Smart sales compensation software

There are three things to consider when building compensation plans. The first is that comp plans should be simple. Make sure they can be explained quickly, and that they don’t involve too many moving parts. The second is that they are logical. You want your comp plans to accomplish the goals your company has set. Lastly, comp plans should be fair. They should be attainable and pay your sales team properly for the work they do.

The three main benefits of sales compensation software include: transparency, error reduction, and motivation. Because compensation information is centralized in a platform, everyone involved in the commission process gains a new level of transparency. Automated math reduces the risks of human error. And when reps have visibility into their compensation and can trust their payouts will be accurate, they are motivated to sell more.

The departments typically responsible for designing sales compensation plans are: sales leadership, revenue operations, and finance. However, the organization responsible for designing sales compensation plans varies as organizations grow. In early organizations, it’s generally sales leadership who designs compensation plans. And in large organizations, this responsibility typically falls to revenue operations teams. No matter who is in charge, it’s important that sales compensation plans are simple, logical, and fair.

Read more about sales compensation strategy in our ebook here.

The simplest commission structure for SaaS sales is a flat commission rate, usually around 10%.

But most SaaS commission structures use accelerators to incentivize over performance.
Some organizations use consistency bonuses that pay a set bonus amount for hitting quota every month or quarter. There’s no exact template to a perfect SaaS commission structure, but here’s more reading about standard commission rates for SaaS sales to further your understanding.

Compensation design plays a big role in motivating sales reps. A good compensation plan should be easy to understand and designed to drive specific behaviors. And, it should pay reps accordingly. Consider adding accelerators and bonuses to motivate your sales representatives to sell more business or specific types of deals.

The most common ways to calculate sales compensation are either using a spreadsheet or with commission tracking software like QuotaPath. For simple compensation plans, many people choose to calculate manually using spreadsheets. This method can work for small sales teams, however, it can become too time-consuming and unfeasible. If your sales team is scaling or you have more complex comp plans, using a tool can help you calculate sales commissions automatically. Then you can add that to a rep’s base salary to calculate their total compensation. Sales compensation software automates calculations, provides transparency, and removes mistakes.

OTE salary is an acronym that stands for on-target earnings. On-target earnings is the amount of money you can expect to earn if you hit 100% of your quota. It can be calculated by adding your base salary and any expected bonuses and/or commissions. Here’s more reading on OTE salary, plus some examples.