoken with recently
• Asking for an opinion on an ongoing project
• Saying hi and keeping the lines of communication open, even if there isn’t something specific to discuss

An example might look something like this:

Benefits of sending a follow-up email

Touching base via email is popular because it’s easy, it’s fast, and requires relatively little effort. Just sign in to your email account, dash off a few lines of friendly text and your work is done.

These brief follow-up emails can work well in scenarios where there might not be a need for more extensive dialogue. It can be awkward to schedule a conference call when you just want to see whether a collaborator’s trial is on schedule. The other party may not be able to give an immediate answer, creating an awkward situation. An email gives them time to consider your question, do any necessary info gathering, and then send an equally fast but measured response.

When not to send a touching base email

Touching base emails can seem like an easy way to reach out and connect with clients. The problem is that easy and effective don’t always go hand in hand. The big problem with these emails is that they tend to lack value. They’re usually devoid of meaningful content and are largely skippable. The open-ended “just touching base” line is overdone, underwhelming, and easily forgettable. What is the recipient supposed to do next?

The lack of a call to action can stall the conversation rather than propel it forward — the exact opposite of your intent.

Alternatives to a touching base email

Next time you want to check in with a prospect, try swapping out the overused “touching base” email with more substance.

Deliver value

If you’re sending your email in an effort to remind the recipient that you exist, it’s best to include something of value. One example might be sending a link to an article, e-book, One example might be sending a link to an article, e-book, digital brochure, or podcast your prospect might fight interesting.

Tie into a previous conversation or shared interest

Have you noticed if your prospect has just shared a new article on LinkedIn? Spied a story that reminds you of a previous conversation? That could be the opening you’ve been anticipating. The trick here is to forward the link with a quick yet insightful comment. You don’t want to be too generic, but neither do you want to come across as overeager. Aim for sincerity and be complimentary without gushing.

Say congratulations

A new product launch or big acquisition deserves a bit of celebration. Even a successful sales promotion can leave prospects in great spirits and primed to take on another venture. Make sure you’re top of mind by dropping a line to applaud their accomplishment and let them know you’re paying attention.

Close with a call to action

If you really want to move the deal along, it’s time to stop being vague and start asking for something concrete. It’s probably too pushy to try to snag a sale via email. Instead, you can suggest a specific action that might get you a lot closer to hearing that all-important yes.

• Ask for a meeting on a specific day or within a specific time period (e.g., “How does a meet-and-greet with Sally on Thursday sound?”)
• Request a follow-up with a few suggestions for a product title, pricing structure, or other key detail
• Provide a calendar link and ask them to book a slot at their convenience. Or even better, send them some specific times.

Examples of touching base email alternatives

There are countless ways to customize the suggestions above. You may decide to use a single technique or combine several approaches for a more dynamic, interesting message.

Here are a few examples to get you started:

The average businessperson’s inbox sees more than 120 emails every day. How will you make your next message stand out?

This is a guest blog from Dialpad.

Once you’ve made that magic 10th sale, you’re ready to start scaling, right? As a CEO, you’ll want to grow your brand, but encouraging sales takes a lot of preparation, care, and planning. 

We’re going to set out everything you need to develop a sales scaling mindset and delve into marketing strategies, hiring processes, and forecasts for successful sales scaling.

Building the dream team

Building a sales scaling mindset starts with the right team. 

When it comes to hiring, most people tend to think from the top down, hiring a Sales Manager straight after the CEO. However, it’s important to save these executive roles and focus on building a strong foundation for your business to allow for sustainable scaling. Instead, prioritize tactical staff such as sales representatives to establish sales upon which you can build your clientele. 

Tactical hiring should begin with Sales Development Representatives (SDRs). Their job is to investigate prospects, generate leads, and fine-tune the sales process. By working through early sales objections and weaknesses in your processes, SDRs will learn the best sales protocol which they can pass on to new staff to ensure sales scaling and increased profits. 

Meanwhile, the CEO can concentrate on the overall brand strategy. They’ll only deal with crucial deals and important client relationships. This is important for sales scaling as it means the CEO isn’t spread too thin but can support important deals when necessary. 

Once the SDR(s) has built the network and a smooth-sailing sales protocol, it’s time to hire an Account Executive. The role of an Account Executive is to conduct market research and build client relationships. They’re important in keeping up to date with the market and creating new, relevant ways to market your products and scale sales. 

Next, you can consider hiring a Customer Success Manager (CSM). They will help clients with their products whilst upselling to increase profits. With customers regularly saying customer service is a key factor when deciding whether to do business with a brand, it’s clear that a CSM is a worthwhile investment. 

Finally, consider hiring a Revenue Operations Manager. Their job is to facilitate communication between departments using systems like an enterprise VoIP solution. They also forecast sales and put in place tools so that you can identify areas to improve. If you’re ready to take your business to the next level, hiring in Revenue Ops is a great idea. 

Overall, gradually hiring staff as your business grows is a great way to sustainably scale sales. Not only will your staff stay motivated by seeing the brand grow, but they’ll also have lots of support along the way. 

Who to hire?

It’s important to remember that scaling sales is all about motivation, for you and your staff. So, it’s important to look out for enthusiastic, motivated people when making new hires. 

This doesn’t always mean experience, so prioritize enthusiasm and motivation. 

Another key factor to consider is their values. If someone shares your company values, they’re more likely to stay motivated and genuinely want to work towards your company mission; making them an enthusiastic and loyal member of your team. 

The statistics show that hiring a motivated member of staff is a great investment and can lead to improved profits. According to Gallup, Businesses with highly engaged employees make 23% more profit than those with high levels of disengagement. 

Another great tip is to hire two-by-two. That way, employees always have a supportive and understanding colleague to work with. This helps build confidence and create better employees in the long run. 

Overall, confident, motivated employees are more likely to make sales. Therefore, making smart hiring choices could be the key to scaling up your sales. 

How to make sure your staff stays motivated

So you’ve got the motivated staff, but you have to make sure you keep them enthusiastic in order to build a sales scaling mindset. If you don’t keep your employees happy and motivated, they’ll be less likely to make those ever-important sales to build your brand. 

One of the ways you can maintain motivation is by prioritizing employee well-being. Everyone knows that sales can have high burnout rates when staff prioritizes sales targets over their health and well-being. So, create a strong company culture in which employees work hard but take rest when needed. 

Taking care of your employees also means great communication. Integrating phone systems like a hosted PBX can ensure quick and easy calls, so employees can chat at any time. Connectivity also means you can mentor and encourage your employees directly, leading to a stronger, better team all around. 

Another great way of motivating your team to scale their sales is to offer rewards. Track employee progress using software like QuotaPath and offer rewards accordingly. 

Be creative with your incentives and make sure they reflect your brand values. For instance, if you’re a remote business, why not offer a home office stipend? This not only motivates employees but attracts and retains talent that meets your company values. 

Compensation Hub

Discover, compare, and build compensation plans. Customize compensation models using 9 variables

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How to train your team for sales scaling 

Training and onboarding are also essential for scaling sales. Make sure it includes information about the company but goes further too. Other areas to consider for training and education include key sales data, market information, customer knowledge, and product specifications. 

All staff should be involved and training should be an ongoing process to encourage continual growth. 

You can use incidents in the company as a learning exercise for all staff. For example, if a sales representative has had to deal with a difficult client, deliver a seminar on how to spot bad clients and how to handle similar situations for all sales staff. 

Evaluate and invest in sales scaling   

Track your progress

In order to build a sales scaling mindset, it’s important to be aware of your progress and track your goals.

Establish Key Performance Indicators based on your industry, company, and progress to date. How much profit should you expect to make? How many leads should you generate? It’s important to have goals when it comes to sales scaling. Providing goals for your employees motivates and encourages them to work hard, encouraging sales scaling. 

Invest in tools for growth

Many tools can help you to track your progress and increase productivity as your business grows. 

Customer Relationship Management software or CRMs can help automate and analyze your data, making them great tools to rate your progress and identify areas for improvement. 

For example, you might notice you need to improve in a specific region or customer segment. Using automated tools for this analysis will save you time and money. Meanwhile, you can optimize your staff and scale your sales. 

You can also use CRMs to help with your marketing. For example, in the case of budget email marketing. With all your customer details in your CRM, it becomes much easier to integrate email marketing tools, send out company messages easily, and track campaign performance.

Sales scaling isn’t just about the numbers but your brand identity, too, so investing in software that makes you look professional and organized could be crucial to brand growth. Try a virtual switchboard to get your customers the help they need quickly and easily or create a professional look with a great monogram. 

Prepare for the future 

Another important part of a sales scaling mindset is future planning. Create forecasts and marketing strategies to improve your brand. This will not only motivate your staff by giving them clear targets to work towards, but also provide clear financial goals for your company to survive and thrive. 

Forecasts should be a transparent balance of growth and costs. If you’re not realistic when it comes to planning, your business is doomed to fail. So, use forecasting tips from industry leaders to create the perfect forecast. 

As a general rule of thumb, you must figure out how much acquiring a customer will cost. Then, overshoot your profits by two to three times that cost. This will give you lots of cushioning if you need it. 

Sales scaling = Motivation and patience 

Scaling sales might seem like a scary task, but with these few simple steps and a little bit of patience, growth is sure to come. 

Key to ensuring growth is creating a motivated sales team. Hire people who match your company’s values and goals. Make sure to motivate employees with rewards. It’s also important to prioritize employee well-being.

First, keep things simple, that means your staff and your approach. Hire core members of staff to carry out sales objectives in key areas. This will encourage focused and effective sales strategies which will promote company growth. 

Planning is also integral to scaling your sales. Create plans and infrastructure using systems like CRMs and forecasts to ensure your company is on the right track.  

Overall, scaling your sales comes down to preparation, motivation, and focus. Add a little patience and you will see your company grow soon enough. 

About the author: Jenna Bunnell, Senior Manager, Content Marketing, Dialpad

Jenna Bunnell is the Senior Manager for Content Marketing at Dialpad, an IVR system and AI-incorporated cloud-hosted unified communications platform that provides valuable call details for business owners and sales representatives. She is driven and passionate about communicating a brand’s design sensibility and visualizing how content can be presented in creative and comprehensive ways. Check out her LinkedIn profile.

Commissions floors, or “cliffs” require an individual to meet a certain performance threshold before gaining commission payout eligibility as defined by the sales compensation plan.

Usually, a certain amount of sales or revenue determines the floor or threshold.

The benefit? It can incentivize salespeople to focus on hitting key performance milestones while safeguarding the company from having to pay commissions for underperformance.

However, unintended consequences often appear with cliffs. 

Rather than motivate reps to hit the threshold, commission floors can actually demotivate and frustrate reps. Instead of aiming for a high velocity, albeit smaller deals, cliffs may encourage reps to go after less, larger deals. Or, it can promote sandbagging. 

Sandbagging occurs when a rep intentionally stalls a deal to game their compensation plan. If there’s a cliff, and the rep knows they can’t pass the threshold in the current month or quarter, they may hold it to have a better shot at passing the cliff in the next quota cycle. 

Now, with that context, are you for or against commission floors?

This topic can be a heated one, so we reached out to a few experts in the space to hear their thoughts.

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Graham Collins: Against commission floors

We first asked Graham Collins, our Chief of Staff, Compensation Plan Expert, and Sales Nerd.

“Commission floors tend to encourage sandbagging,” said Graham. “If I have to hit 50% of my quota this quarter to start earning commission but I know my next deal only gets me to 40%, then I’ll kick it to next quarter.”

Plus, set the floor too high, and you’ll upset your reps. But if you set it too low, and everyone hits it, then why even have a cliff?

“Cliffs can discourage new salespeople and even applicants,” said Graham. “It’s a red flag that indicates a lot of the team missed quota so they had to add a floor.”

As an alternative, Graham suggests adding a commission rate to a different tier. For example, once a rep hits 50% of their quota target, their commissions retroactively apply to everything they’ve sold. 

For compensation plan strategy support and templates, visit Compensation Hub.

Rhys Williams: Against

Rhys Wiliams, Domestique Consulting Founder & Managing Partner and former VP of RevOps at Convercent, shared four reasons against commission floors.

1. If you design the comp plan correctly, you shouldn’t need a floor.
2. They lead to sandbagging.
3. Cliffs can be a cultural drag and make it more difficult to recruit the best AEs.
4. There’s likely a larger systematic issue.

Regarding his last point, Rhys suggested the following as a potentially larger issue: “Do you have an effective demand generation forecasting meeting that is contributing to a consistent pipeline where AEs have enough coverage to hit their number?”

If yes, a floor won’t fix that. 

Cassandra Anderson: Depends on the ramp period

We also asked Optimove VP of Global Revenue Operations & Enablement Cassandra Anderson for her take on cliffs. 

“I see both sides,” Cassandra said, who has set floors at 50% and 70% until recently removing the floor because they have no ramp. 

“A floor can ensure the company isn’t taking a bath on commissions paid before the rep is really ramped,” Cassandra said. “But does a rep lose motivation by not being paid from $1? I think the use case depends on the ramp period and the time-to-value. I’m sure there are other factors too and those are my quick thoughts.” 

Final thoughts on commission floors

If you do move forward with a commission floor, one thing to remember is to set an appropriate level and align the cliff with overall business goals. For instance, having a commission floor that is too low might discourage salespeople to achieve higher goals. Reversely, having a commission floor that is too high might lead to an increase in the cost of sales and negatively impact the overall performance of the business.

To find a cliff appropriate to your business model, check out our Commission with Accelerators & Cliff comp plan example and modeler. To discover and build other comp plan designs, visit our free compensation planning resource, Compensation Hub.

About QuotaPath

Want to see a custom demo of QuotaPath’s automated commission tracking? Book time with our team today, and see how our customers save nearly 20 hours of work every month by automating their commission tracking and payments processes. 

What is OTE?

OTE stands for On-Target Earnings. Your OTE is the amount of money you can expect to earn if you hit 100% of your quota. This number is usually given in an annual figure. For example, a sales job posting might say “$90,000 OTE”. This number is sometimes rounded to an even earnings number for convenience. For example, your true OTE might be $90,240 but you might be told that it is $90k for simplicity.

How do you calculate OTE?

The equation for OTE is very simple:

Do you need help calculating OTE, setting a sales quota, or determining a commission rate? At QuotaPath we built an entirely free sales compensation calculator, no sign up required.

Also, if you want to automate calculating commissions and quota attainment, QuotaPath is here for you. We take the spreadsheets and human error out of calculating commissions with automated commission software. Get started for free or sign up for a demo.

OTE is not guaranteed

If you’re interviewing for a sales job, make sure you also ask the hiring manager about average attainment. The OTE for the role might be $120k, but if average attainment is 50% of quota, the average earnings will be substantially lower. OTE shouldn’t be impossible for even top talent to attain. It should be possible for most salespeople on your team to see success.

Other OTE terms to know

Fully-ramped OTE: most sales roles require some ramp time. Because of this, OTE usually doesn’t consider ramp quotas and payouts. However, good sales organizations will either give you a draw or increase your commission rate to make up for the lower quotas.

Pay mix: this refers to what % of your OTE is base salary and % is commission. The industry norm for SaaS sales is 50% base and 50% commission/bonus, but there are industries where the pay mix is different.

On-target commissions (OTC): the second half of that equation above. Some organizations refer to on-target commissions to mean how much a rep earns if they hit 100% of their quota.

Average rep earnings: remember the fact that OTE isn’t guaranteed. Some hiring managers will provide what an average rep earns in a year. If the average rep hits 100% of quota, they’re going to brag about this! However, if their reps are hitting 40% of quota and therefore drastically under-earning, expect to have to quiz them on this.

OTE examples

Account Executive

An Account Executive has an OTE of $100,000. Their base salary is $52,000 per year. They have a monthly quota of $40,000 and earn a 10% commission off every deal they sell. Therefore, if they close 100% of their quota every month, they would earn $4,000 every month. This means $48,000 in commission every year. Add that $48k to the $52k base salary, and you get the $100k on-target earnngs.

Sales Development Representative (SDR)

A Sales Development Representative (SDR) has an OTE of $70,000. Their base salary is $42,000 per year. They have a qualified meeting quota of 35 per quarter, and they get paid a $100 bonus per qualified meeting. They also have a sourced revenue quota of $210k per quarter, and they get paid 3.33% commission on deals they source. If they hit 100% of their quota every quarter, they earn $7,000 every quarter. This means $28,000 in commission every year. Add that $28k to the $42k base salary, and you get the $70k on-target earnings.

Director of Marketing

A Director of Marketing is responsible for overseeing the entire marketing department. Their annual quota is centered around revenue generated by the marketing team. Even though some disagree with holding marketing’s compensation to a metric! They have a base salary of $130k and their quota is $2.4 million. Once they hit 50% of their quota, they earn a $5,000 bonus. They earn another $5,000 bonus once they hit 75%. Finally, they earn a $10,000 bonus if they hit 100%. Adding their $20k possible bonus to their $130k base salary, their OTE is $150k.

If this all sounds like it’s too complex for you to solve on your own, don’t worry, we’re here to help! I’m happy to sit down with you for a free compensation plan strategy session. I promise we can cut some complexity out of your compensation plans and give you an understanding of how to build a great plan.

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What is the average OTE for a sales rep role?

The average OTE for sales reps in the U.S. varies per industry, region, and company. However, according to Glassdoor, the average OTE for a sales representative in the United States is around $60,000 per year and ranges from $30,000 to $100,000 or more depending on the above mentioned factors.

This number increases for enterprise reps, who generally deal with larger, more complex sales and under longer sales cycles. Glassdoor’s data also reported that an average OTE for an enterprise sales representative in the U.S. is around $125,000 per year, but it can range from $75,000 to $300,000.

According to the U.S. Bureau of Labor Statistics, about 60,000 individuals held the role of “sales engineer” in 2021.

This role most frequently appeared in the computer systems design and related services industry, more commonly known as SaaS.

But what does a sales engineer do and how do you compensate them?

Below we detail the role, and compensation structures, and learn more about the support and services they provide. And we do so via the experience of our own sales engineer. 

First, what does a sales engineer do? 

A sales engineer brings technical skills, business knowledge, and customer service to support growth teams during the selling and implementation process of a customer’s journey.

They serve as specialists and technical experts during sales calls to establish trust within the technical frameworks of the product and show benefits in a way that go deeper than the rep’s pitch. 

At QuotaPath, we introduced a solutions consultant role last summer. 

After flooding our reps with proof of concepts and over-scheduling our CTO and Head of Product with sales calls, we knew it was time for a dedicated resource to support Sales.

Our very own Michael Davenport earned the promotion to solutions consultant after two years as an Account Executive. His sales background combined with his history of shining in deals that required intensive product technical know-how made him the perfect candidate.

Sales engineer responsibilities at QuotaPath

As a solutions consultant, Michael acts as a sales engineer and is introduced mid-way into the sales cycle after the rep has identified complexities that go beyond the usual requests. He also works in conjunction with Coleman O’Phelan, our solutions engineer, who reports to our Director of Product and does more of the coding work required for system integrations. 

Here, technical issues might arise when it comes to integrations or comp plan design. 

For instance, our commission tracker and sales compensation software ingest thousands of different comp plans. During the sales process, we ask our prospects to send us their plans, or comp plan descriptions and spreadsheets.

At that point, the sales team must interpret and validate how we’ll build the plan framework within QuotaPath. 

“From there, we must also validate how we’re going to integrate into the prospect’s system to get the data to flow into QuotaPath,” Michael said. 

That’s when Michael lends a hand to accelerate the sales cycle. 

“I take the technical work of validating comp plans and integrations off of the rep’s plate so they can focus on the sales cycle and quickly close the deal,” Michael added. 

His presence in the deal also helps ensure a smooth transition from sales to onboarding to ensure that everything will work accordingly when our customer success team takes over. 

And while the position is still relatively new, Michael said the key metric he’s established for himself is the annual recurring revenue generated from deals that include his involvement. He also looks into the closed/won rates for deals he’s in versus those he’s not.

“Ultimately, my main goal is to help our sales team close deals however I can,” Michael said.

Sales engineer metrics

QuotaPath remains in the early stages of this role, but as time progresses, Michael said he plans to implement the following metrics to gauge his success:

• Closed/Won rates of deal involvement
• Sales engineers’ time spent on deals and effectiveness on outcomes
• Categorizing the types of sales he’s brought into
  

“The last two will help me report at the end of a month or quarter that I spent, for example, 70% of my time on sales calls and 30% on customer calls with our CSMs,” Michael said. That information will then help inform him where he should spend more time. 

Sales engineer compensation

Michael’s seen a lot of sales comp plans in his work at QuotaPath, and that includes sales engineer compensation structures.

“I most often see team-based structures for small solutions consulting or engineering teams,” Michael said. “So, if the team achieves 80% of their number collectively, then my commission as a solutions consultant kicks in.”

For larger teams, Michael said sometimes you’ll see sales engineers assigned to a small group of reps who earn commissions only from the group’s total earnings. For example, if an engineer supports a pod of three or four reps, the engineer earns a percentage or bonus off every deal that pod closes, or any deal they play a role in. 

“These plans can start at the high level with the engineer earning a bonus from any deal regardless of the involvement. Or, they can go deeper by only compensating on deals the engineer supports,” Michael said. 

As for base-to-variable pay ratios, Michael said he most frequently sees 80:20 splits, with 20% attributed to variable pay. 

“The most important thing to remember is to incentivize what you want the person’s role to do,” Michael said. “If they support an entire team, then their compensation should be broad.”

However, if they’re used for a specific use case, such as writing code for one part of the platform, then consider paying them on only the deals they’re writing code for.

Who does a sales engineer report to

Most frequently, you’ll see sales engineers report to the head of customer success. That’s the case here at QuotaPath, too. 

This proximity to customer success helps instill a seamless handoff once the prospect upgrades to customer. This also helps ensure that the product will work accordingly as reviewed during the sales process when the sales engineer joined the conversation.

When is it time to add a sales engineer?

How do you know when it’s time to add a sales engineer to your salesforce?

“Salespeople will look for answers somewhere, so why not devote a dedicated resource, such as a sales engineer, to help them sooner?” Michael said.

If you’re noticing an uptick in complicated sales calls that require large time commitments from your reps and none sales leaders, it might be time to consider a sales engineer.

Thank you for the chat, Michael! To learn more about compensation plan design and commission structures, visit Compensation Hub. This resource includes 20 customizable comp plan templates. To see your comp plans automated in QuotaPath, book time with their team today.

Product-led growth (PLG) is growing in popularity amongst B2B companies. 

According to a survey conducted by ProductLed, 58% of the participating companies run PLG models. Ninety-one percent said they plan to increase their PLG efforts, while 47% committed to doubling their investment. 

It makes sense. 

Over the past decade, some of the most popular SaaS tools implemented PLG models, including HubSpot, Calendly, and Slack. 

Yours truly, QuotaPath, also adopted a PLG motion by offering free commission tracking software. 

By creating intuitive, user-friendly products and superior customer experiences, these companies provide customers with a self-service journey to learn, access and experience their products. And, they do so by offering their solutions for free.

This approach stems from the idea that once users see the value, they convert to paying customers and expand with more subscriptions. 

For Slack, it’s paid off. The company went public in 2019 and maintains a paid customer retention rate of 98%, according to this report. Calendly, too, surpassed 10 million users this past year and a $3B valuation. 

But how do freemium PLG models impact sales compensation plans since the product sells itself? 

Below we explore this topic. 

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How PLG motions impact sales compensation

A sales team in a PLG organization has a different focus than a traditional sales-led growth model.

For instance, sales-led teams focus on creating leads, demoing the product, and guiding prospects through the sales process.

PLG sales teams, on the other hand, spend more of their time helping customers realize value and expanding accounts. They might partner with free users to accomplish objectives and guide them through configurations, pricing, and contract negotiations.

So, how can you pay your team appropriately and competitively for PLG models?

Let’s look at an example.

Comp plan example for PLG companies 

To get started, keep in mind that PLG comp plans don’t differ greatly from a standard SaaS comp plan.

How you think about paying on PLG models shifts based on how expansions occur within your business. Do they occur naturally or is it a core component of the sales cycle? This question will help determine how you go about structuring your sales compensation strategy.

At QuotaPath, for example, our expansions happen relatively naturally. Perhaps a deal kicks off with 10 users, then the customer adds their SDR team and 5 new AE hires. 

As is the case with most PLG programs, the customer in this example does not need to sign a new contract. Rather, they can add users directly to the platform, with their pricing immediately updated.

PLG sales comp plans to consider:

The first PLG comp plan example we often see involves paying the sales rep on the expansion at the same rate as the initial contract and allowing it to count toward quota.

Usually, leaders will set a period of time that the expansion payout is eligible. We most commonly see timeframes set within 12 months of the initial agreement. Some organizations will leave it indefinitely. Others will pay reps on expansions only within the first 90 days. 

“If they immediately hand off the deal to a customer success or account manager, it doesn’t make sense to compensate the rep on the upsell,” Graham Collins, QuotaPath Chief of Staff said. “But if they manage the relationship, the rep deserves to be paid on that.”

Higher rates at the time of contract

Another commonly used PLG comp plan entails paying a higher commission rate on the first contract. 

The catch? The company pays a higher rate with no additional payment on expansions because there’s a significant chance they expand later. 

So, a rep might earn 20% off the bat, a rate we consider very high, due to its likelihood of adding more users later.

“Reps might not like this because they don’t get paid on the expansion, but whether or not it expands, the rep still earns a higher rate,” Graham added. 

Commission rates and quotas

A third option to consider is to pay the rep the same commission rate on the expansion while disqualifying it to count toward quota. Or, you could pay a lower rate and not count quota.

Here are the plans we see from most common to least common:

• Most popular: Count toward quota, paid same rate
• Count toward quota, lower rate
• Doesn’t count toward quota, paid same rate
• Least popular: Doesn’t count toward quota, lower rate

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For example, if 30% of free users convert to paid without an AE stepping in, then a cliff or decelerator will pay the AEs on a lower commission rate until they surpass 30%. Once they pass 30%, they begin earning a higher rate on every conversion thereafter. 

Build your PLG sales comp plan

Sales comp plans for a product-led growth company depend on the unique structure of your sales team, strategy, and product. 

We recommend beginning simple and adjusting your plan over time to drive sales behaviors that align with your company goals.

For support with comp plan design, visit our free resource, Compensation Hub. This library includes 20 adjustable free comp plan templates to run and test scenarios. 

To learn more about QuotaPath’s sales compensation automation and management software, book a time with our team for a chat. 

Move over marketing qualified leads (MQL). Community-qualified leads (CQL) are the hottest new best practice for generating solid leads and brand evangelists. 

According to this Community-Led Report, 22% of companies have developed community teams since 2020. These teams consist of cross-functional members of a company dedicated to providing resources and building relationships in communities where their buyers and customers are.

We’re big fans of this approach because it creates a space to build early, authentic relationships with those who fit within our ideal customer profile. That way, when the prospect is ready to talk to sales, they have already seen value from our company and aren’t coming in cold.

But don’t get too excited just yet! This form of engagement is only for the resilient. 

CQLs require a long game to convert them to a closed-won deal. 

Unlike MQLs, CQLs are not measurable. Plus, CQLs impact more than sales and marketing teams. 

So, let’s break down what a CQL actually is. 

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For instance, QuotaPath is a community partner in RevOps and Sales professional communities, such as RevOps Co-Op and Pavilion. We are active participants across their Slack channels and provide resources that directly relate to the sales compensation space, as well as other topics. Just last week we provided a community member with a sample RevOps Analysts’ job descriptions at their request.

Benefits of community-qualified leads to each department 

Each department in a company can benefit from a CQL, but it can look different across teams. 

Below, we break it down. 

Human Resources

By engaging in a community, active members within can identify talent to join the business, either by referral or by members sharing they are open to new opportunities.

Product

User feedback steers product growth. Communities offer a space to receive both solicited and unsolicited user feedback, giving the product team an instant peek into how to prioritize their product roadmap. The product team can also leverage communities to identify beta testers.

Marketing 

Communities set the perfect playground for case studies. Finding people who are willing to talk about their product experience is invaluable. From these case studies, it’s also easy to get a testimonial as well. Communities are also a great hub for finding guest writers. They’ll be able to create authentic content that speaks to the product and brand of the company. These people could be tapped to become an ambassador for the business, too. 

Customer Success 

Customer Success can lean on communities filled with customers to offer best practices and use cases of your product to future buyers and new customers. This creates more value for the product to power users offering support to those who seek it. Communities can also serve as a host for educational content and product FAQs. 

Sales

It might be worth having a couple of your sales reps planted within the community. We recommend the reps who are best at establishing long-term relationships and are okay with a long sales cycle. Tell them the limits of what they can do within the community and what they should avoid. 

For instance, many communities will deter companies from actively advertising their services and pitching their products. But, if a sales member is listening and providing helpful resources and answers to questions that come up, that’s all fair game. 

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According to Commsor, community–led sales is a slow burn. The time in which a potential prospect hears about your business to when they first connect with a salesperson can take much longer than traditional sales. 

Additionally, it’s helpful to understand who in the community is a prospect versus an existing customer. We recommend creating a shareable document that sales and marketing can reference that lists out the customers in each community. 

This way, if someone asks about your product, you can tap into those customers you have solid relationships with to speak to their experience. Because, at the end of the day, your customers are your strongest sellers.

How QuotaPath thinks about community-led growth

While we have a growing business development team who nurture our MQLs before handing them off to sales, we also have invested in our CLG efforts.

In addition to Pavilion and RevOps Co-op, we participate in Modern Sales Pros, Wizard of Ops, and more. In these groups, we respond to compensation questions and consistently share content and free resources, such as Compensation Hub which includes a library of 20 adjustable sales comp plan templates and examples. 

Other resources we share out and encourage you to check out:

• Sales Compensation Calculator (Includes an On-Target Earnings Planner, Sales Quota Planner, and Commission Rate Planner)
• Quota:OTE vs. Sales:Earnings Ratio Calculator (Use this tool to ensure your reps’ on-target earnings and quotas reflect what they’re bringing in for the business)
• Sales Funnel (Experiment with different close rates, average contract values, and activity numbers to see what’s right for your business, team, and individual goals)

Last year, our Chief of Staff (and host of Sales Nerds Live!) Graham Collins shared the patterns he observed after conducting more than 350 compensation strategy calls.  

His top five takeaways include the importance of designing comp plans with a task force, keeping plans as simple as possible, aligning the plan to company objectives, avoiding an over-reliance on sales comp to motivate behaviors, and sales comp plan testing.

The latter, sales comp plan testing, is what we’ll focus on today.

In previous blogs, members from both Sales and Finance agreed that the comp plan design process should start with Sales. 

“I prefer when Sales comes to us with options and pre-proposals,” said QuotaPath VP of Finance Ryan Macia said, in How to include Finance in sales comp planning. “I don’t like starting from scratch. If you can come to me with some concepts that you think will motivate the team, then we can determine if it will break the bottom line.”

Additionally, Sales can take proactive steps by running light pressure tests of the comp model before taking those first concepts to Finance. 

Caroline Tarpey, our former VP of Sales, for instance, said once you give Finance your proposal, they’ll overlay the plan on historical data. 

“They’ll take the new plan and run last year’s numbers through it to see how it would pay someone under the proposed plan and how it differed from how it was actually paid out in the year prior,” said Caroline in How Sales and Finance can work better together this comp plan season. “This is a step Sales can take on too if you’re looking to expedite the process a bit and get Finance buy-in earlier.”

So, whether you’re Sales, Finance, or RevOps, and are curious about how to approach sales comp plan testing, we pulled some best practices with the help of our Senior Financial Analyst, Jonathan Mann.

How to pressure test your comp plan models

4. High-level testing: apply last year’s numbers

“Take a carbon copy of your current year numbers and apply them to next year’s proposal,” said Jonathan.

If it doesn’t fit with the current year, don’t even bother moving forward.

“Go back to the drawing board before you get too involved in pressure testing your forecast and model,” Jonathan said.

3. Run scenarios based on next year’s revenue assumptions

Identify overlaps across plans, bonuses, and SPIF programs. Determine the maximum commission rate that a rep could earn on a deal given any time period.

“If you only think about different programs and plans in isolation, and fail to consider where they overlap, you could up paying a rate that you didn’t intend,” Jonathan added.

2. Skip to the bottom line then work backward

Look at the average commission for the year across the sales team.

“My mind goes straight to a mid-range estimate to what kind of commission expense this results in the year based on the revenue modeling,” Jonathan said. “Then I look at if that number is sustainable and reasonable.”

1. Run sensitivity analysis on each component before modeling mixed variables

Take each variable, such as Quota to OTE, actual commission rates, and multipliers, and test individually in controlled environments. Then proceed with scenario modeling by mixing variables. 

Jonathan also offered this advice to his fellow Finance peers, “These can be sensitive discussions. Acknowledge that. Be human.”

Happy testing!

For additional sales compensation strategy support, check out Compensation Hub. This free library includes 20 adjustable sales comp plan templates that model according to your inputs. Run different scenarios and test to see if the commission structure fits your business.

And, to learn more about QuotaPath’s automated compensation management software, book time to chat with their team today.