huntmaster

AE (Account Executive)

Old School Bravo

50% minimum quota to qualify for commissions

Does anyone here have a comp plan where they only get commissions if they reach 50% of their annual quota?

Scenario: A friend started an AE gig selling complex software implementation projects on 1/1/2021. Realistically from the first cold call, it can take anywhere from 6 months to 3 years of nurturing an account before it becomes a legitimate sales opp. From there, the sales cycle is around 6-12 months.

The AE was given an annual quota of $2 million. Without any existing pipeline, he managed to scrape up $790k in revenue for his first year.

In terms of profits for the company, out of this $790k, 30% was used to actually pay a developer, architect, and PM to perform the implementation services, 30% was any overhead (including the reps 115k base), therefore he made the company $316,000 total net profit (40%), even after the sales cost in his first year.

There are 2 other experienced reps, and they both closed around $1.5 million with the pipeline they had accumulated from previous years.

The big moral dilemma lies here: The rep signed a comp plan saying that he would receive 3% commission on all sales IF 100% annual quota is hit, 2% commission on all sales IF 50%-99% annual quota is hit.

...BUT if the rep does NOT hit 50% quota (which is $1 million in his case), he is going to receive ABSOLUTELY NO COMMSSION for closing $790K in his first year.

And now further, this rep is completing a contract negotiation for a $1 million dollar deal, but his prospective account has made it clear that due to budget, it will not close until January 2022.

Since this $1 Mil deal has been forecasted and committed for January 2022, his manager has already raised his 2022 quota up to $3 million dollars with the same 50% rule. Meaning the rep will start 2022 closing a $1 Million dollar deal, but will not see any commission until he hits $1.5 Million. Then it will only by 2% commission unless he makes it to $3 Million.

If you are still reading, please provide your input/advice for this rep. Have you seen a comp plan like this before? YES, he signed the comp plan.... but he also did not know this when he took the job...

What do you think people? Let's hear your thoughts....

💰 Compensation

19

24 comments

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DungeonsNDemos

Big Shot

8

Rolling 20's all day

To keep it brief, that’s some bull.
Sounds like management does not care about their reps and only about maximizing profit.

huntmaster

Fire Starter

1

AE (Account Executive)

Yes, but on the other hand, the 115k base is not terrible for the reps experience.

The issue he is having is, we all do this brutal work for commissions, so at the end of the year, he at least got on the scoreboard... but won't receive any commission.

Not that good of a moral booster to drive more sales, performance, etc...

braintank

Politicker

2

Enterprise Account Executive

But if the company knows they'll never have to pay them more than $115k...

TheOverTaker

Politicker

6

Senior Account Executive

Sounds like they are cool with reps just riding out their base because that comp plan is ass

CuriousFox

WR Officer

3

🦊

Yeah. It ain't good for sure.

SaaSam

Politicker

2

Account Executive

Sounds like your friend should have rejected the offer when he saw the comp plan.

At my current company, hitting monthly quota unlocks residuals. Meaning I can still make commission off of any and all accounts every month for a year provided I hit quota every month.

But even if I miss quota i still get the comms on what I closed that month.

huntmaster

Fire Starter

1

AE (Account Executive)

Unfortunately, he agreed on a base/OTE with the initial offer, but it actually took a few months before receiving the actual comp plan. I've seen this happen often with other companies.

At that point, he contested it, and it was a "take it or leave it" type situation. But I agree that if he had something else lined up, he should have walked.

SaaSam

Politicker

1

Account Executive

ooof yeah that's not ideal. It's my nature not to trust anyone and here is a great example as to why

LordOfWar

Tycoon

1

Blow it up

Never ever EVER trust the company to take care of you.

I've been down that road before, it never works out in your favour.

MCP

Valued Contributor

1

Sales Director

It’s not an acceptable plan. Commissions should be paid on what you sell, periodt. Bonuses and / or accelerators are for when you over achieve. This person should live off the base while they look for the plentiful jobs available to them and NOT take the next one unless the hiring manager can share the comp plan structure with them.

dwightyouignorantsale

Politicker

1

Account Executive

That is a terrible comp plan. I’m curious what the turnover looks like.

Diablo

Politicker

0

Sr. AE

Is this commish rule applicable to all the reps or your friend alone?

huntmaster

Fire Starter

0

AE (Account Executive)

All of the reps have the same comp plan. Structure But the ones who have been there
Longer have higher quotas.
The numbers seem a bit unrealistic to the point where it’s tough to even obtain 50%… so reps end up under performing just to collect a base since it’s so hard to “see the light” everytime they get close their number is raised

Sunbunny31

Politicker

0

Sr Sales Executive 🐰

I'd be looking for a new gig. That's horrible.

Filth

Politicker

0

Live Filthy or Die Clean

This can't be a surprise, I'm sure it's in the comp plan (I apologize for being unsympathetic - that's a sick base). I personally don't sell for anyone where I get commission on whatever I sell regardless of where I stand for the month/quarter/year.

If I sell it, pay me - if you signed it, live it or find a better option. Tis the time of greener pastures.

hh456

Celebrated Contributor

0

sales

every company is entitled to structure comp plans how they like. the goal of this community and other websites like RepVue and Bravado jobs board is to help quality peeps avoid helping shitty companies succeed.

your friend can coach up, ask for a change, quit or stay. nobody forced them to be there. and it sounds like they're pretty good at their job. so i'd encourage them to find a new job if they are unhappy and get paid.

SaaSyBee

Politicker

0

Founder

Sounds like a scam. He needs to leave and he needs to publicly out that company's practices.

Beans

Big Shot

0

Enterprise Account Executive

If you sold something, you should get paid on it, period.

FinanceEngineer

Politicker

0

Sr Director, sales and partnerships

I have heard that in the past, and you have to negotiate the % down a little to get your number. I wouldn't want to take it, but I'm told it is done in a lot of marketing tech/ ad tech sales roles.

LordOfWar

Tycoon

0

Blow it up

As others have said this is some serious bull.

The company can't have it both ways, either have the 50% cut-off but maintain quota year to year, or remove cutoff and jack quota. What is even worse is this is a no-pipeline and long sales cycle operation.

How did he sign, but not know what the comp plan was when he took the offer?

The base seems high, so maybe they just think that is enough and only want to award Allstars. Either way, they are not incentivizing the sales team properly.

notmarketing

Opinionated

0

Account Executive

I work for a company with a similar decelerated comp plan.. the big difference is that I get 5% for 0-50% attainment and then that jumps up to 10% for 50-100%, and 12% for anything beyond.
Shitty model but I get why they do it. The plan your friend signs sucks though

GDO

Politicker

0

BDM

Sounds like bs! He sold so he is entitled to his commish

brrr

Good Citizen

0

Account Executive

Gotta get out of there

lilbiscuit

Member

0

Enterprise Account Manager

This happened to me at a past company and it was complete and total bullshit. The CRO was at google for 5 years and decided to just keep using it, even though we were a ~30-person "startup within a company" selling a new to market product that nobody could afford. if i sell something, fucking pay me.

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