whatbeclosing

Account Executive

Member

Good Citizen

Tiered comp plan - thoughts?

I'm an Enterprise AE for a HR Tech company. My annual ARR/ACV quota is $1,555,000.

We have a comp plan where:

0-80% of quote attainment gets a reduced rate of commission (0.59 multiplier),
80-100% of quota gets a higher rate of commission (2.33 multiplier), so that when you hit 100% of quota you get your OTE.

I get paid on the ACV amount, there are different commission rates for 1 year (6.68%), 2 year (8.91%), and 3 year (11.58%) deals.

I'm on track to close ~80% (~$1.2m ACV) for the year, all being 3 year contracts - so the real rate is ~6.75%.

I will make far less than last year given this change, and it doesn't sounds like they will change it for next FY (which starts in March) - which I obviously hate...and is making me really think about what I do after this FY ends...

Thoughts on this comp plan?

Anyone else have this sort of set up?

💰 Compensation

22 comments

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Sunbunny31

Politicker

Sr Sales Executive 🐰

Any time you punish your team, you're wrong.
Your rate should be your rate, then you get a bump for over attainment or higher level. I hate this bs.

unclespacejam

Politicker

ur dad’s brother

I’ve never seen a plan with more “finance” fingerprints than this. Jesus

Sunbunny31

Politicker

Sr Sales Executive 🐰

I think it’s all the red ink on the plan.

unclespacejam

Politicker

ur dad’s brother

Lmfao no shit eh

jefe

Arsonist

🍁

I absolutely agree. It's the opposite of what should be happening. Don't disincentivize reps for not hitting 100%. I wonder how many reps are actually hitting their numbers..

@Revenue_Rambo 's math of $81K for $3.6M is fucking insane.

CuriousFox

WR Officer

🦊

It really breaks my heart.

DataCorrupter

Politicker

Account Executive

Sounds like the company gamed it so that they don't have to pay most everyone except for the top performers. The problem is, attainment across industry is ~40%. Personal opinion, but that's just acting in bad faith with your AEs.

DataCorrupter

Politicker

Account Executive

Also, on a different note, your quota seems high. I'm an enterprise AE and have never had above 1.2m quota. From the outside looking in, it kinda reinforces what I'm thinking, gaming the system against the AEs.

salesleader123

Fire Starter

sales director

Where can I see % attainment across different industries?

DataCorrupter

Politicker

Account Executive

Go to RepVue, it’s a website. They’ve got those numbers

Revenue_Rambo

Politicker

Director, Revenue Enablement

I’ve never been a fan of “gated” comp plans.

At that rate you drop $1.2M and only take home $81k. That’s some bullshit considering they are 3 year deals and translate to $3.6M.

Phillip_J_Fry

Opinionated

Director of Revenue

Wow, I didn't do the math on this, but 81k for pulling in $3m is crazy.

unclespacejam

Politicker

ur dad’s brother

It’s also higher LTV naturally for the company so in theoretical dollars it’s worth even more.

You my friend, are getting fucked

Phillip_J_Fry

Opinionated

Director of Revenue

Any company doing this is a red flag to me. From the times I've seen it, it appears execs take the top performers numbers, add 20%, and call that your quota. It feels like a very greasy way to pay you a fraction of what you should be making in any role that doesn't have a tier comp plan.
Now, if all reps are hitting quota then totally disregard what I'm saying. But orgs that have this comp structure AND very few reps are hitting that multiplier, then I'd steer clear.

FeelItInMyPlums

Valued Contributor

Sales Account Executive

Yeah this is rough. Hopefully you're cool with living off 59% of your comp (as thats what you'll be seeing 80% of the year if you're hitting at goal). I had plans like this, and they were tough seeing my bank account go down Jan-Oct, and then spiking in Nov/Dec.....but even then, Nov/Dec was never a sure thing and I had massive misses that set me back. The year I ended in first place at 75% after the company jacked our team numbers up was very tough (it was 2019 - i still remember it).
Not sure if you have an ask of the group besides a general opinion? But this is something you have 0 control over usually as a seller (unless you're interviewing, then you make the hard ask).

Pachacuti

Politicker

They call me Daddy, Sales Daddy

Companies love to complicate comp plans. That said, tiered plans happen all the time. Do they have an accelerator after 100%?

whatbeclosing

Member

Account Executive

Yeah: 1.3 multiplier at 105% and 1.5 multiplier at 120%

unclespacejam

Politicker

ur dad’s brother

This is so fucking dumb. They really are over complicating things here.

I would sand bag the fuck out of this plan

whatbeclosing

Member

Account Executive

This goes through my mind all the time

medhardwaredr

Opinionated

Director of Sales NA

That’s a bit rough definitely. Sounds like a PE has some influence.

Diablo

Politicker

Sr. AE

Too much of a math. We are somewhere getting there slowly and it’s nothing but bs

AnchorPoint

Politicker

Business Coach

Constant change to structure is sign of poor leadership

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whatbeclosing

Tiered comp plan - thoughts?

22 comments

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