A commission plan with accelerators, bonuses, and spiffs can motivate positive selling behaviors but only if you can see how close you are to reaching key milestones and thresholds. In the absence of a sales compensation calculator to automate the process, figuring out where you stand can be difficult. This is especially true for a complex commission plan with a math-intensive and code-heavy commission formula in excel that’s tough to run if you’re not a finance professional. The inability to project how much you’ll earn on a given deal, or how much you should anticipate receiving in your upcoming commission check, can leave you feeling frustrated, demotivated, and uninspired.

We’re here to help. In this article, we’ll guide you through the proper steps of how to calculate commission easily and correctly, so you always know where you stand.

Getting to know your commission plan

Commission plan definition: a framework used to calculate the amount of money a sales rep earns based on their progress against specific criteria. Compensation plans often consist of base salary, commissions, and bonuses. Different types of commission plans include:

• Straight commission, also referred to as 100% commission, where pay is entirely based on sales earnings with no base salary or guaranteed pay.
  
• Base salary plus commission examples. The base salary plus commission is one of the most common compensation structures. It includes a base salary plus a commission rate.
  
• Single rate, also known as flat rate or fixed rate commissions, is the most basic form of sales commission where earnings are calculated based on a set percentage of the value of deals closed.
  
•  Multiple rate plans assign different percentages to deals closed based on quota attainment, deal size, or total amount sold during the month or quarter. We also hear this type of plan called accelerators, escalators, tiered commissions, or multipliers.
  
• Gross-margin plans take a similar approach as single-rate plans except commissions are calculated based on a percentage of gross revenue collected.
  
• Territory volume models are used in team sales situations where a team collaborates to sell into a specific region or vertical. These are single-rate commissions that are split evenly between the territory team members.
  
  Bonuses are calculated differently than commissions. A commission is a percentage of a revenue number and a bonus is a set amount of money earned for doing a specific action.

• Milestone bonus is a set amount of money paid for doing a specific task when certain stipulations are met.
•  Multiple rate bonus varies based on criteria like quota attainment, size of the deal, or length of the contract.
• Single rate bonus, sometimes called spiffs or incentives, are a set amount of money for completing a specific action and doesn’t change based on the number of times the action is completed.
  
  Draw against commission reduces the cashflow inconsistencies of a commission-based income by allowing a rep to borrow against future commissions so the money is there when you need it most to pay for basic living expenses. There are two main types of sales commission draw—recoverable draw and non-recoverable draw.

Steps to calculate commission

Here are some basic steps for calculating your commissions.

1. Determine the commission period. Is it biweekly, monthly, or quarterly?
2. Calculate the total commission base you made during the period. This equals the value of deals closed during the period or the gross revenue for percentage calculations. If percentages vary by product type, calculate these values for each product type. And if you receive bonuses tally up period totals for each bonus type.
3. Multiply your commission rate by your commission base. These calculations will vary by plan. See below.
4. Take variable commission rates into account, if applicable.
5. Allow for tiered commission rates.
6. Complete any additional applicable calculations and adjustments like overrides, deductions for returns, and commission splits for shared territories.

How to calculate commission

Below, we laid out examples of commission calculations for the various commission plans discussed above.

Straight commission

James sells cars. He earns 2% commission on all sales. If his total sales for the month comes to $350,000, he is paid $7,000.

Commission Percentage X Total Sales = Commission Amount

0.02 X 350,000 = $7,000

Single rate

A salesperson earns $1,000 per month in salary plus 10% commission. If they sell $25,000 worth of product in a month, they earn $3,500: $1,000 salary plus $2,500 commission.

Single rate commission calculation:

Commission Percentage X $ Amount Sold = Commission Amount

.10 x 25,000 = $2,500

Multiple rate

A sales rep’s base commission is 4% up to $150,000 in sales. The commission increases to 8% for all sales above that amount. If the rep closes $250,000 in sales, they receive

Multi-rate commission calculation:

.04 x 150,000 = 6,000

.08 x (250,000 – 150,000) = .08 x 100,000 = 8,000

6,000 + 8,000 = 14,000 commission for the period

Gross Margin

A salesperson sells an $80,000 car that costs the dealership $50,000, so the gross margin is $30,000. The salesperson earns 8% on the margin or $2,400 in commission.

Gross margin commission calculation:

Total Sale Price – Cost = Gross Margin

Gross Margin X Commission Percentage = Total Commission 

80,000 – 50,000 = 30,000

30,000 X .08 = 2,400

Territory volume

Three reps share a quota of $150,000 per month for sales in the state of Michigan. If one rep closed $60,000, the second closed $50,000, and the third sold $40,000, then the team reached their goal. So, the three reps will evenly divide the 10% commission, receiving $5,000 in earnings each. 

Territory volume commission calculation:

Total Monthly Territory Sales X Commission Percentage = Total Commissions

Total Commissions ÷ Number of Territory Reps = Commissions per Sales Rep

60,000 + 50,000 + 40,000 = 150,000

150,000 X 0.10 = 1,500

15,000 ÷ 3 = 5,000

Milestone bonus

An Account Executive has a monthly quota of $40,000 and when they hit that quota, they get a $3,000 bonus.

Multiple rate bonus

A Sales Manager receives a $1,200 bonus for each deal their team members close for product X and a $2,400 bonus for each deal their team members close for product Y.

Single rate bonus

A Sales Development Representative has a monthly goal of setting 35 meetings and earns a $150 bonus for every meeting that occurs.

Draw against commission

A sales rep’s On-Target Earnings (OTE) is $5,000 per month in commission. The rep receives a $2,500 per month recoverable draw during their onboarding period. If this rep’s sales only generate $1,500 in commissions their first month, they receive a $1,000, for a total of $2,500 in commissions that month. The company will recover the draw amount during future pay periods when the rep’s commissions exceed the allotted draw amount.

Potential Draw – Earned Commissions = Repayment amount

$2,500 – $1,500 = $1,000

Simplify the process by making your plans less complex

Complex commission plans can be a motivational force when you know where you stand in relation to your goals, quotas, milestones, and bonus targets. The more complicated the compensation plan, the more difficult it becomes to track your commissions and progress throughout a given period. This is especially true if you’re relying on a formula-laden excel spreadsheet.

Looking for an easier way? QuotaPath can automate the entire sales compensation process so reps and leaders can easily track their progress throughout the sales period. Try QuotaPath for free or learn more by booking time with our team today. 

Ready for this? If there is sandbagging in sales at your company, it’s your fault.
Reps sandbag deals for a reason and oftentimes that reason makes sense based on what you’ve told them to do. Read on to learn when sandbagging deals occur, instances it might actually be appropriate, and how to discourage this behavior from the beginning.

What is sandbagging in sales?

Sandbagging in sales occurs when a salesperson intentionally delays closing a deal to ensure better results in the future. 

Reps might sandbag by delaying sending an agreement for signature, holding off on post-meeting follow-ups, adding unnecessary steps in the closing process (think: NDAs, legal review, or proofs of concepts), or slowly responding to emails from customers and prospects.

Why does sandbagging occur?

Salespeople sandbag deals for a couple of reasons, but the two primary reasons are to work the sales commission structure and to showcase consistency.

1. Commission
   
   Most commonly, reps sandbag deals because they believe they will earn more in the long run by closing it at a later time. That might be because of a commission cap, an upcoming change to a comp plan, or to hit an accelerator. Whatever the reason, they see more dollar signs when they think about postponing a signature.

2. Consistency
   
   Secondly, to appear consistent across quarters, a rep may intentionally schedule a deal into the next one. For instance, say you’re a rep who has already hit their quota for the quarter. You have a vacation coming up next month and don’t want to go away for two weeks without closing a deal. This is a perfect example of when a seller might sandbag a deal after already achieving target. 

Downsides of sandbagging

While reps sandbag to game the system a bit, they put a lot at risk by delaying a deal. The longer the delay — the greater the risk.

A good rule of thumb? Remember that you can’t guarantee a deal until it closes. Even if you feel really good about it, have a verbal confirmation that the customer intends to sign or you’re in the room with the buyer who has a pen in hand, you can’t count it until finalizing the paperwork.

Maybe a competitor comes in at the last minute and undercuts you. Maybe your champion gets laid off.

If you delay the signing of the deal for any reason, you add risk.

Other downsides include unexpected comp plan changes that reduce your sales commission rates or shifts to your territory design.

How to prevent sandbagging in sales

So, how can you prevent sandbagging in sales from happening? There is no tried and true way to avoid it, but there are three ways to reduce the likelihood.

1. Compensation plan
   
   Start by looking at your sales compensation. If you have very generous accelerators or very punitive decelerators, your reps are more likely to sandbag deals in order to maximize their earnings. To head off sandbagging, remove decelerators (and cliffs) or make the accelerators less enticing. You can also create a rule around year-to-date performance. This ensures a rep won’t miss quota two quarters in a row followed by a quarter 300% over goal. Also, remove your commission cap. 

2. Sales training and coaching
   
   Create a culture where it is unacceptable to even hint at sandbagging deals. If your team focuses on winning deals as quickly as possible, then the results will follow. Weekly deal reviews with solid next steps – and accountability – go a long way.

3. Process
   
   Lastly, lean on technology. Technology can help prevent sandbagging. You should have notes for each deal if you record your sales calls. If that’s the case, it makes it harder for a rep to fudge the details of what a customer said because you’ll have full visibility into these calls. 

Remember, the goal isn’t to entirely eliminate sandbagging by these methods. Rather, it’s to reduce the incentive so reps don’t think it’s worth it. 

Upsides of sandbagging

Okay, this is the part where I might ruffle some feathers. I had a boss once tell me, “If I ever catch you sandbagging a deal, I’ll fire you on the spot.” But, as you’ll see in the examples below, sometimes there are advantages for reps to sandbag deals. 

But what about the company? 

The biggest argument I’ve seen from a leadership lens in favor of sandbagging goes back to establishing consistency over time. Some sales teams have “lumpy” results, meaning they have quarters where they hit 200% of quota and some quarters where they hit 40% of quota. 

A sales leader might think to themselves, “I wish they would just hit 100% every quarter instead!” 

However, sandbagging is not the way to accomplish that. 

Instead, build your sales comp to discourage lumpiness. Are the accelerators too aggressive? If so, you might be encouraging overperformance at the expense of the following quarters. Do you have a commission floor? If so, maybe sandbagging is actually your issue, not the solution.

Examples of sandbagging

Below, I’ve outlined a few examples of sandbagging. If you’re a leader in sales, these should sound familiar.

Account Executive sandbagging in sales example:

Jennifer is an Account Executive at a high-growth SaaS startup called Naturize. Naturize sells software to help its customers encourage employees to go on more hikes for their mental health. Naturize’s compensation plan pays Jennifer 10% of every deal she sells. She also earns a Milestone Bonus, a flat $2,000 bonus, if she hits 100% of her monthly quota. She had a great January, already at 120% of quota, and has collected her Milestone Bonus.

February, however, isn’t looking so hot. Her pipeline dried up a bit, but she continues to work a deal through legal that she could close in January if she pushes her legal department.

It’s worth about 75% of her quota. If she closes it in January, she pretty much guarantees to miss her February quota (and therefore her February Milestone Bonus). On January 25, she decides she’ll sandbag this deal, and… what do you know! It closes on February 3 and she’s able to easily come up with the rest of her quota to earn her Milestone Bonus. 

SDR sandbagging example: 

Davis is an SDR at a B2B SaaS company called Alttitude. Alttitude is a tool that automates checklists for companies. It’s Davis’s job to schedule demos for Account Executives, and they get paid $100 for each demo that occurs. However, there is a quota of 20 demos per month. For every demo after the 20 target, Davis earns a reduced rate of $10 per demo. It’s late in April and Davis has enough demos scheduled to hit quota. 

Davis secures a hot lead on the phone who says this tool sounds perfect. Now they have to decide on whether or not to sandbag this demo to next month. If they book it for this month, they’ll only earn $10. If they schedule it for next month, $100 in their pocket. They sandbag the demo to next month by claiming the AE’s schedule is “just too busy this week”. 

Account Manager sandbagging example: 

Justin is an Account Manager at a company called Mixxter that sells high-tech bakery equipment. Mixxter sells hardware but makes most of its income off the software that runs the hardware. It’s his job to maintain customer relationships and also upsell bakeries when they need more hardware or additional software. He gets paid 10% of any upsells he closes each quarter. However, Mixxter doesn’t want Justin spending all his time on upsells, thereby forgetting about contract renewals. So Mixxter’s CFO puts in a commission cap for upsells. Once Justin hits $100k in upsells each quarter, he is no longer eligible for commission on further upsells. 

Well, one day a small bakery comes to him and says they acquired a competitor and are expanding to 10 more locations. He is excited about this upsell opportunity until he remembers he’s already approaching that commission cap and he’s only halfway through the quarter. 

So, he tells the customer that it would be better to slowly expand their account over the next 6 months rather than all at once. The customer initially agrees, but when he calls them on the first day of the next quarter, they have actually signed a deal with Divimixon, Mixxter’s biggest competitor. The upsell vanished and in its place, churn appeared. 

To sandbag or not to sandbag

See the dilemma? Sometimes it absolutely makes sense to sandbag from the rep’s perspective if a company writes a comp plan that indirectly encourages it.

Unsure if your comp plan promotes sandbagging? Let’s chat.

About QuotaPath

QuotaPath’s sales commission software pairs an easy-to-use experience with a highly technical backend. That’s why so many teams use us to get Sales, RevOps, and Finance all on the same page when it comes to sales compensation.

To see how we fit into your tech stack, check out our integrations page. And, to learn more, book a time with a member of our team today.

QuotaPath CEO and Co-Founder AJ Bruno authored this blog on SaaS pricing transparency.

Almost all the information we need today we can access at our fingertips.

In SaaS, that means buyers have grown more sophisticated over the past several years. So much so, that we can now buy and sell cars, homes, and even commercial real estate entirely online.

As the shift to shopping for major investments online has intensified, buyers have gotten smarter too. 

Modern shoppers know how to educate themselves, and they know what they’re looking for and how to get the information they need. Whether it’s via Google search, posing a question in a community forum, or seeing what their friend at a different company uses, people know how to shop. And, in most cases, the buyer doesn’t even need the help of a salesperson until they feel fully prepared to buy.  

Still, despite so much of the sales process depending on the shopper’s online research, one B2B trend continues to loom that disrupts this self-buying journey. 

A pricing page absent of pricing. 

Non-transparent pricing in a transparent buyers era

We all know the feeling of exploring a product only to have trouble locating the actual cost. Just imagine if gated pricing came up in our day-to-day lives as much as it does in SaaS.

After days dedicated to scouring the internet for the perfect lawn mower, you finally found the one.

The only thing you don’t know is how much it costs. And, guess what? The path to find pricing is convoluted and filled with pitstops.

So you set off on a pricing expedition.

You may initially do some “sleuthing” that will lead you to the dark recesses of the internet, but alas, it seems that companies try their best to scrub this data. So, your second stop: a call with the business development representative, who has never actually used this lawn mower. Better yet, they have never mowed a lawn.

They ask you several questions to measure how likely you are to buy, despite your hours of research leading into the call. 

The call concludes. Congratulations, they’ve deemed you a qualified buyer! 

But sorry, to get the price, you’ll have to speak to a more senior lawn expert. On to your next stop. 

After walking you through how the lawn mower works and why it’s better than the other lawn mowers, you finally arrive at pricing. The twist — it’s a number much larger than you anticipated. The rep hears the shock in your voice. You tell him this falls outside of your budget and comes in much higher than other similar lawnmowers.

“We’re willing to work with you,” he says before quoting a price much lower.

You take some time to think about it but leave the call confused. Why was it so hard to get pricing? Why did the company instantly offer a lower price? Is that the true price of the product or were they overquoting me in hopes that I would be willing to pay? 

Am I being played here?

We’d all lose our minds if this is the process we endured regularly. 

It’s not a great experience. It dampens the customer journey and ultimately the sales cycle. 

We have to move away from gated pricing and allow people interested in our products to “qualify” themselves. I use qualify loosely because the interest in your product should be enough. If someone spent enough time exploring your product on your website, or through another avenue and landed on your pricing page, that’s intent to buy.  

Clear buying decision needs to be in the product and ultimately your website.

Moreso, your website represents your number one marketing tool. Whether a visitor browses or actively explores your solution, they’re engaging with your best marketing asset. Your website should answer almost all the questions a buyer might have, especially pricing.

If you don’t want your competitors to see, or you think you need to prove the value of your product before sticker shock, re-think leaving your pricing offline.

Customer-centric and product-centric organizations provide pricing visibility. For those who don’t, I question your customer- and product-centricity. 

QuotaPath’s pricing transparency

QuotaPath provides sales compensation and commission tracking for scaling GTM organizations. Pairing an easy-to-use user experience with a highly technical backend, QuotaPath is the only solution fit to get Sales, RevOps, and Finance all on the same page.

To see how we fit into your tech stack, check out our integrations page. And, to learn more, book a time with a member of our team today. Want to know our price? Check out our pricing page, complete with prices.

Sales incentive compensation often features multiple avenues for reps to earn variable pay, such as bonuses on logo commissions or multi-tier commission structures like accelerators.

We like to refer to these rules as “paths,” or the different ways a rep can earn sales compensation within a comp plan. 

Some other paths might include milestone bonuses, accelerators with cliffs, single-rate bonuses, or any combination of the three, but this blog focuses on logo commissions.

Designing compensation plans? Here’s what you need to know about logo commissions.

What are logo commissions?

First, let’s clarify.

This article will not explore how to commission a graphic designer to draw up your business logo. If that’s why you’re here, this blog will only bring disappointment. For that info, kindly redirect here and come back when you need to automate sales commission tracking. Thanks for stopping by.

Still here? Great!

In software sales commissions, revenue leaders sometimes reward higher payouts on deals based on logos.

For instance, if the organization aims to close the top 15 logos of a specific industry, the comp structure will reflect higher commissions or bonuses accordingly.

One step further, let’s say we’re an HR rewards platform and we’re targeting the real estate tech industry. Our base salary plus commission structure pays a flat 12% commission rate for deals that include enterprise-defined reality tech firms, like Zumper, OpenDoor, and Zillow. This rate comes in marginally larger than the standard commission rate of 8% on all other deals under this comp plan. 

This technique acts as a great way to motivate reps to go after those jewel accounts and works synchronously with account-based marketing (ABM) campaigns.

However, if reps focus too much of their attention solely on prospects that fall under logo commission guidelines, they may miss out on deals with other ideal customer profiles (ICP). 

So, while we suggest logo incentives, we recommend not making it the main driver of your comp plan. 

Logo commissions as a SPIF

Instead of carving out and reserving space for logo commissions with your comp plan (remember, less is more), some teams insert logo-based payouts as a SPIF. A SPIF represents a short-term mechanic of the overall comp plan. Leaders typically implement these on an ad-hoc basis throughout the year. 

Logo SPIFs might include customers won from a competitive takeaway or a larger customer from a specific industry. The latter can create credibility for your organization, like the example above. Sometimes, sales teams will pay a SPIF to lock in a lighthouse customer in a new market, territory, or country. 

TIP: If you’re considering adding logo commissions to your pay structure, test it as a SPIF beforehand to see how it impacts your outcomes. If it doesn’t alter selling behaviors, then no need to add it to your plan. 

Logo commission pay examples

Next up: examples!

The most important piece to remember, and in comp planning, is to clearly define the rules around how the rep earns the extra payout. This will ensure everyone understands sales reps commissions.

Below, we’ve listed some examples that include strict guidelines.

Example 1: For signed customers with employee counts above 200, the rep takes home a single-rate bonus of $500.

Example 2: The rep earns a flat $1,000 bonus for signing up any companies between 200 and 1,000 employees.

Example 3: The rep collects $2,000 on every deal for companies with 1000-plus employees.

Or, perhaps a company pays a logo bonus based on contract value. 

Example 4: For any contract value more than $5,000, the rep receives a single-rate bonus of $500.

Example 5: Reps earn $1,000 on any contract valued between $5,000 and $10,000.

Example 6: For any deal larger than $10,000, the rep collects a $2,000 bonus. 

Tracking logo commissions in QuotaPath

Historically, Sales and Finance have manually tracked logo commissions under their own system — reps, too. Who else do you think is Googling “how to calculate commission?” 

No need, my friends. QuotaPath exists so that all you have to do is add the SPIF into the platform. We’ll take it from there and automatically track it. Or, team up with us to design your comp plan with logo bonuses with our guidance. We’ll ensure it maps correctly in the system.

You can read about our customer Prefect’s experience with the platform. Prefect specifically runs “logo bounties,” which counts as the second big driver of their comp plan. Instead of a percentage, Prefect’s team earns a flat-rate bonus based on deal size.

“It sounds like a SPIF, but it’s part of the comp plan on a recurring basis,” Prefect Head of Finance Thomas Egbert said. 

Want to learn more? Book a time with us today to see if we’re a match. 

Account managers (AMs) and customer success managers (CSMs) have very different roles than account executives (AEs) and sales development reps (SDRs). As such, their sales compensation also varies. Below, we highlight their responsibilities and salary info and share three commission pay examples for AMs and CSMs.

While AEs and SDRs focus on connecting with new prospects to guide them through the buying process until they close the deal, AMs and CSMs engage with customers after the sale. They partner with clients to meet their goals, optimize their use of the product, and upsell and cross-sell when applicable.

Although winning new business is important to business growth, retaining existing customers is essential to growth and profitability. This is especially true when you consider that:

• It costs five times as much to attract a new customer as it does to keep an existing one
• Increasing customer retention rates by 5% bolsters profits by 25% or more

So, when customer churn is high, it restricts growth which causes an uphill battle.

Salary and job market

Account Managers are in high demand with 1,000+ Account Management job openings on Indeed in Austin, TX, alone. Imagine how many openings for this position exist nationwide! And, the average salary for an AM is $70,321 per year in Austin with on-target earnings (OTE) of $100,418.

Customer Success Manager is still considered somewhat of a newer role in the SaaS industry. As such, only about 100 roles exist in Austin right now. However, if you search “customer success,” you’ll notice more than 13,000 available roles with titles like client services, client success, or customer support. According to Built In Austin, the average salary for a client success manager in Austin is $80,937, with an OTE of $95,802.

Getting AM and CSM commission pay structure right has always been essential for attracting and retaining the best talent. But with so many job openings, the current labor shortage, and the threat of an economic downturn, it is more important than ever to offer the right compensation plan to potential candidates for these critical roles. That’s why we assembled three sales compensation plan examples to help you attract and retain top AM and CSM talent.

Plan #1: Retention-based commission

The first of our three sales compensation plan examples is for businesses that pay AMs and CSMs a commission for each renewed account. In this case, the AM or CSM has a target retention number with an expectation of renewing a percentage of the contracts that they manage. 

A few examples of this include:

• An Account Manager has a monthly retention quota of $33,000 ARR and earns a 10% commission of every deal they close
• An IT Relationship Manager has a hardware quota of $100,000 of revenue to existing customers per quarter and earns 6% of every deal they close
• An Insurance Contract Manager has a renewal quota of $20,000 of health insurance plans per month and earns 15% of the premium of every plan sold.

The details of this plan are as follows:

Retention-based commission with 1 Path to earnings

Quarterly net revenue quota of $300,000

Earnings rule:

0% – 100% = 7.5% commission rate

> 100% – 150% = 12.5% commission rate

> 150% = 15% commission rate

Plan #2: Retention & Upsell Bonus

Our second plan targets businesses that pay AMs and CSMs a bonus for each account renewal or upsell. It is common for AM and CSM compensation to be based on two major components—retention and upsells. Some AMs receive a bonus depending on their revenue retention percentage through either renewals or upsells.

A couple of examples of this include:

• An Account Manager has a quarterly retention quota of $240,000 ARR and earns a 7.5% commission of every renewal deal they close. Plus, they have an upsell quota of $60,000 ARR and earn a 10% commission on every upsell deal they close.
• An IT Relationship Manager has a hardware quota of $100,000 of revenue to existing customers per quarter and earns 6% of every deal they close. Plus they have an upsell quota of $10,000 and earn a 10% commission on every upsell deal they close.

The details of this plan are as follows:

Retention & Upsell Bonus with 2 Paths to earnings

Quarterly retention revenue quota per quarter = $240,000

Earnings rule:

0% – 100% = 7.5% bonus

> 100% – 150% = 12.5% bonus

> 150% = 15% bonus

Plus – Quarterly upsell revenue quota per quarter = $60,000

Earnings rule:

10% bonus

Plan #3: Retention-based bonus

Lastly, is our plan that pays AMs and CSMs a bonus for each renewed account. In this case, the AM or CSM are paid a bonus based on their revenue retention percentage.

A few examples of this include:

• An Account Manager has a monthly retention quota of $33,000 ARR and earns a $33 bonus on every quota percent they attain.
• An IT Relationship Manager has a hardware quota of $100,000 of revenue to existing customers per quarter and earns a $60 bonus per quota percentage point they achieve.
• An Insurance Contract Manager has a renewal quota of $20,000 of health insurance plans per month and earns a $27.50 bonus for each quota percentage they attain from 0-100%.

The details of this plan are as follows:

Retention-based bonus with 1 Path to earnings

Quarterly net revenue quota of $300,000

Earnings rule:

0% – 80% = $83.33 bonuses

> 80% – 100% = $100 bonuses

> 100% – 150% = $120 bonuses

> 150% = $140 bonuses

These compensation plan templates set a great way to begin creating SaaS sales compensation for your AM and CS teams. QuotaPath has expertise in partnering with organizations on designing effective comp plans that drive the right seller behaviors. For sales compensation consulting and sales incentive software that provides commission tracking, schedule time with a QuotaPath teammate today.

Curious to see who we integrate with? Check out our native integrations page to automate your compensation process. 

This is a guest post written by RevPartners, a management and consulting firm that supports scaling companies with RevOps strategy and execution for teams without a dedicated RevOps function. 

Why QuotaPath?

Spreadsheets? More like deadsheets. If you’re using spreadsheets to manually track sales commission, you’re living in the past, inviting errors, and burning the one resource there never seems to be enough of…time!  It doesn’t have to be this way. QuotaPath automates sales compensation, including the commission tracking traditionally completed in spreadsheets.

With QuotaPath:

• Commission tracking, payment, and approval for Finance
• Forecasting and pipe management for RevOps
• Commission visibility and goal setting for Sales

Why use Quotapth’s integration with HubSpot?

• Increased adoption of HubSpot
• Ability to see QuotaPath commission data directly in HubSpot
• Provides a single source of truth for attainment and earnings, in turn creating alignment, accuracy, and a better user experience

So, how does it work?

Prerequisites

Two items must be in place before commission tracking can fully automate.

The first? Your compensation plans. Using QuotaPath’s plan wizard, admins can build out each plan in a few steps and map the various rules of the plans accordingly.

Then comes the sales process. Leaders should have a structured, documented, communicated, and adopted sales process in place that determines when a deal classifies as closed/won, and at what points the rep earns commissions.

Having these two tasks completed ahead of time will ensure a smooth, seamless, and beneficial operation!

Compensation Plan Types

Sales Reps

Many comp plans exist for sales reps, but four of the most common include the single rate commission plan, commission with accelerators, commission with bonuses, and commission with multiyear accelerators.

The organization’s go-to-market goals often determine which type of plan the rep earns commissions from. 

For instance, if one of the company’s goals involves securing longer contracts, the comp plan usually reflects that by paying more on multi-year contracts. In this case, they’re likely implementing the commission with a multiyear accelerator plan. 

Sales Leaders

Sales leaders’ compensation typically falls into the following three buckets. Team-based commission pays a single commission rate on every deal the team closes.

Team-based commission with accelerators pays a different commission rate on deals the team closes dependent on the teamwide quota attainment.

The third, team-based commission with bonuses, pays single-rate commissions on deals the team closes and a bonus when the team hits quota. 

Sales Development Representative (Business Development Representative/Marketing Development Representative)

The three types of SDR comp plan examples we see include the activity-based plan for when a rep earns commissions based on the number of demos set, qualified opportunities created, etc. A revenue-based plan pays a commission on the opportunities the SDR created that an AE later closes. The third combines the former two, paying on both defined activities and revenue generated.

Account Management and Customer Success

Account Management and Customer Success teams earn variable pay from usually three types of comp plans. Retention-based plans pay a commission on renewals. Retention and upsell bonuses pay bonuses when accounts renew and when upsold.

Lastly, the retention-based bonus pays a bonus on every account renewed.  

Sales Process

When it comes to the sales process, data hygiene is paramount. At a minimum, all sales stages (amount, owners, closed/won) must remain correct and up-to-date. In addition, forecasting quota attainment and potential earnings provide reps instant visibility into the impact of their projected pipeline. 

How to automate sales compensation in QuotaPath

Automating commission tracking in QuotaPath is a very straightforward process. However, you may find it helpful to familiarize yourself with some common QuotaPath terms. The “plan” is the name of the compensation plan (e.g. SDR Plan 2022). Meanwhile, commissions, bonuses, and accelerators define as the “paths” that make up the plan.

• Bonus: Paid upon reaching a milestone (attainment % or number)
• Commission: Paid % of closed won revenue
• Accelerator: After hitting a milestone (# or %), paid a higher dollar amount

The path to the future is QuotaPath

If you’re still tracking commission manually, step into the 2020s!  A better way to run commissions exist and it saves time while ensuring accurate and on-time payouts. For a two-way commission tracking experience, sync HubSpot CRM and get on the right path, QuotaPath!  

To learn more about RevPartners, visit revpartners.io.

We’ve had a busy and exciting month at QuotaPath! 

Just how busy? 

How’s two incredible new feature launches, three native integrations, and an overhaul to our QuotaPath API sound? 

(Hold for applause)

Our newest features, and most requested, include Payouts Eligibility and Multi-Currency. We also added CRM integrations with Copper CRM, Sugar CRM, and Zoho CRM, and made significant enhancements to our QuotaPath API to make it easier for our customers to build their own integrations.

To learn more about each new addition, read on!

Payouts Eligibility

In short, our new payouts eligibility feature enables QuotaPath users to define eligibility rules and automate when payouts will go out. Our new eligibility mapping wizard makes it easy to define and map r eligibility rules, which currently include eligibility by invoice and eligibility by date. 

Multi-Currency

With the launch of multi-currency, QuotaPath users can now view their commissions in their local currencies. Previously, users manually converted their commission info from USD to their local currency. With the launch of multi-currency, admins can assign specific workspace members to a currency that will display their rep level functions such as Earnings, My Deals, and My Plans in the selected currency. This enables reps to quickly understand their commission info.

API Enhancements

Additionally, we made significant enhancements to our QuotaPath API by reducing the time it takes to create new integrations from months to days (or even hours!). You’ll no longer have to program any app logic to create your own API implementations. Simply pipe your data from your system to ours and vastly reduce the need for engineering resources. 

QuotaPath CRM Integrations

Last, and certainly not least, QuotaPath now offers native integrations with Copper CRM, Sugar CRM, and Zoho CRM. With these new integrations, users can feed deal data directly into QuotaPath to deliver revenue teams immediate access to their existing and future earnings, total annual recurring revenue, and attainment progress.

We hope you’re as excited about these as we are! And, shoutout to our entire engineering and product teams for making these enhancements a reality. Y’all are the real MVPs. 

Stay tuned for more  QuotaPath product news next month! See you then! 

Every month, QuotaPath collects nominations from our customers to name a Quokka of the Month. We’re thrilled to announce our QuokkaPath August winner below.

Nominated for excelling as a mentor and his incredible dad jokes, Gerard Ayala has been named our August Quokka of the Month!

This Senior Account Executive for Victorious SEO has more than 10 years of sales experience, including 3 with Victorious. Since joining the SEO marketing agency, Gerard earned Victorious Club twice, a company recognition for sales reps that finish in the top 3 in the percentage of annual sales to quota. He has also become an instrumental member of their mentorship program.

Below, we caught up with Gerard to learn more about our QuokkaPath August winner!

What has helped you succeed in sales? 

In addition to the stellar training I’ve received over the past few years, Victorious’s team-first culture has created a camaraderie amongst our reps that is unlike anything I’ve experienced in other sales roles. 

We are all willing to help each other at any moment, and we often step in to help close deals for reps who are out sick, on PTO, or otherwise unavailable. 

I would say the one area where I feel that I have a unique advantage is my previous non-sales work experience in hospitality management. This experience gave me the ability to easily build rapport with prospects and practice active listening, which has helped me truly understand a client’s challenges and goals.

How do you serve as a mentor to other sales reps on your team?

At Victorious, departments actively practice distributed training, meaning that individual contributors in the sales department assist with training new hires. This allows for deeper collaboration between team members and provides us the opportunity to share best practices across the team. Armed with unique perspectives from across the team, we’re able to mentor new folks and share success stories in ways that are not possible in traditional mentoring approaches.

What advice would you tell your younger self on the first day of your first sales job?

If I could start my sales career over again, I would invest more time in learning from proven sales leaders earlier on. I spent a few years mostly winging it, relying on sub-par training and rapport-building skills. I ended up making a lot of friends but not a lot of money. Those 3-4 years could have been much more lucrative if I had approached sales a little differently.

Lastly, describe what it’s like to work on the Victorious team. What keeps you there?

Our growing company’s ability to cultivate and maintain a thoughtful (and intentional) team-first, family-friendly culture is a highlight of my current role. We also execute well on new ideas and act on constructive employee feedback. This is truly a phenomenal organization!

Learn more about Victorious SEO and get a free SEO consultation.

About QuokkaPath

Like a gaggle of smiling quokkas, we’re happiest when our customers excel! 

That’s why every month, our customers nominate someone from their team who has gone above and beyond in the workplace. From there, a QuotaPath Quokka Committee selects a winner.

Congrats again, Gerard, and thank you for sharing your story!

Your sales compensation plan is all set up, you have balanced a plan that is attainable yet challenging. It’s lucrative for the reps and profitable for the company. It has some accelerators, it encourages consistency; it’s your magnum opus. And then the unthinkable happens: one of your middle-of-the-road reps closes a bluebird sales deal. 

Wait, this is an article about sales compensation, not birdwatching. What do you mean, a bluebird deal?

What is a bluebird in sales? A bluebird is a deal that is substantially larger than your average deal or one that closes much quicker than your standard deal. Many organizations consider a bluebird deal as one opportunity when the contract value is greater than a rep’s quota.

What do you do? Your first instinct might be to panic. You have never written a commission check this big in your entire sales career! What happens if this bluebird deal isn’t all it’s cracked up to be? Where is that large automobile? Wait, no, that’s Talking Heads. Anyway, here’s what you should do. 

Step 1: Celebrate the bluebird deal

Your rep sold the biggest deal in company history. The very first thing you do? Scream it from the rooftops. Celebrate your rep. Send out an organization-wide email about how this is an incredible achievement for your rep, their manager, the sales engineer who helped close it, and the SDR who sourced the deal. Your VP of Finance might be wringing their hands, but now is not the time. If you want to close more of these gigantic deals (hint: you do), then you need to signal to your team that this is a good thing.

Step 2: Pay your rep on the bluebird sales deal (with a smile on your face)

Okay, now is when the rubber hits the road for you. Pay your rep. Pay them accordingly to their commission plan. If you try anything funny, you’re going to have issues. Don’t try to reduce their sales commission rates. Don’t try to cap their commission. If you ask a room full of salespeople if they’ve ever had someone mess with their commission, you’re likely to have at least a dozen hands go up. And if you ask them about that experience, at least one of them will probably say they quit because of it. They probably posted a scathing LinkedIn post about it, too. Losing a top rep purely because you didn’t want to pay a commission that they earned is a very expensive (and unethical) mistake. Pay them on the bluebird sales deal.

Step 3: Modify commission payment terms if needed

There is one nuance to bluebird deals: timing of commission payouts. If you normally pay your reps after the customer has been fully onboarded, then this probably won’t be an issue for you. However, if you’re like most companies and don’t wait until onboarding is complete, it can get a little more complicated. Essentially, you don’t want to pay out on this bluebird sales deal only for the deal to evaporate. Then you’d be stuck trying to clawback a gigantic commission check, or worse your rep quits and you have to kiss that commission check goodbye. 

So, explain the extenuating circumstances to your rep. Consider giving them a portion of the commission at the typical cadence and pay the rest out on a set schedule. If you typically pay out after the deal is closed, you pay out 25% of the commission on the next pay period and the other 75% once the customer has paid their invoice. Or, if you usually pay commissions after the first month’s invoice is paid, pay out equal installments over the first 3 invoices. 

Step 4: Evaluate your comp plan for next time

You might think this was a black swan event. And, it very well might be. But that’s not a good reason to skip planning for the next time it happens. You want to avoid discouraging people from closing these bluebird deals. After all, they can affect an entire sales team quota. We don’t recommend limiting the commission they earn on these deals. However, you might want to consider reducing the accelerators once someone hits above 300% of quota. Maybe you actually write the modified commission payment terms into the compensation document.

There you have it! Congratulations on your bluebird deal. Now you know how to handle it in a professional and expert way.

Also, if you are looking to calculate commission on this bluebird deal – or any deal for that matter – you should be using ​​QuotaPath. QuotaPath is a tool designed to help automate the commission tracking process for you, your finance team, and (maybe most importantly) your sales reps. 

The blog below includes 10 best practices and an example compensation communication plan to follow when deploying new plans and adjustments.

It’s mid-year. The sales team has been hitting their goals. Well, until the company rolled out the new compensation plan designed to reward reps for selling new product lines to different market segments. The reps didn’t even realize that the new compensation plan design went into effect as leaders only briefly mentioned the changes during a recent meeting.

But, as reps received their first paycheck on the new plan, the amount on their checks failed to match their expectations. Many reps anticipated commission checks based on the accelerators from the previous plan and at a higher commission rate.

Instead, they saw lower earnings per deal since the new plan doesn’t include the same tiered commission structure. 

Reps felt blind-sided, disappointed, and suspicious. They wondered why there wasn’t more of an announcement or, better yet, a dedicated training. This is their paycheck, after all.

Left unchecked, this sort of experience leads to frustration, uncertainty, and poor morale. 

Some reps even quit over miscommunication of comp plans.

That’s why it’s essential that leadership formulates a sales compensation communication plan when altering the comp plan or changing quotas. 

The plan needs to:

• Include sales-leader-driven workshops to review any changes or adjustments to the plan
• Explain the why behind the changes and the math
• Share how the company will support the team with the new objectives
• Create a safe space for the team to ask questions

To start, read on. 

10 things every sales compensation communication plan should include

1. Use consistent messaging each time you share the plan. This helps avoid confusion and misunderstandings.

2. Leverage various methods to communicate the new plan. This is important because everyone learns differently. You might circulate written documents, a video explaining the plan, example calculations, group presentations, and 1:1 discussions. This increases the odds of understanding the plan and its ramifications for the individual. Plus, the group and individual discussions provide opportunities for reps to ask questions with immediate answers.

3. Start broad and become more detailed. For example, when sharing a new plan with the entire sales organization the messaging will be more general. But as sales leaders present it to a specific sales team, or 1:1 with an individual, the messaging becomes more detailed and specific to the individuals involved.

4. Create a Frequently Asked Questions (FAQs) document. Distribute it alongside the plan documents. Proactively answering these questions saves time and boosts plan understanding more rapidly.

5. Provide calculation examples based on various scenarios. You can incorporate this into the actual plan documents or by providing the sales team with forecasting software that calculates commission amounts for any deal in the pipeline. Offering such a tool answers a multitude of questions and provides clarity around how the new plan impacts everyone’s income potential.

6. Explain why the plan is changing and how the company will back the reps through these changes. When your team understands this it makes it easier to accept the change. When reps know why leadership adjusted a plan and how new resources and enablement will support them, enthusiasm and acceptance will follow.

7. Share the benefits of the new plan. Team members want to understand why they should be excited about the new comp plan and how they can optimize their income on it. 

8. Plan documentation should be just the right length. Avoid lengthy comp plan documentation that buries details in a manuscript. But make sure to cover all of the important details. Proper documentation will cover the key points clearly and concisely.

9. Skip the legalese. Don’t get too technical or use a lot of confusing jargon in the plan documentation. It needs to be straightforward and easy to understand. Otherwise, reps may think you are trying to hide something, which decreases their trust in the plan and management.

10. Clearly define how performance ties to reward. You can accomplish this by explaining how you will measure performance, weighted factors, and how to calculate earnings.

An example compensation communication plan

As part of our sales compensation best practices, below we’ve provided a communication plan to adopt and modify.

Step 1 – Educate management

Before rolling out the new comp plan, introduce the plan to all levels of management. Explain all of the elements, why they made the changes, how it impacts the salesforce and whom, and in what ways. Highlight the benefits of the new plan and how to optimize commissions on the new plan. Share plan documents, FAQs, videos, what-if calculators, promo video templates, and any other plan launch materials.

Step 2 – High-level review of the new plan and the roll-out process

Senior management from the salse organization, such as the VP of Sales, should review with the team a high-level review. The strategy is to energize and engage the entire sales organization as they launch the new comp plan. Following the session, send an email to everyone in the sales organization recapping the discussion along with a video reviewing the plan highlights and roll-out process.

Step 3 – More detailed review of the new plan

Next, sales managers should present a detailed review of the plan to their teams. Explain the plan in terms of how it impacts both the team and individual contributors. Distribute detailed plan documents, FAQs, videos, what-if calculators, and other plan launch materials to sales team members for their review.

Step 4 – One-on-one plan review

Then, sales managers meet with each rep on their team to review how the new plan impacts the specific individual. This gives reps the chance to privately ask their questions or raise concerns over the new sales compensation plan. Reps are also provided with the option to present any additional questions via email, private chat, or phone as needed.

Step 5 – Plan verification

Lastly, ask for reps to show they understand their plans by signing off on them. This marks an essential step in creating alignment and transparency across the comp planning process. Leadership should introduce plan verification or re-verification anytime they issue a change to the compensation plan. Complete this by using DocuSign, via email, in person, or by leveraging our in-app Plan Verification feature.

Compensation communication plans are critical

It is essential to create a compensation communication plan when designing or altering sales comp plans. The best plan won’t motivate reps or drive desired behaviors if they don’t understand how the plan works. Failing to effectively communicate plan changes and how reps can optimize their income under the new plan, leads to frustration, loss of trust, demotivation, and reps who choose to quit.

To see QuotaPath’s Plan Verification feature and streamline your compensation communication plan, schedule a custom demo with our team. 

Interested in some of our other free resources? Check them out:

• Sales compensation calculator
• Sales commission plan template + commission tracker
• Quota:OTE Ratio Calculator
• Sales Funnel Calculator
  

On Sales Nerds Live Ep. 3, our host and QuotaPath Sales Nerd, Graham Collins welcomed Carabiner Group Account Executive Amelia Taylor to the show!

Amelia recently earned the title “Cold Calling Champion” after winning several LinkedIn Live cold calling competitions put on by RevGenius.

Watch the 35-minute episode below and pay attention to Amelia’s most successful cold-calling greeting, social selling tactics, and how to do “dark social” right. Scroll down for other key takes from episode 3!

About Amelia: A former real estate agent, Amelia today sells and supports the RevOps services of the Carabiner Group. The mom of two lives in Florida and loves to write. She’s also currently reading Jeff Bezos’s book, “Invent & Wander.”

3 key takeaways from Sales Nerds Live! Ep. 3

The cold calling greeting that works for someone else may not work for you

Put down your sales pitch examples pdf! What works well for someone else may not work for you, so you’ll have to experiment with messaging and build a natural flow.

Amelia, for instance, found success asking, “How are you?” after stuttering through the greeting, “May I make a suggestion?” (a line that worked well for a coworker).

It’s human nature for the person on the other line to ask you the question in return, and Amelia uses this as an opportunity to have an honest conversation.

“I answer honestly and transparently about how my day is going,” Amelia said. “If I breakdown my barriers, they’ll break down theirs.”

Then she’ll pivot the conversation by saying, “I have an idea for you.”

Social selling needs to be strategic

Graham mentioned that the social selling tactics he sees entail automated canned messaging after accepting a connection request.

“You have to be extremely strategic,” Amelia said. “Narrow your social efforts to ideal customer profiles based on what funding round they’re on, what industry, and role at the company.”

Use social to build out your champions’ relationships.

Dark social involves a more indirect approach

“It’s not that dark,” Amelia joked.

Dark social means showing up in the online places, communities, and apps where your buyers collaborate with their peers.

“It’s an underground way to find your buyers, but it’s easier than other outbound efforts because they’re already there,” Amelia said.

The key, Amelia said, is to offer resources and deliver value without directly pitching your product. Instead, provide blogs, recommend contacts or solutions at other companies, and establish trust.

For sales tips on follow-ups, getting a quick “huddle” meeting over social, and other selling best practices, watch the entire episode.

And, to see previous and future Sales Nerds Live! episodes check out our page here or our LinkedIn. Want to be a guest? E-mail kelly@quotapath.com.

Right now, tech companies are going through mass layoffs due to the emerging recession. However, maximizing your business’ return on investments is the best way to retain a talented sales team and deepen profits. According to TechRepublic, technology, like commission tracking software, can play a key role in helping executives optimize risk and follow through on business strategy adjustments. 

For instance, data science platforms can strengthen automation, connect disparate tech stacks, and detect both risks and opportunities via machine learning. 

And while the commissions software space is but a fraction of the size of big data, the role this technology can play in bolstering sales, increasing bottom lines, and even retaining talent hasn’t gone unnoticed.

The industry has caught on, and a rise in commissions management solutions has hit the market in the past 5 years. (QuotaPath included!)

Commissions continue to motivate sales teams in the midst of a looming economy

As sales commission tracking tools continue to become more popular, GTM teams have started realizing that the commission formula in Excel is no longer viable or scalable.

Leaders seek efficient and accurate commission management solutions that align departments and provide instant access to information for anyone who touches the compensation process. Transparency into how, when, and what reps get paid on is not only a must-have but a motivator.

A commission tool like QuotaPath, for example, allows sellers to see progress toward quota and their variable pay in real-time. With a forecasting toggle feature, the commission payment software also shows reps, leaders, and finance how the existing pipeline impacts projected annual recurring revenue and earnings goals.

But, we recognize that we’re not alone in the market.

So, as you’re evaluating which commissions management services platform to use, consider the following. 

Tool Accessibility

Do you want compensation plan software that will allow you to add plans and adjustments as you scale? 

QuotaPath makes it easy to quickly add new members of the team, build out new comp plans, and drop in changes all one your own. But should you need us, we’re quick to respond.

Forecast earnings/attainments 

Does the platform provide executive- and rep-level reporting on pipeline forecast and quota attainment?

Find a tool that automatically generates accurate forecasts based on your CRM so that business leaders can understand their sales team’s projections. 

ASC-606 Compliant

Is it compliant with ASC 606 regulations? 

This is new to the SaaS world, and if you’re not careful, it could be something you overlook when looking for commission tracking software. This new regulation requires revenue recognition standards for all businesses that enter into contracts. QuotaPath has the power to provide accounting teams with the ability to recognize commission expenses immediately. 

Fast time-to-value

How long will it take your team to get your system up and running? When will your team be trained on it, and how soon can it run commissions for you?

Here, we provide the fastest onboarding process in the biz without sacrificing quality. 

Trusted data and math

Can you trust the info is correct and up-to-date?

Send us your comp plans and we’ll run commissions for you. Check our math.

Our native integrations (truly native, meaning no manual refreshes or nightly updates) pull data automatically from your CRM. As long as that data is correct, so is QuotaPath’s. Automate Salesforce commissions, HubSpot commission tracking, integrate with Close, Maxio, you name it.

Partner relationship

How difficult will it be to get in touch with your vendor after signing on the dotted line? 

We’ve heard horror stories of customers falling through the onboarding cracks at competitors. Or that they were unable to get ahold of anyone when they needed help adding a new plan, running a payout, or making a comp plan adjustment. Our response time is less than 90 seconds. Time us! We also offer sales compensation consulting at no additional cost to double-check your comp plan designs.

No minimum user limit

300 reps? Great. 4 reps? Also great.

QuotaPath doesn’t require a minimum number of users. Whether you’re a multi-continental, multi-product, multi-industry sales organization, or a startup with your first 2 reps, we got you.

Rep motivation

Find a solution that Finance, RevOps, and especially your Reps will love to use.

We created QuotaPath to help reps better understand their comp plans and when and how they get paid. Our user interface is easy to navigate so they can see their goals, accelerators, and bonuses, and how close they are to hitting those milestones. 

In-app communication

Can teams collaborate within the platform?

In early 2022, QuotaPath released Deal Flagging. This feature allows users to dispute any discrepancies that would immediately be escalated to an admin. Finance and Accounting can then address any questions within QuotaPath.

User Experience 

Think about how easy the solution would be to show someone on your team.

Our Director of Product said, “Our entire UX approach and philosophy focus on the idea that whatever we’re building shouldn’t require lots of training. We want our users to log in for the first time and already have a general understanding of how to use it.” 

Transparent pricing

How much does it cost and how easily can you find that out? We list our pricing upfront and directly on our website.

Let’s see if we’re a fit! Schedule time with our team, or get started with our free commission tracking software by signing up here.

If not, take this checklist to your next demo to make sure you’re getting exactly what you need.