iAMgr00t

Account Executive

Clawbacks on mid-market and enterprise deals

What's up y'all.

I'm new to a traditional sales job. Currently working as an AE at a small startup. Deal sizes range from $30k - $500k ARR.

The CEO, who I report directly to said they wanted to discuss clawbacks incase we aren't able to save the company money.

One of our value props to customers is that if we don't save them money that we will pay them back the difference at the end of the year.

My CEO said "we might need to clawback a bit from your commission if that happens."

We have a meeting coming up to discuss this but i'm not sure what is normal and reasonable for this scenario.

Right now i'm thinking:

If I close on our ICP and it doesn't work out -- that's completely out of my control so a clawback doesn't really make sense.
if it's outside of our ICP and i'm taking a risk then I can understand how a clawback would make sense.

My concern is that if I close a $500k deal and then we aren't able make up that difference in savings for them that I could be on the hook big time.

What's your first impression of this and what types of clawback agreements have you seen or experienced that are reasonable? (maybe not clawback is the most reasonable, i'm not sure).

💰 Compensation

18

31 comment

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CuriousFox

WR Officer

10

🦊

The fuck they will. THEY made the stupid gimmick. THEY need to be responsible for it.

antiASKHOLE

Tycoon

2

Bravado's Resident Asshole

as funny as this is initially as I read this in Foxxy Love's voice from Drawn Together(sorry Foxxy, that is who you appear in my head as when reading your comments lmao) it is absolutely 100% correct. They chose to make that claim, and they can pay it back.

iAMgr00t

Good Citizen

1

Account Executive

😂😂😂

SaaSsy

Politicker

1

AE

Yes, total BS - ask the CEO directly if the system is a scam, and if not, why is he worried.

iAMgr00t

Good Citizen

1

Account Executive

Thanks for that feedback! I can attest it’s not a scam — but it appears that the guarantee doesn’t evoke confidence!

Pachacuti

Politicker

6

They call me Daddy, Sales Daddy

So you're whole value proposition is that you will save your clients money? How do you quantify that: criteria, timeline, etc? That seems very bogus to me and a way for your company to grab money from sales people when the company needs some extra cash. The CEO is setting the stage for some major 💩💩 to happen.

Also, it you knew a big clawback was coming down the line, what happens if you just quit before that happens? I would.

Finally, if money savings is your ONLY value prop, that is a pathetic way to win business. Someone will always be cheaper.

I have only seen clawbacks on solution cancelation.

iAMgr00t

Good Citizen

0

Account Executive

The "moneyback guarantee," is fairly common among vendors in our space "proving ROI," or de-risking the purchase. This isn't a technically a SaaS product we have face-face (virtually) healthcare services we provide as well as our software.

antiASKHOLE

Tycoon

2

Bravado's Resident Asshole

That makes absolutely ZERO sense. You sell it like you are supposed to.. you have ZERO control over the outcome... like if they actually use the product as intended. or the world shuts down.

iAMgr00t

Good Citizen

1

Account Executive

That's correct I have no control over the outcome after a year. Which is why it doesn't make sense to me either. Thanks for validating ha!

Sunbunny31

Politicker

2

Sr Sales Executive 🐰

I've never been in a company that actually extended a money-back guarantee like this. I would imagine the only way to protect yourself from a clawback would be if your company paid you an agreed upon non-returnable amount, and then gave you the remainder if there's no refund or rebate to the customer. That's not ideal either, because now your company has your $$ in escrow and not in your pocket.
I mean, do you believe in the product and in your enablement/customer success team to ensure it's being used properly and will perform as expected? Or -- ?

iAMgr00t

Good Citizen

1

Account Executive

I do believe in the product and that it works, however we have a case right now where the customer is NOT "saving" money but a lot of that is also not controllable as there could just be a really bad year where they have much higher healthcare related expenses that we couldn't prevent.

Sunbunny31

Politicker

0

Sr Sales Executive 🐰

Yeah, this whole thing puts elements that are 100% out of your control into the mix.
That should not be part of any compensation agreement.

SaaSguy

Tycoon

2

Account Executive

Leave

iAMgr00t

Good Citizen

0

Account Executive

😂😂😂

Diablo

Politicker

2

Sr. AE

Dude hope this doesn't happen but it might make you negative money. I understand terminating the contract but company paying back is insane :)

How much time does it typically take to see the results?

iAMgr00t

Good Citizen

1

Account Executive

If I closed a $500k deal my commission on that is 12%. The CEO wants to discuss a clawback on a portion (or who knows, maybe all of it) on that.
It could take a year to see that actual results of this because we come in and are preventing healthcare events from happening -- meaning we have to look at the data retrospectively.
We currently have a $500k ARR contract where we are $100k in the hole. Thankfully i'm not on that contract.
As a company we probably should be removing that performance guarantee.
Are there ever performance guarantees like that in the b2B world?

Sunbunny31

Politicker

2

Sr Sales Executive 🐰

I can't say that there are never, but it's outside anything I've ever see in B2B.

iAMgr00t

Good Citizen

0

Account Executive

Good to know. Thanks!

Diablo

Politicker

1

Sr. AE

Same here as Sun, haven’t seen it yet

Gasty

Notable Contributor

2

War Room Community Manager

Let me put on my simplicity spectacles and break this down:

- You peddle your product/service
- Client employs the product/service with hopes of seeing their piggy bank fatten up
- If their piggy bank starts dieting instead, they come knocking on your door, asking for a refund.

If I've gotten this right, tell me something. Who's the ringmaster in your circus guiding these clients to their post-purchase pot of gold?

ps: great first post for a discussion, welcome to the war room @iAMgr00t

iAMgr00t

Good Citizen

1

Account Executive

Yea very good point! I’ll be updating this post after I have the conversation today.

ZVRK

Politicker

1

Enterprise Account Executive

This is just ridiculous, delusional.. how are you supposed to sell if your under these conditions?

GDO

Politicker

1

BDM

Are you responsible for your ge reason the clawback happens? If no it’s BS

kittychachas

Valued Contributor

1

VP/Director of Sales

We used to have something similar. It was a terrible system and the ROI could be gamed by either side. There weren’t any clawbacks, thankfully. But it was something we did away with shortly after I joined the company.

Juancallclose

Catalyst

1

Director

You ain't clawin back jack

Justatitle

Big Shot

0

Account Executive

You didn't give the gimmick they did. wouldn't be too flexible on it.

0

Director of Strategic Accounts

Another way to look at it: No, you do not want a clawback - but a) how likely is a clawback and b) what would you like? Would you accept a clawback if your commission would be higher? Are there other perks you would like in your job? Maybe it is not a "no, boss, F U", rather than a, "if you give me X, you can have your clawback". Ask yourself how often does your company NOT save money. Because if this is a high percentage, you might be with the wrong company if their claim is wrong to begin with. Summary: Get what YOU want out of it.

iAMgr00t

Good Citizen

0

Account Executive

Great perspective. Thank you for that!
Since we are a startup and don’t have a ton of customers there isn’t enough data to make that call unfortunately. 😬

pirate

Big Shot

0

🦜☠️ Account Executive

No clawbacksies

CRAG112

Valued Contributor

0

Account Executive

Pizza places stopped promising free pizza if it takes more than 30 minutes to deliver. Why in the hell is a CEO doing that with what’s sold?

Sounds like they just don’t want to pay you and are baiting the discussion.

Get some legal advice and help. Don’t sign shit.

iAMgr00t

Good Citizen

0

Account Executive

ha yea. In my original contract this is not in there, so I'm good. I told the CEO that this was not a good look and will make it very difficult to hire any future sales-people.

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