OldDogNewTricks

Sales guy

Are your comms paid on MRR rather than annual contract value?

Boss just made claim that agencies and SaaS businesses are no longer paying commission on total annualised contract value, but only rolling comms on actual paid MRR (for up to 12 months)

I wanna call bullshit but gotta check here first

So for us, our average deal is approx 6k per month. Previously if we signed for 12 months that was a 72k deal, with comms paid out incrementally over 5 months.

Now we'll be paid quarterly, for that quarters revenue only, every quarter for the first year. No more clawbacks, nothing is paid in advance of customer paying.

Is anyone still getting paid on full contract value rather than MRR?

💰 Compensation

17 comments

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SlinginSoftware

Politicker

Account Executive

I’ve always been ACV, but am going somewhere with MRR. It’s the first time I had heard of that payout structure!

OldDogNewTricks

Opinionated

Sales guy

see thats where i see a flaw - gotta be hard to attract good talent to move from being paid on ACV to MRR. what drew you to make the change?

SlinginSoftware

Politicker

Account Executive

I did it all for the Benjamins…

It has nothing to do with how revenue is counted, it has everything to do with commission structure and quota.

I’m using numbers that are easy to divide, but if my current quota is based on ACV and is 1.2 mill a year, I need to avg 100k a month to hit quota.

This translated to MRR: quota is $8.3k MRR goal per month and 100k MRR goal per year.

The revenue is essentially the same above, just looked at different.

At my last company, my quota was 4.5 mill a year and it was MUCH easier than hitting my current quota of 800k… every thing is relative to how things are structures

OldDogNewTricks

Opinionated

Sales guy

yup yup - i get that the numbers are just presented differently. our issue is we used to get paid quicker and on the ACV. so comms on 72k was paid upfront, well technically in 5x lump sums over 5 months... sometimes a client doesn't see out the 12 months, but sales rep is rewarded providing the client is there for 5 months.

MRR model means the comms is now paid every quarter, based on the revenue up to that point. so as long as the client stays on for 12 months, yep its the same amount. but its paid way slower, and now sales reps are having to jump into customer success lane to make sure they stay happy for the whole year.

its a big change in the cash flow for our sales reps.

(nice work on the new gig, btw!)

SlinginSoftware

Politicker

Account Executive

Aaaaah- I’m following you now. Yeah, that’s a bit tough. I’ve been told that we’re paid upfront immediately… I hate the idea of having to worry about churn affecting my commish

NoSuperhero

Politicker

BDR LEAD

I'm in channel sales for UCaaS and CCaaS and yes, the new model is to have partners sell with X amount of times on MRRs depending on deal size and longevity of the contract or commitment.

OldDogNewTricks

Opinionated

Sales guy

thanks @NoSuperhero - just so i can get my head around what you're saying... are comms paid monthly on revenue in? or paid in a lump sum based on longevity of contract?

NoSuperhero

Politicker

BDR LEAD

The specifics I don't remember them right now, but to my understanding we're applying MRRs for our partners, and the X amount of times it receives per month will depend on the seat size and contract/commitment the partner set up with us.

We're a pretty big one, and our hardest competitors apply very similar programs.

Adored

Executive

Sales Director

I’ve had a similar model before for deals that were billed monthly rather than upfront annually. It’s a bit shit because your commission checks will be that much smaller at the beginning and you can’t really expect huge payouts - but could imagine in 9 months time and after having closed quite a few deals, that even if you have a less than stellar Q it’ll be nice to still have cash flowing in from previous wins. You should ask if it’s different / are there any kickers for closing deals with an annual, upfront payment.

OldDogNewTricks

Opinionated

Sales guy

Yeah you nailed it - its a lean first 6 months or so, then it really compounds and kicks in... We've been through a similar transition in the past where we went from getting a lump sum up front (ie. Paid all of 12 months comms, after client paid month 1 retainer) to our comms being paid over 5 months.

No kickers for payment up front, but as a service based business (Marketing agency) we rarely if ever get these anyway

So are you paid on ACV up front? What industry are you in?

Adored

Executive

Sales Director

Ah ok, so that makes sense. I work in SaaS and anytime I’ve billed ACV up front in full, I’ve been paid my commission as one lump sum once payment has been received. In my current business there is also a kicker on this so it’s worth shooting for.

OldDogNewTricks

Opinionated

Sales guy

Got it - cheers @Adored, very helpful

GDO

Politicker

BDM

I had acv per year. So if I sold 3years. I got my commission payed out over 3years.

OldDogNewTricks

Opinionated

Sales guy

Paid out over the 3 years - got it. Slower burn in cash flow but would make for sticky staff!

Cheers @GDO

Blackwargreymon

Politicker

MDR

I’ve always been ACV, but am going somewhere with MRR. It’s the first time I had heard of that payout structure!

CuriousFox

WR Officer

🦊

I like your avatar.

Error32

Politicker

ISR

To me a cold call is anyone not actively in a buying cycle that didn’t submit a contact request form. Regardless of past inquiries, if they are not actively evaluating my software there is still some elements of a cold pitch needed, and a good WYWYN to hook them.