It was my second day in the office back in 2008. At the time, we were expected to make 50-60 cold calls to PR professionals, and I was having a hard time swallowing my pride and working up the guts to actually pick up the phone. I remember taking a deep breath, dialing out, and waiting inevitably as a gatekeeper, or WORSE, the contact picked up…

A lot has changed in the last decade and it seems like every few days there’s another splashy new article being passed around LinkedIn declaring the death of cold calling as a sales tactic. With headlines describing cold calls as intrusive, ineffective, and overly labor-intensive, these articles are good for generating engagement, but are they accurate?

Not exactly.

While it’s true that some common practices associated with cold calling have fallen out of favor, the practice as a whole is alive and kicking in many sales organizations. As with any other sales technique, there’s a right way and a wrong way to do cold calling. To make it work for you, it’s important that you know what to do (and what not to do) before picking up the phone.

Don’t: read a script. Do: talk like a person.

This is one big reason cold calling has gotten a bad reputation. We’ve all picked up the phone only to have someone dispassionately read off a sales spiel without coming up for air. While having a list of talking points available is a great idea (and can help you keep the conversation headed in the right direction), just reading from a script is another matter entirely.

Reading a formulaic message drastically reduces the chances that the prospect will respond to your message (or even stay on the phone). Monopolizing the conversation to spit out your sales pitch indicates that you’re uninterested in what the other person on the line thinks or cares about. Though a cold call will definitely be more talking on your end than a discovery call, it’s ultimately still a conversation between two people. Make sure you’re asking questions and keeping the other person engaged.

Don’t: call without doing some research first. Do: have an idea of who you’re talking to.

Another reason cold calling has fallen out of favor—at least with thinkpiece authors— may have something to do with the word “cold.” Cold calling generally used to mean dialing number after number and talking to whoever picked up, but it shouldn’t work that way in a modern sales organization. With the amount of sales intelligence tools the average salesperson has access to (including just a simple Google search), there’s no reason to make a call without taking at least a minute or two to do some research.

Before you pick up the phone, try to arm yourself with a little basic knowledge: what are some common pain points in this industry? Who are the big players? Who are this company’s competitors? This knowledge will allow you to tailor your talking points and position your company as a solution to the prospect’s problems, and will help you stand out from the many truly cold calls this person likely fields each week.

Don’t: let a cold call be your first and only point of contact. Do: follow up (or send an email first).

If your plan was just to call a prospect and hope for the best, you may not get the best results. A cold call works best as part of a multi-touch effort to get in front of a decision maker. That may mean sending an email over first and following up with a call a day or two later. It may look like calling and leaving a voicemail, following up with an email, and attempting to call again a few days later. It might take some experimentation to find the best combination of outreach activities, but no matter what, remember that one call is probably insufficient.

How to get better at cold calling

Cold calling can be awkward if you’re not used to it, but like any other common work task, it’s a skill that you can improve. For your own benefit, consider recording your calls and listening to them as a training exercise. Are you monopolizing the conversation, or allowing engagement from the prospect? Did you sound reasonably well-versed in their goals and pain points? Did you do a little research before calling to make sure your company can help them? Does your voice sound warm, engaging, and enthusiastic about what you’re selling?

While thinkpiece authors love to ring the death knell of cold calling, the facts aren’t on their side. Many thriving sales organizations still use cold calls as an effective part of their process. As long as you’ve done a little bit of research and are confident that you’ve got a solution to this contact’s pain points, there’s no reason to dread reaching out.

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At least twice a week, I get asked about compensation plans: “What do you think of this?” “How can I get my team to buy into this plan?” “Have you seen this plan before?”

Even worse, when I go through plans with individual contributors, their comments are usually (in a frustrated tone) along the lines of, “Yeah, I’m not sure why we decided to go this route.” or “We’ve changed it at least 3 times in the last year.”

I’ve been guilty of having my own team feel this way as well. That’s why I’ve decided to put together a post breaking down the various components of what makes a good compensation plan.

First off, when you’re deciding whether you want to join the sales team at any company, there are so many factors to consider: the company’s reputation and culture, vacation policies, and the potential for growth, among other things.

But your compensation plan has a lot to do with your happiness and success at the company. That’s why it’s important to know what to look for when you’re interviewing for a sales position in any organization. Let’s take a look at some features of a good compensation plan, as well as some common red flags that should send you running in the opposite direction.

What makes a good compensation plan?

Simplicity

Whether in a smaller sales operation or complex enterprise sales, the best comp plans should be so simple to explain that they could fit on a napkin. As a salesperson, you’re driven by a desire to succeed, and your target numbers and the associated pay should serve as beacons that guide your work. If there’s a lot of guesswork or confusion about how your take-home pay is calculated, you might find that your morale takes a hit and you’re less driven to reach your goals. More than 3 different variables going into a compensation plan is a red flag for me.

Correct ratio of OTE to quota

There are varying opinions about what the ideal relationship between quota and on-target earnings (OTE) should be, but generally, the sweet spot is in the 15-25% range (full compensation). That means if you have a 1 million dollar new business sales quota, your OTE should be somewhere between $150,000 to $200,000. If you’d like to get paid higher, figure out what your quota is and do the math.

The breakdown of base pay to commission will vary depending on the company and the role, but here are some general rules of thumb:

• Sales representatives are typically 50% base, 50% commission.
• Lead gen roles may have a higher base and lower commission, e.g. 60% base, 40% commission
• Account managers will often have an even higher percentage of OTE made up of base salary (something like 70% base, 30% commission).
• Enterprise sales reps (with large deal sizes) might be more like 40% base, 60% commission.

Realistic goals

A sales plan is only as good as it is realistic. Quotas should be ambitious, but they should also be achievable. A good way to tell whether a company sets appropriate quotas is to ask about the percentage of the sales force who are able to hit the mark every time. A company with realistic quotas will have about 80% of their sales reps hit the mark every period.

I’ve had years where rep attainment percentage hovered around 80% and years where rep attainment was around 30%. Guess which one was way more fun to be around?

In addition to realistic quotas, the best companies will account for an appropriate ramp-up time for their sales cycle, and a way for sales reps to get paid until that ramp-up period has passed. For instance, if the average sale takes three months to close, a ramp-up period of one month isn’t adequate for a new sales rep to start closing deals.

What are some red flags to watch out for?

Now that we know what a good sales compensation plan looks like, let’s take a look at some factors that should prompt you to ask more questions.

Complex or moving targets

There are a lot of legitimate reasons to shake up sales compensation plans: a new VP of sales, a new financial model, a new product line, or sales rep turnover, among other factors. Changes to comp plans often come with major structural changes to territories or verticals and peoples’ roles in the company.

But as we mentioned earlier, sales targets serve as a beacon for sales reps to focus on. Too many changes or complications in a short period of time can muddy the waters, obscuring progress toward goals and hurting morale. Companies that frequently change sales compensation plans, quotas, or reporting periods (monthly to quarterly or quarterly to yearly, etc.) may be helmed by leaders who don’t understand the company’s sales cycle or how its products should be sold.

A higher-than-average clawback rate

Clawback policies are common in many sales organizations. Essentially, they mean that if a customer cancels a sale or asks for a refund, the credit for that sale and the associated commission will be taken away from the sales rep who closed the deal. They’re a bummer, but they ultimately shouldn’t represent a huge percentage of your total commission as a sales rep.

In general, a clawback rate higher than about 2% may indicate that: a) the company’s product doesn’t work as advertised, and/or b) sales reps aren’t getting sufficient training to help them identify the right customers.

100% commission jobs

This one should be pretty self-explanatory: if a company isn’t willing to pay you a base salary, they’re not really hiring you as a salesperson for their company. Don’t invest your time and talent in a company that won’t invest in you.

Find your way

Simple, appropriate sales compensation plans aren’t just the sign of a healthy organization; they’re tools to motivate sales reps and power company-wide growth. Well-defined and realistic sales goals (along with the right training and support) should help empower salespeople to meet and exceed their targets. Take a look at the compensation plan for your current company or any organization you’re considering joining to determine whether you’re being positioned for success — or whether you need to take your talent elsewhere.

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