Learning how to motivate your sales team is one of the most important things you can learn as a leader. Some employees respond to gentle encouragement, while others need more direct feedback to get revved up. But there’s one type of motivation that’s almost universally effective: money. That’s where incentive compensation shines.

Learn all about incentive comp and how this fluid approach to payday could inspire your team to work harder and scale quickly.

What is incentive compensation?

Many non-sales jobs come with a fixed income, meaning you get paid the same amount every paycheck no matter what. That’s ideal for anyone who thrives on stability, but that guaranteed biweekly deposit doesn’t do much to encourage an extra dose of hustle.

Sales incentive compensation is a type of variable compensation that awards earnings depending on how the team member performed. In other words, the more someone sells, the more money they get to take home.

Incentive compensation is commonly structured as base pay plus commission to help keep salespeople afloat in between deals. It’s also not unusual to see non-monetary incentives on offer. Prizes, free vacations, stock options and at-work perks can also inspire.

Who gets incentive compensation?

Incentive compensation is an option for anyone who has a quota. That includes SDRs, account managers, account executives, some customer success roles, etc.

For an incentive compensation plan to work, candidates must fit two criteria:

• They must be given a number to hit so it’s possible to gauge performance in a quantifiable, objective way.
• They must have opportunities to sell and a chance to showcase their unique brand of hustle.

Incentive based compensation can be a valuable tool both during recruitment and after your hires are hard at work. Do your part to create an effective system by being totally transparent. Every employee should know what types of compensation are on the table and how they can exponentially higher earnings.

Why hand out incentive compensation?

Being a salesperson is wonderfully liberating because you finally have at least some authority over your income. What you do informs how much you make. In other words, a career in sales means that the better you do, the more you get paid. That’s an attractive upside for job seekers interested in moving away from set salaries and pursuing professional growth.

For employers, handing out incentive compensation is like issuing a challenge to their entire team. It’s like you’re saying “Meet this objective and you win a big prize.”

Tips for creating an Incentive Compensation Program

1. Outline clear, realistic objectives

Give your employees goals to hit. These personal objectives should align with larger business objectives. They should also be attainable to keep employees motivated and generating revenue.

2. Emphasize the importance of organizational results

It’s great for salespeople to feel motivated by their own desire for success, but what the company needs matters too. Sales incentive programs can drive competitiveness, sometimes to the extreme. By splitting focus between individual quotas and organizational goals, you empower the entire team without capping individual results.

3. Create a pay structure

The obvious play is to compensate salespeople for hitting an overall goal, such as a quarterly sales quota. But there are other ways to structure financial incentives.

A SPIF, or sales performance incentive fund, encourages reps to push a particular item or portfolio. SPIFs are often used to promote a new feature launch or boost sales of a product line. The opportunity for immediate results is tempting, but there are downsides to offering a SPIF (also called a SPIFF or SPIV) too.

Some insiders believe that SPIFs encourage salespeople to push for sales at all costs when they should be giving clients what they need. Instead, they’re tempted to compel the buyer to go with the option that results in the best commission or bonus. The trick is to use short-term incentives programs such as SPIFs as a complement to a more long-term sales incentive program. One is exciting due to the speedy return. The other helps develop salesperson-client relationships and drive continued success.

Single-rate and multiple-rate bonuses as well as milestone bonuses are also worth exploring. If you need a hand creating your sales incentive compensation plan, I’m here to help!

4. Communicate expectations

Nobody can hit a target unless they know where and what it is. Outline your compensation program, and make sure everyone has a copy. Transparency is key, as is a plan that accounts for every position and reasonable circumstance.

Additionally, ensure your employees all have solid employee development plans in place. That way there is no ambiguity on how to progress and be promoted.

5. Incorporate supporting sales roles

It’s not just your salespeople making the magic happen. Customer service agents, lead qualifiers, techs, administrative support — they all deserve to have their contributions acknowledged, too. Include them in your sales compensation plan, even if the rewards aren’t as big and flashy.

6. Think beyond money

Surprise! Not all salespeople are motivated most by money. Financial rewards are wonderful, but there are other options worth exploring. Incentive programs can include:

• Gift cards
• Tickets to a show or sporting event
• An invitation to a corporate retreat
• Special merchandise
• Travel rewards
• About a hundred other things

Research what your team would want and make that the pot of gold at the end of the sales rainbow.

7. Budget for bonuses

Leave room in your budget to go above and beyond if team performance warrants it. Say you’ve decided to give out one big prize to the top seller. Then the entire term delivers way past expectations. Sure, they’re getting their normal commission. But wouldn’t it be nice to come up with a second and third prize last minute?

It’s entirely possible to plan secretly for tiered prizes for runners-up without announcing it first. In fact, the surprise factor could be an additional motivator the next time you’re running a sales contest.

8. Be prepared to pivot

When COVID-19 hit, business were forced to revisit their compensation plans. The goal was to help reps cope with the new normal and adapt to economic stress. Lowering quotas and removing decelerators and commission cliffs can prevent demotivation. You can also add in new more feasible incentives and reward other performance factors aside from total revenue. These measures may be temporary, but the goodwill and morale boost lasts a long time.

Types of Incentive Compensation

Incentive compensation can take many forms, and understanding which structure to use can be the key to motivating different segments of your sales team. From straightforward commissions to more complex SPIFs and multi-tier bonuses, the right compensation type will align with both your team’s roles and your business goals. Here’s a look at the main incentive options to consider:

1. Base + Commission: Most commonly used for sales reps, this is the classic structure where earnings grow in direct relation to sales achievements.
2. Bonuses and SPIFs: Targeted bonuses, like SPIFs (Sales Performance Incentive Funds), provide short-term motivation, often to drive specific behaviors, like pushing a new product.
3. Milestone and Performance Bonuses: For goals beyond mere revenue, milestone bonuses can reward reps for hitting metrics like customer satisfaction or retention rates.
4. Non-Monetary Rewards: Gift cards, trips, or public recognition can be a huge motivator for reps who value unique experiences or prestige.

When should you be using team incentives vs individual incentives?

Choosing between team-based and individual incentives depends on your organization’s goals and team dynamics. Team incentives are effective when you want to foster collaboration, like in complex sales cycles where support and customer success play significant roles. This approach builds camaraderie and rewards everyone involved in a successful outcome, from the account executive to support and implementation teams.

On the other hand, individual incentives work well when rewarding personal initiative or competition is likely to drive performance. Individual incentives are often best suited to roles where personal contribution is more measurable, like account executives or SDRs with specific targets. Balancing both types can reinforce a culture where individuals contribute to the team’s success while still being recognized for their unique achievements.

Key features of an incentive compensation tracking tool

An effective incentive compensation tracking tool helps both leaders and sales teams by providing transparency, real-time updates, and streamlined calculation processes. Here’s what to look for:

1. Automated Calculations: Manual commission tracking is prone to errors, especially as teams scale. Automated tools eliminate calculation errors and save time by quickly adapting to different compensation structures, tiers, and bonuses.
2. Real-Time Tracking: A dashboard that updates as deals close keeps reps informed about their earnings and motivates them as they approach targets.
3. Customizable Reports: Leaders benefit from flexible reporting features that allow them to analyze trends, measure team performance, and make data-driven decisions.
4. Visibility into Earnings: Salespeople thrive when they can see how their actions translate into compensation. A tool that shows progress toward goals and earnings potential helps boost motivation and transparency.
5. Goal Management and Alerts: Tools that track quotas and notify reps as they hit milestones help reinforce goals and drive performance.

With the right tool, tracking incentive compensation becomes a seamless part of operations, motivating reps and helping leadership keep compensation aligned with business objectives. QuotaPath provides just that: visibility, automation, and actionable insights for sales teams to stay focused on their goals.

Tracking incentive compensation

The more salespeople you have, the harder it is to keep an eye on everyone’s numbers. Figuring out who is meeting or exceeding quotas can feel like trying to juggle a dozen balls coated in something desperately slippery. Luckily, QuotaPath can help. Our proprietary sales commission software can help your team understand earnings, track incentive compensation and so much more.

Interested in having more flexibility and control? Sign up for free today and see why people love QuotaPath.

We started QuotaPath with a big goal: to transform the way companies track and pay commissions through an intuitive, automated, simple-to-use sales compensation software.

With that goal in mind, we’ve built the most adaptable solution for sales reps to finance and everyone in between. We’ve captured the hearts and minds of revenue professionals, who need a way to bring transparency and accuracy to the commission process. Our users have spoken up on G2, and we’re happy to announce that we scored big on G2’s recent Fall 2020 Market Report!

QuotaPath’s industry leading G2 badges

THANK YOU for helping us become an industry leader in the following categories: Sales Compensation Management, Sales Analytics, and Sales Performance Management. We beat out our competitors in several categories and we couldn’t have done it without you.

• Most Implementable software: We ranked #1 out of all of our competitors for ease of setup, implementation time, and user adoption. This has been top of mind since the beginning of QuotaPath. We set out to build a fully automated solution that eliminates the need for spreadsheets. Our code-free Comp Plan Builder means that you can build and assign comp plans in minutes. And you never have to rely on our team to make changes as your compensation changes. You can have a built out Workspace with your CRM data integrated in hours, just in time to run your next commission cycle.
• Best Support: Our CS team is here to support you through your commission journey in whatever way you need. We can help you onboard your team, set up your plans, and sync your CRM. We’ll be as hands-on as you need, at no additional cost to you.
• Sales Compensation Leader: Sales compensation software… it’s what we live and breathe! With QuotaPath, reps no longer have to wonder why they earned what they did because they have full visibility into their commission and earnings. Sales leaders and ops can reduce stress and save hours each month when it’s time to run commissions for their team. No more errors or back-and-forth, just happy, motivated teams.
• Best Relationship with our buyers: Our sales team does way more than the average salespeople. We’re here to grow with you. We see hundreds, even thousands of comp plans, and can help consult you on yours if you’d like us to. We also take all of our customer feedback to heart. It’s a huge reason why we’re the leading sales compensation and commission tracking tool. We often hear “it just works” and this is music to our ears. We believe that commission software should elevate your process, not hinder it. Becoming a QuotaPath customer means joining our community of revenue professionals.
• High Performer for Mid-Market: We support organizations of all shapes and sizes, in all different industries. Whether you’re an individual contributor or lead a team of 100 salespeople, we can help you with commissions. And this goes for comp plans too. No matter how intricate or complex your comp structure is, our platform can handle it.

“Success” is a big word, but it’s also a vague one. It’s hard to figure out whether your sales team is meeting goals if you don’t have a way to analyze and quantify progress. For managers, a larger issue is learning how to amplify your team’s performance in a way that’s universally understood. MBO can help.

Here’s some quick insight for anyone who wonders “what does MBO stand for?” or wants a better way to motivate salespeople.

What Does MBO Stand For?

MBO stands for “management by objectives.” This management strategy aims to improve organizational performance using clearly defined objectives. A key component is that these objectives are decided as a group. Sales management and individual contributors work together to determine the goals.

MBO advocates say that implementing goals the entire team agrees upon leads to greater employee participation and commitment. It ensures everyone is working toward a common goal — outline your targets and remove the potential for confusion. The purpose of MBO is to align all parties involved toward a shared goal.

Why use MBO in sales?

In addition to serving as a motivator, MBO has other advantages, such as informing sales strategy. Goal-setting and planning go hand-in-hand. Once you find out where you want to go, it’s easier to map out how to get there. Management by objectives decentralizes authority, bringing management and employees together in pursuit of shared achievement.

For sales reps, MBO offers clarity that can help increase commission. Understanding expectations and removing confusion is a great way to awaken ambition and stoke excitement.

How can you track MBOs?

Some critics of MBO say that objective-based management can be both time-consuming and costly. Using a management information system that gauges performance and tracks achievements as they relate to the outlined objectives can help immensely.

QuotaPath’s commission tracking software is built with revenue-related objectives in mind. It’s easy for reps to see how much they’re earning from every deal and how close they are to hitting their quota. Team leaders can keep an eye on the leader board while using the forecasting feature to predict success and test “what if” scenarios.

For a tool to help you use MBO to your advantage, sign up for QuotaPath today.

There are a lot of ways to “make it” in sales. Some love to be totally hands on, sticking with customer-facing positions that include tons of daily interaction with a diverse array of personalities. Others prefer a more supervisory role. For anyone who craves advancement, learning how to become a Sales Manager could be the ticket to a successful career in a growing industry.

What does a Sales Manager do?

Just as the title suggests, Sales Managers supervise a team of salespeople. Before that quick description conjures up too many images of The Office’s Michael Scott, know that managing is so much more than simple oversight. Managing is about creating an environment that facilitates your team’s success. This could mean acting as backup during a crucial sales pitch or offering coaching to help them close on their own.

More specifically, Sales Managers may be asked to:

• Determine sales territories and relevant staffing
• Set goals and sales quotas
• Construct sales plans for their team as well as individual team members
• Analyze sales data and look for ways to improve
• Offer opportunities for ongoing training
• Address customer complaints
• Determine special pricing and other discount programs
• Participate in hiring and firing

There may be several types of levels of Sales Managers in a single organization. Lower-level Sales Managers work directly with sales reps on a daily basis. They’re typically more focused on guiding individual reps and ushering the team toward revenue targets. Managers who act as head of a sales division or broader territory tend to focus more on big-picture stuff. Instead of sitting down with reps, they’re busy developing a comprehensive sales strategy. There are even Sales Managers who are focused on partner relationships. These managers manage partner firms or individuals at those partners.

Essential Skills

Not everyone can be a Sales Manager. It’s also not easy to go to school for sales management; most colleges don’t offer an MBA in Sales Management. Effective Sales Managers typically possess dynamic personalities and enjoy being in a leadership role. They’re also invested in the success of others. They are likely to be outgoing and assertive and have the ability to motivate others to be just as enthusiastic.

Other essential skills of a Sales Manager include:

• Spotting Talent: A Sales Manager is only as good as their team. Being able to wade through a stack of resumes and identify who would be a good fit is important.
• Coaching: Sales Managers coach new hires to help them hit the ground running. They also work with existing team members to identify ways they can improve.
• Leadership: The ability to lead goes hand in hand with the ability to coach. After all, people want to learn from managers who have first-hand knowledge of the best way to score a meeting or close a sale. Leaders don’t just talk about motivation, they actually motivate.
• Multitasking: In sales, no two days are exactly the same. Sales managers have to be able to pivot from staff training to working with a buyer in the blink of an eye. The bigger the team, the more critical it is for the person in charge to be able to split their focus without sacrificing results.
• Experimenting: Adaptability and agility are vital in sales. Managers need to be the first ones to volunteer for forward-thinking approaches, like a new sales technique or cutting-edge software.
• “Managing Up”: For mid-level managers, their position in the hierarchy is doubly complex. Even as they help their subordinates, these managers need to be able to assist a boss who may be overworked or overwhelmed.

You might want to become a Sales Manager if

Not everyone is cut out for management, and that’s okay. There are some major perks to becoming a supervisor. There’s also a lot of stress involved. You may find you don’t enjoy managing a team as much as you enjoy being part of one. Do you like to mentor and coach people? Do you derive satisfaction from helping others achieve their goals? If so, a career as a Sales Manager may be right up your alley.

Note, though, that managing often pays less than a full-time sales role. According to the U.S. Bureau of Labor Statistics, Sales Managers make an average of $126,640 per year. That’s a lot of cash for a position that typically requires less than five years of experience. On the other hand, very talented sales reps can make a generous base salary while also generating commission. That could take them well over that $126k mark, surpassing a Sales Manager’s take home.
The job growth outlook for Sales Managers is about 4%, which is on par for the national average. All told, that spells a lot of potential for anyone with the skills and drive to succeed.

How to become a Sales Manager: expressing your interest to management

If you’re in sales and looking to move up, the first step is letting upper management know you’re interested in pursuing a new role. Ask for a meeting and start by outlining your experience and what you think you’d bring to a management position.

After you’ve made your interest known, ask for mentorship opportunities. The move from sales rep to supervisor will feel far less risky falling behind in your current position while you pursue a new one. You can’t be a great Sales Manager if you’re not great at sales. Chances are the powers-that-be will keep a close eye on your numbers as they decide who gets to sit in the empty corner office.

Ready to move up? If you think you’re the best person for that vacant sales management job, it could very well be your time to step up. Shine up your resume, sit down with your mentor, and put a plan in place. The next step in your career could be closer than you think.

Once you become a Sales Manager, now is the time to help your sales team hit their quotas and earn commission. If you need a way to track your team’s commissions, QuotaPath is here to help.

At QuotaPath, we firmly believe that the cold call is alive and well. In order to prove that out, we asked some top salespeople for their number one cold calling tip. Here’s what they had to say!

First name basis

“Getting past the receptionist can be difficult for those new to cold calling and even experienced salespeople. That’s why I like to research the company beforehand and at least have the name of one person working there.

I then call into the company asking for the person by their first name only very casually, giving the receptionist the impression I know this person. This gets me past the receptionist 90% of the time.”

— Ryan Bradshaw, Director of Sales at Apollo Technical

Smile and dial

“My number 1 tip is to ‘smile while you dial’. As cheesy as that advice sounds, it’s important that sales professionals understand the importance of tone of voice. Your tone of voice is equally, sometimes more, important than the actual message you’re saying.”

— Evan Donahue, Sales and Recruiting Manager at IWR

Be positive and energetic

“When making cold calls, smile. Be positive, kind, and remember that energy is contagious! If you aren’t excited about why you are calling how can a prospect expect to be? Bring up lighthearted topics briefly and use humor and laughter when appropriate. Communicate in a way that you are delivering good news. Positive attitudes drive sales.”

— Lauren Cohen, Commercial Real Estate Leasing Executive & Certified Executive Coach

Assume the sale

“My number one cold calling tip is to always assume the sale. If you’re in the business of selling credit cards, don’t ask the client if they want the credit card. Instead, assume they want the credit card and ask them which credit card they would like. Offer them options that only you are comfortable with, meaning that you don’t offer not taking a credit card as an option. Now obviously you don’t want to force anything on the prospect, but if you assume the sale, you’re more likely to get a yes.”

— Jack Choros, Sales Manager at IronMonk

Prepare for the discussion

“You have 10 seconds to show you’re worth referring to, so separate yourself from other callers. Switch the attention on your prospect by bringing in your analysis and personalizing the call once you have presented yourself.

For example: With praise, you might open on a recent professional achievement that you have come across through analysis.”

— Eliza Nimmich, Co-Founder/COO at Learnt

Anchor the conversation

“Start each call with an anchor point. For example, you could call and say, ‘Hi, my name is Michael and I found you on LinkedIn’ or, ‘we are a service provider for your competitor, XYZ company.’ By providing some point of familiarity, you move from being one of the 7+ billion potential internet strangers, and someone that is a known entity is some way. From there, you can start to work to develop a conversation and relationship.”

— Michael Alexis, CEO at TeamBuilding

Research first

“The most effective way to conduct cold calling is to avoid sounding like it is a cold call. We’ve all experienced cold calls. ‘Is this Andrew? Is this a good time to talk?’ Do the research you need to in advance so that you know who to speak to and what their pain points and customers are.

Research doesn’t need to be time-consuming. A simple search on LinkedIn or at a press release could reveal a lot about who is in charge of marketing, for instance. The contact that is listed on a public press release is a much better starting point than calling the general business line.”

— Katie Zillmer, Account Director at KitelyTech

Set a goal beforehand

“Don’t place the call unless you have a clear goal in mind for the conversation. This goal should be something small, which gets the prospect into the habit of saying yes. For example, the goal might be to confirm a prospect’s email or to verify the person on the other end of the line handles strategic purchasing. Setting a goal for each call will not only help keep your conversation on track, but it will also make you sound more confident, which, in turn, will increase the chance of a follow-up meeting.”

— Allison Potts, Senior Business Analyst at FitSmallBusiness

Try calling off-hours

“My number one tip for cold calling is to call before or after regular work hours. Typically, the decision-maker works longer hours than their gatekeepers and you’ll be able to get to connect with them more easily first thing in the morning or after the typical 9-5 day is done.”

— Tom Pelisson, Head of Partnerships at Rejoiner

Listen intently

“My number one cold calling tip is to be a good listener. This may be easier said than done especially when cold calling. However, in the aggregate, you can learn a lot from your calls when you listen. You can learn what your clients are looking for and how to meet those needs in a short explanation so that you can find a way to engage and ultimately see to those clients. If you are pushy and busy telling them what you have to offer, then it can be difficult to really identify how you can provide a solution to their problem with your service.”

— Scott Simrall, Senior Sales Representative at MyCorporation.com

Call in front of a mirror

“My best tip in helping salespeople succeed in cold calling is to have a mirror in front of them while making their calls. Even though your prospect doesn’t actually see you they do feel your energy. When you look in the mirror you quickly realize if you’re bringing an upbeat and energetic feel or not. It adds a real feel to ‘smiling and dialing’.”

— Jonathan Kellert, Regional Vice President at Primerica

Use social proof

“One of the best tricks that has worked for us in cold calling is using social media proof in the sales pitch. We come up with a list of past and present customers who resemble the qualities of our potential buyer. We anticipate the fact that our leads want to know who else we have worked with and what were the results. We back up our customers’ testimonials with stats and numbers from social media to prove our claims and work on a great storytelling approach to get our lead excited hearing more from us. This has absolutely worked for our team in terms of converting cold leads into paying clients.”

— Michael Hammelburger, CEO at Expense Reduction Group

Identify pain first

“To ace the cold calling, the number one technique that I can give you is: never pitch prematurely. First, find the pain point of your prospect, this can be done through some research about the company beforehand or during the conversation. Once you have created the environment of interest over call, pitch him/her the solution you are providing. Moreover, in doing so, remember that the time for yes/no questions is over. Ask your prospect open-ended questions with the fresh and enthusiastic tone because your old school monotonous tone cold calling strategies are not fruitful in 2020.”

— Sarah Sibtain, Sales Manager at The Fashion Jacket

After you’ve used these tips to navigate your cold-call, transition to the pricing conversation with ease using these tips from SalesRight. Now that you read through these cold calling tips, time to hit the phone! And because you’re going to crush your sales quota, you’ll need a way to track your commissions. That’s where QuotaPath comes in handy!

This is a guest post from Lily Youn Jaroszewski, Director of Sales at TeleVet. Interested in writing for us? Contact info@quotapath.com.

Going from being an individual contributor to a sales manager is a whole new experience. You’re no longer just responsible for your own number but now you’re responsible for several people’s numbers and your own. If you’re like me, you might have had imposter syndrome no matter how ready you thought you were for the role. Having started my career at a startup as a Sales Development Representative to making my way into a Director of Sales role, there’s a lot of guidance I received that helped me get out of that mindset. So if you’re an individual contributor looking to become a manager, a leader within a team, or are a new manager here are a few tips that can help you start your leadership career on the right track.

First 1 on 1 meeting with your new hire

• Have a 1 on 1 with your new team member. Do this immediately to understand how they learn best. Are they a visual, hands-on, or auditory learner or maybe it’s a combination of those. Apply that during coaching sessions to see their ramp time decrease. Also, provide insights on how you normally communicate as well so they know what to expect from you as their leader.
• Learn about why this person wanted to join your company and team. Learn their personal and professional goals. You probably asked this during their interview, but that 30-minute chat with someone under pressure might not give you the full picture you get once they’re hired.
• Be consistent. Holding weekly 1 on 1s with a specific structure and expectation will foster better communication and goal alignment with your team.

Goals/Quota attainment:

• Set realistic goals. Whether that be outbound activities for the week or demo sets. You can make it attainable by looking at the previous week’s or month’s number.
• Align day to day with the overall picture. Sales is a grind. Your team is prospecting, making those dials, objection handling, setting demos and doing it all over again, and burnout is real. As a leader, it’s helpful to provide insights on how their daily, weekly activities impact their overall monthly numbers. But don’t forget what that person cares about: path to promotion, company goal, and commission payout to have that down payment for a new car or house.
• Have a visual. Physically show your reps week over week with how their work is getting them closer to their payout or quota attainment. It can be a huge motivator when you can see how one more demo occurred, Sales Accepted Opportunity, or closed/won deal could get you to the next pay scale and also toward your team and company goal.

Communication:

• Ask for feedback. Getting feedback can be tough whether it’s from your boss, direct report, or colleague, but it’s important for your growth and for your team to grow. The fact your team knows that you’re open to feedback can have a ripple effect and have them be receptive to your feedback. This can increase creativity and collaboration in resolving issues and reduce rep turnover.
• Take all feedback/communication seriously. We’re all human and we make mistakes, whether we’ve been a manager for six months or six years there’s always room for growth. Whether you can act on the feedback immediately or not it’s important to close the loop and let your team members know you heard them and are actively working on it.
• Give them the “Why” when asking them to do something. Have you ever had someone tell you “Just do it because I said.”? I have, and when I don’t know why I’m doing something I tend to not do it properly or can’t do more than what I’m told because I don’t know what type of outcome it’s supposed to yield. Explaining to your team why you’re asking them to do something opens the door for better understanding, more creativity, and investment from them, thus better results.

Overall, there’s so much you can do as a leader to help your team, and one of the biggest things I stick with is constantly asking myself am I handling this situation with a growth mindset or a fixed mindset? The fact that you’ve read this means you’re in the growth mindset which is exciting, so keep it up as it’ll yield positive results.

I woke up with hives all over my body. I tried to stand up but my legs gave out. I hit the floor.

Something was very wrong.

It felt like arthritis, the flu, and some sort of infection rolled into one. I’d never felt so miserable. I went to the hospital and ended up staying for six days.

Rather than relax, I worried about work. I’d beaten the odds and helped launch a fast-growing startup called TrendKite. By January 2017 (when this story takes place), my company had 300 employees and $25 million in annual revenue. I was supposed to be in New York closing the largest deal in company history. Instead, I was in a hospital bed staring at my swollen hands.

In today’s hustle culture, where people are expected to grind from sun-up to sun-down, startup founders like me are pressured to go non-stop. It’s an unsafe climate. Startup founders are twice as likely to suffer from depression, psychiatric hospitalization, and suicidal thoughts as the general population. I didn’t have those issues, but I did drink tons of coffee, rarely slept a solid eight hours, and stressed night and day. I stressed about my 100-person sales team, pleasing our board, and cultivating a great company culture. I also stressed about moving my family back to Philadelphia after years in Austin. Who cared if I ate breakfast? Nobody.

It was all too much, and my body simply gave out.

Following my release from the hospital, I still felt crummy, but went right back to work. Two weeks later, I spoke in front of the entire company. Once I got off stage, I collapsed. I went right back into the hospital and finally took a step back from work.

Turns out there was a 4 millimeter ulcer in my throat. An antibiotic had gotten lodged in the ulcer (gross, I know) and made my body try to kill things it shouldn’t be trying to kill. I lost 30 pounds from a combination of illness and a hastily deployed fruit-and-vegetable-only diet. I spent six weeks in the hospital scared out of my mind. I was scared of not finishing something I started. I was scared of letting my team down. I was scared of letting my family down. I was scared that I couldn’t protect anybody because I couldn’t protect myself.

I knew I had to make some serious changes.

I’ll always be a workaholic. But I’ve learned that if I’m not healthy, I can’t be my best at work. If I don’t accomplish everything on my to-do list, that’s okay. If I strive for 100% and hit 70%, that’s okay.

I drink more water. I’m eating healthier and exercising. People actually started telling me, “Your skin is glowing.” I was just getting the image of my hives out of my mind, now people are telling me I’m glowing? Unreal.

I gained a deeper appreciation for those struggling with unseen illnesses. Mental health issues. Auto-immune diseases. Fibromyalgia. People might look perfectly healthy but they could be in intense, invisible pain.

As for my company, everything was just fine without me. My team stepped up big time, kept clients happy, and closed deals. In fact, January 2017 was our best month ever. Two years later, TrendKite was acquired by Cision for $225 million.

My family and I moved back to Philly and I started another company called QuotaPath. I’m just as excited, energized, and passionate about success as I was when I started TrendKite — but I’m no longer letting stress run my life. The journey is far more important than the destination. We must be happy and fulfilled by the work we’re doing today rather than constantly dreaming about the next deal, the bigger house, or the next vacation.

I’m sharing my story because founders, early-stage employees, and executives are particularly susceptible to running themselves into the ground. ‘Hustle culture’ has gone too far. We need to start caring for our mental and physical health — not just revenue and client lists. We can hustle without running our bodies ragged. Yes, it’s important to eat breakfast. Yes, it’s important to exercise. Yes, it’s important to spend time with our families. Don’t let a venture capitalist or motivational YouTuber tell you any different.

There are a lot of red flags you should be aware of when looking for sales job postings. When I see a job description that says someone needs to be “competitive,” I assume that means the sales team doesn’t collaborate. Job postings that say “sales ninja” make me roll my eyes. The worst of them all is “uncapped commission.”

What is uncapped commission?

Uncapped commission means that there is no limit to the amount of commission you can earn on the deals you sell. You may have also heard it referred to as unlimited commission. If you hit 200% of your quota, you’re going to earn more than if you sold 100% of quota. Likewise, if you hit 300% of your quota, you’re going to earn more than if you sold 200% of quota.

Why “uncapped commission” should scare you

Wait a minute, shouldn’t I be happy that the sales organization isn’t capping my commissions? Absolutely! A sales leader who caps commissions is (generally) not one you want to work for. Simply put, if a company lists “uncapped commission” in the job description they don’t have a good understanding of how to pay salespeople. Keep commissions uncapped. Listing this as a perk is like listing “desk and phone” under perks.

What it usually translates to

You’re going to be underpaid. A company should be able to tell you what percent of their sales team hits quota every month. They should be able to tell you how much their average salesperson is making per month in commission. Not just the top seller, the average seller.
It also means that the company thinks salespeople only lean on money for motivation. While it’s true that most sales reps find their motivation from money, a number of other factors can inspire them to work harder.

Alternatives to “uncapped commission”

Clearly state the on-target earnings (OTE) in the job description! If you don’t know your on-target earnings, you can use QuotaPath’s Sales Compensation Calculator. Because OTE is base salary plus commission, this number can be misleading as well though. Ensure you declare what the base salary is and what the on-target commissions are. Sales organizations should have a clear promotion track and a fair and balanced compensation structure that applies to everyone. If everyone on your sales team has a different salary/OTE, you’re likely underpaying people of color and women. Don’t feel comfortable laying out the exact OTE? Simply stating that the role is a base + commission is sufficient.

If you need a hand calculating your team’s commissions, QuotaPath is a powerful, simple commission tracking software.

Since we launched QuotaPath in August of 2019, I’ve heard a lot of reasons why people don’t use sales commission software. These are the three most common reasons I hear:

• We can calculate our commission in a spreadsheet
• Our commissions are too simple/complex for software
• Commission software too expensive

We built QuotaPath from our first-hand experience with a big problem in the sales industry: sales commission calculation sucks. Here are the 6 reasons we believe it’s important to automate your commission process.

Benefits of adopting a sales commission software

Time efficiency

Most organizations spend hours (if not days) calculating, verifying, and recalculating commission checks for their sales reps. Especially if the b2b sales team has one spiff, the SDR has another spiff. It can get incredibly confusing to keep it all straight. By automating commissions with software, the process can take just a few minutes every month/quarter.

With QuotaPath, you don’t need any complex formulas or an outside consultant to get accurate commissions. If you have an especially complex comp plan, we’re here to help — no implementation fees. If you use CRM software, our Salesforce integration pulls in all of your company’s data and updates in real-time. This makes it easy to get your team up and running and data is exportable for you to upload to your payroll providers.

Reduction of mistakes

The term ‘fat-fingering’ can strike fear into the hearts of data-centric people. Take it from UBS, whose fat-finger mistake cost them $100 million. While your numbers might not be as large as USB, a simple spreadsheet error can be a headache to unwind.

If you’ve ever had a conversation with a rep that starts with “my commission check is wrong…” then you know the pain. Oftentimes, it requires you to write a check out of your payroll cycle or hold off until the next paycheck. Either way, the sales rep is annoyed that their compensation is wrong. Plus it causes a disruption to your week. By automating your commission process, you can reduce the number of costly human errors.

QuotaPath allows users to relax knowing that their commissions are correct the first time. And if you need to make a change in the compensation plan? It takes just a few minutes to tweak (or entirely remake) compensation plans.

Money savings

Save money by spending money on sales commission software? That sounds counter-intuitive. If you’ve ever done a search on Google, you may have gotten turned off by expensive enterprise solutions. These legacy tools are clunky, unintuitive, and take forever to set up. I don’t recommend them — I know from experience! Many of our customers have migrated to QuotaPath after poor experiences with these tools. Commission managers are looking for a modern and affordable sales incentive compensation solution for their team.

And spending money on a compensation management tool, you’ll likely save money in the long run. Between time spent to calculate commissions, the numerous back-and-forth exchanges with reps, and reps’ time away from selling there are countless wasted hours. These hours could be spent doing core tasks that generate revenue for the company while finding ways to cut costs where appropriate. For instance, Finance teams could consider exploring high-interest savings accounts reviewed to make informed decisions about optimizing their company’s financial management strategies.

Improved sales

When people track their progress towards goals, they are more likely to achieve them. This applies to goals from weight loss and quitting smoking to growth targets. With quota attainment tracking tools, reps are reminded of their goals regularly and are more likely to hit their quotas.

Within QuotaPath, there are two ways for reps to track progress toward a goal. With the Attainment module, they can see their quota prorated over time to see how their deals are helping toward hitting quota. They also have the ability to forecast deals in their pipeline so that they can maximize earnings potential. With MyPath, reps can create their own goals based on personal events. If they are saving for a house down payment or a fancy vacation, they can set an earnings goal and track toward it. It’s also a great way to keep their busy days organized and stay on track and motivated to hit their targets.

Transparency

This is the reason that I’m most passionate about. With sales commission software, there is no “shadow accounting”. Reps know — in real-time — how much compensation they have earned on deals. ‘Forecast Pipeline’ allows the ability to see how much compensation they could earn on deals in their pipeline. With QuotaPath, reps can log in and see real-time views of their earnings and what they’ve closed in a quarter. With the Earnings Detail View, they can drill into deals and understand why they made what they did on a specific deal. They have visibility into which deals pushed them into the accelerator bracket, and which ones pushed them over their monthly quota.

For commission managers and sales managers, sales commission software provides more visibility into individual and team sales performance. They can view deal data on both a macro and micro level. They have access to the same information as the reps. Finance teams don’t have to send out end-of-the-month commission statements because reps are aware of how much they have earned.

Source of truth

I’m sure you’ve heard software companies tout that they are the “source of truth” for organizations. While the term might be overused, QuotaPath helps align teams. Our commission tools offer a dedicated place where teams can look at the same set of data, instead of disparate spreadsheets. Juan Torres, Head of Global Sales at Prism.fm said it best, “With QuotaPath I know exactly how much to pay my reps. They can easily see how much they earn.”

Not only are earnings aligned, so are compensation plans. Using our sales commission tool, admins can distribute new compensation plans to all relevant reps instantly. Need to add in a quick spiff (or is it spif? Spiv?) or alter quota due to, say, a pandemic? QuotaPath’s Plans module has that functionality. Plus you can integrate your CRM to ensure all the data is accurate.

In uncertain times, investing in sales software can be tricky. Adding a sales commission software might seem like an unneeded expense. However, as you can see, it pays off very quickly for you and your team. Your reps will have a greater understanding of their earnings which means they will have more time to focus on closing more business. Managers will have more visibility and insight into team performance. Plus, you can use QuotaPath for free for your whole organization.

Originally published on March 27, 2020, updated on November 12, 2020.

Building a startup sales compensation plan that works for your company can be extremely tricky.

Oftentimes, it takes multiple iterations to reach an appropriate startup sales commission structure.

This blog will cover seven principles that will help accelerate the process of finding a sales commission structure for startups. Not sure what a compensation plan is? Check out this blog post to learn about the basics of a compensation plan.

First, there are three factors that need to be considered when creating a startup sales compensation plan.

Size/Stage of the startup

An early-stage startup typically has fewer employees and an inconsistent revenue stream. This is the stage when figuring out a solid sales strategy and understanding your value proposition is key in scaling revenue. In the growth stage, a startup is most likely to figure out how to optimize their sales strategy. No matter what stage, the sales strategy is going to have to adapt to the needs of the business. Once the startup is more established it becomes a lot easier to project sales targets based on historical data.

Runway

Startups are typically strapped for cash (or at least careful with where their cash is going). This means that the design of the compensation plan itself needs to be planned out to maximize efficiency early on. Cash-strapped startups make higher base salary compensation plans nearly impossible since there isn’t much cash in the bank. This holds especially true for companies that are pre-revenue. Having a blended mix of salary and commission is probably going to be the best compensation plan for the majority of startups. Don’t forget that equity is a powerful tool you can use as well!

Industry

This one is pretty obvious. Sales compensation plans can look different across various industries.

“SaaS companies typically have annual contracts, whereas consulting companies may have a month-to-month agreement,” QuotaPath’s Head of Growth, Graham Collins shared, “so you have to pay your sales reps accordingly. Do some research on the way your competitor’s bill and therefore pay their sales reps.”

7 tips for building a startup sales commission structure

1. Don’t overcomplicate the startup sales compensation plan

Keep it simple. The general rule is that if you can’t explain your sales compensation in one or two sentences, it’s probably too complicated. We wrote all about what makes a good compensation plan in a previous post.

Typically, a blended method with 50% salary and 50% commissions is the standard split for most startups. Of course, this is assuming that the product is fairly simple to sell and has a shorter sales cycle. If the product is more difficult to sell, it might be wise to do a 75% salary to 25% commission split. This will help with churn on your sales team. If you’re early stage and having to do an even higher salary to commission split, it might be too early to hire sales reps. In this case, you should consider focusing first on improving the product.

2. Be sure to cultivate the right culture

Cultivating the right culture for your startup, specifically on your sales team, is extremely important. When building your early sales team, it’s important to hire the right sales reps. You want reps that understand the problem you are solving and resonate with the mission of the company. The early hires are going to set the precedent for the sales team as the startup scales, so it’s important to vet them properly. It might even be helpful to hire someone with more experience in sales, to help train the next couple of hires. Our CEO, AJ Bruno, goes into more detail about how to cultivate the first sales hires into champions in this post.

There’s something to be said about creating a culture of competitiveness to keep reps motivated. However, be careful to not allow this to transform into a cutthroat sales culture where everyone acts as a “lone wolf.”

3. Make sure your reps have a clear understanding of your value proposition and your target market

At an early stage startup, the founder is typically the first salesperson. They need to be able to clearly convey their vision and drive to their sales team. If reps don’t have a clear understanding of the product’s value, it can be difficult to get initial customers to buy into the vision. If the founders can’t sell the product, there is a good chance that the sales team won’t be able to either. Check out this blog post for more on why product knowledge is key to the success of your sales reps.

4. Ensure quotas are attainable for your reps… but not TOO attainable

If only a small percentage of your reps are consistently hitting their quota, that may be a sign that the quotas are too high. Whereas if all your reps are hitting quota easily, that’s an indication that your quotas are too low. Even if you have superstar sales reps that hit their quota every quarter, you should also cater to the reps that aren’t as consistent.

If a rep is struggling to hit their quotas, the sales manager should focus on trying to improve the rep’s performance. QuotaPath is a great way to motivate your reps. They can visually track their progress and see how they compare to their fellow reps. Another way to help struggling reps is to sit in on their conversations. You’ll be able to see what the rep is potentially doing wrong and provide constructive feedback. If that isn’t working, it might be time to hire someone new to replace the lagging rep.

5. Make sure the B2B sales commission structure aligns company goals with the rep goals

A friction point that startups and companies with high sales rep churn face is misalignment between company goals and the reps’ goals. The person running the sales team needs to understand what drives each of their reps to succeed. An example of not understanding the reps’ goals is capped commissions. Very rarely, if ever, do capped commissions make sense, especially if a startup is looking to grow as fast as possible. For more info on capped commissions, check out this blog post about why capping your team’s commissions is almost never a good idea.

6. Designing a sales compensation plan for a startup that can scale with your business

As you scale your business, the last thing you want to worry about is making adjustments to your comp plans at every stage. The best way to ensure that your plans can scale is to keep them as simple as possible. Simplicity scales.
Of course, the sales incentive plan you have as a five-person sales team is going to change when you hit 50 people.

It’s important to optimize along the way to drive the behavior that leadership is trying to promote. You just don’t want the plan to change with every new hire.

7. Ensure that your reps can track their commissions and quotas

Sales reps hate not knowing what they’re going to be paid. They want to make sure that they are getting the commissions they deserve for the work they put into the startup. Being able to visually see how they are contributing to company attainment and personal goals is a powerful tool to motivate sales reps.

Luckily, visually tracking commissions and quotas is made simple through QuotaPath. Built by salespeople for salespeople, QuotaPath empowers the individual sales rep to crush their quotas and make those important sales. If you’re interested in seeing how QuotaPath can work for your sales organization, sign up for a free 30-day trial.

Setting up compensation and benefits for startup companies

Remember that your total incentive package will include compensation and benefits. Consider your company’s stage of growth and be prepared to get creative, such as offering equity, flexible work arrangements, and opportunities for professional development.

Do your research by looking at what other startups similar to your stage offer. This will help you to set competitive and fair startup compensation packages.

Most importantly, be flexible and transparent. As your startup grows, your compensation and benefits plans may need to adjust. Keep your team in the loop and communicate regularly.

FAQs

How can I determine the appropriate commission structure for my startup?

To determine the commission structure for your startup, consider the following:

• Company’s stage of growth: A young startup may need to offer a higher commission rate to attract and retain top talent. As your company grows and matures, you may be able to lower the commission rate.
• Product or service you offer: Your product or service will affect the best way to structure your sales commission. For example, a SaaS company may want to offer a commission based on the number of recurring subscriptions a salesperson generates, while a software company may want to offer a commission based on the total value of the sale.
• Sales goals: What are your sales goals for the next year? Your commission structure should be designed to help you achieve those goals.
• Budget: How much money do you have to spend on sales commissions? This will help you determine the maximum commission rate you can offer.
• Team experience: How experienced is your sales team? If you have a team of experienced salespeople, you may be able to get away with a lower commission rate. If you have a team of less experienced salespeople, you may need to offer a higher commission rate to incentivize them.

Should I consider offering equity or stock options as part of sales compensation in a startup?

We recommend offering equity, stock options, or profit sharing in addition to sales compensation not in place. Our CEO offered startup equity best practices.

What are common mistakes in start-up sales compensation planning?

A common mistake when it comes to startup sales compensation planning occurs when leaders try to duplicate commission structures that worked at previous companies. A more complex plan that drove selling behaviors at a later stage company likely won’t be successful at a more volatile early-stage company. Another mistake involves not adjusting the plan frequently enough. We normally would say less changes are better. But at younger companies, you will need to make changes as you uncover more information about sales cycles, average deal sizes, and number of deals per month and quarter.

Originally published Nov 26, 2019, updated August 20, 2020

One of the great debates in cold calling methodology is the voicemail; to leave or not to leave? The anti-voicemail camp believes that by not leaving a voicemail, you stay undercover. You can call back later in the day and hopefully get someone on the phone. The other camp (my camp) thinks that a cold call voicemail is another valuable touch point.

To be clear, we’re talking about leaving a cold call voicemail. I’m not talking about leaving a voicemail when you’re working on closing a deal. It’s perfectly acceptable to leave voicemails when you’re following up with someone with whom you’ve already had a conversation.

Why leave a cold call voicemail

By leaving a high-quality voicemail message, you can define why you’re calling and encourage a response. Before we dive into how to leave one, I want to get one thing clear though. I do not leave voicemails with the hope of callbacks. I have worked with sales reps who get tons of callbacks even to missed calls without a voicemail! I’ve never been that lucky (or skilled) so I don’t expect callbacks. As a salesperson, you shouldn’t count on callbacks from your voicemails.

My goal when I leave a voicemail is to either:

1. Get the point of contact to send me a response to my cold email. I only leave a voicemail after I’ve sent an email. Getting an email response is my primary reason for leaving a voicemail message. My emails contain way more information about what I’m selling than a voicemail message ever could.
2. Encourage the point of contact to pick up when I call again. This requires you to be calling from the same number whenever you call. One of the reasons I don’t like tools that obfuscate your actual phone number.

How to leave a cold call voicemail

You want to keep your voicemail short. The sweet spot seems to be around fifteen to twenty seconds long. Any longer and you risk your voicemail message being deleted or ignored. If it’s any longer you run the risk of an unclear or nonsense message. I’d recommend coming up with a voicemail script and using it at first. You don’t always have to follow your sample script verbatim, but it gives you a good structure.

Greeting

Just like with a cold call, the first few seconds of your voicemail are the most important. It’s very easy to delete voicemails and your prospect will decide very quickly if they want to listen to the rest of it.
Who you are and why you’re calling. That’s what you need to cover in your greeting. Make sure you’re speaking clearly and succinctly, especially for your name and the company’s name. Then give a little taste of what your company does. Enough to give them a basic idea and get them intrigued about what you do. Don’t spend 30 seconds giving an elevator pitch. Remember, the sweet spot is around twenty seconds. It should sound something like this:
“Hey Marisa, this is Graham with QuotaPath. You might have seen my email this morning. QuotaPath is a commission calculating tool built with the sales team in mind.”

Ask

What do you want the point of contact to do? As I stated before, you’re not generally looking for them to call you back. If you’re waiting for callbacks, you’re likely to be disappointed. Instead, you should try a variation on this line:
“I’d love to connect and see if we could help you with your commission tracking. As I mentioned, I emailed you this morning, so if you could check that out and get back to me that would be great!”

Close

You want to remind your point of contact who you are and what company you’re from right after the ask. I give my phone number at the end on the off chance they want to call me back and can’t find my email. Here’s how mine would sound:
“Again, Graham with QuotaPath, (207)555-5555. Have a great day Marisa!”

When to leave a cold call voicemail

I’m sure there are numerous studies on what hours to leave a voicemail. Should you leave voicemails on Mondays? Should you leave them at 9 AM or 2 PM? That’s not my specialty, so I’ll leave that to the experts. Instead, I mean two major things:

1. Don’t leave a voicemail on your first call. It’s no surprise that people are hesitant to answer their phones when it’s an unknown number. As a salesperson, if you call a few times your prospect might be curious enough to pick up after three or four missed calls. If you leave a voicemail on the first call, you’ve given yourself away as a sales rep.
2. After you send an email. I mentioned it before, but because salespeople are not expecting callbacks, they should have an email to reference. If callbacks happen, all the better!

Putting it all together

So this is what a cold call voicemail script would sound like if I was to leave one today:

“Hey Marisa, this is Graham with QuotaPath. You might have seen my email this morning. QuotaPath is a commission calculating tool built with the sales team in mind. I’d love to connect and see if we could help you with your commission tracking. As I mentioned, I emailed you this morning, so if you could check that out and get back to me that would be great! Again, Graham with QuotaPath. Have a great day Marisa!”

Big news has hit the sales community today. Drum roll please… We’re excited to announce that QuotaPath has entered into a strategic partnership with Revenue Collective, a membership organization of over 3,000 sales and marketing professionals. Together, we’ll work to help sales professionals better understand their compensation and help executives and companies more accurately set, track, and predict commission-driven compensation.

What this partnership means to us

When it comes to compensating salespeople, a thoughtful and focused strategy is critical to driving the right behaviors and business outcomes, but designing comp plans is a delicate balancing act – equal parts both art and science.

Sales leaders are constantly trying to model comp plans that incentivize their front-line teams. Individual sellers are often left to their own accord when figuring out how and when they get paid. It’s our mission at QuotaPath to provide end-to-end transparency and empower sales reps to better understand their comp.

Thousands of Revenue Collective Members turn to its “#comp_plans” Slack channel looking for best practices and insights from others in the community. We’re thrilled to join this community and provide thought leadership through jointly-produced webinars, research reports, and surveys. We have a ton in store to demystify variable compensation for sales organizations all over the world. We’re also creating a “#qutoapath” branded Slack channel where Members can interact directly with our team, get access to upcoming feature releases, and more.

“I’m incredibly excited to partner with QuotaPath and have discovered through conversations with their CEO, AJ Bruno, that they share our commitment to unlocking the professional potential of revenue leaders around the world,” said Sam Jacobs, founder and CEO of Revenue Collective. “As we surpass 3,000 Members, I’ve never felt more confident and optimistic about our opportunity to truly change our Member’s lives for the better and our alliance with QuotaPath is yet one more step on that journey.”

How to get involved

If you’re interested in joining Revenue Collective, information to apply can be found here. Come join the exclusive organization designed to support the professional development of revenue leaders at high growth companies from more than 100 cities across the world. And if you haven’t done so, sign up for QuotaPath’s free commission tracking software. See you on Slack soon!