swizard

Sales Evangelist

Picking community's brain - creating attractive commission model

Hi community - I am creating the new commission+bonus model for my b2b sales team. What would be your best practices, tips, advises based on your current bonus model or the experience you've gained while doing the same exercise.

must be uncapped
must be progressive
fair to the team
good ration for OTE vs market ranges

what else?

💰 Compensation

🧠 Advice

💪 Motivation

51 comment

Sort by:

JuicyKlay

Celebrated Contributor

I think the biggest factor is commission actually being attainable. So many sales teams have hyper growth quotas that nobody on the team hits - even the best reps. Source: was just at a company like that.

swizard

Celebrated Contributor

Sales Evangelist

been there.. truly painful situation. which also leads to increasing employee turnover.

saleskick

Opinionated

Sales Specialist

the key philosophy behind should be making it worthwhile. the rest are technical elements. often sales managers forget the motivation of sales reps - which is essentially MONEY

Ace

Arsonist

CEO

Following this!

swizard

Celebrated Contributor

Sales Evangelist

Cheers!

JJASBE

Catalyst

Director, Solutions Sales

Does progressive mean kickers/accelerators? If not, those should be included.

swizard

Celebrated Contributor

Sales Evangelist

Yes, that's exactly what I meant with that. any other tips?

softwaresails

Politicker

Sales Manager

If you are SaaS I like to have the commission structure based around MRR. Having the commission structured in a way that the sales teams goals are aligned with the companies.

Ace

Arsonist

CEO

So when you say MRR, you mean you'd like to get your dough on your monthly closes?

softwaresails

Politicker

Sales Manager

I like it to be a percentage of the MRR.

Since most SaaS companies really should care about the new MRR it helps line the AE goals with the company goals.

swizard

Celebrated Contributor

Sales Evangelist

sounds fair. thanks! what's your take for b2b IT sales ?

Ace

Arsonist

CEO

I think what @softwaresails said applies to B2B IT sales too

softwaresails

Politicker

Sales Manager

Yeah it definitely applies to b2b as long as you are focusing on MRR.

swizard

Celebrated Contributor

Sales Evangelist

fair enough. tnx folks!

DaveyDimes

Acclaimed Answer

Account Executive

This may be a bit bias but the commission structures I've seen based on MRR have been very confusing. I'm a big fan of getting a one-time payment based on total ARR. Most MRR models end up multiplying the number by 12 to find your commission.

Ace

Arsonist

CEO

A clause could be added to refute that

swizard

Celebrated Contributor

Sales Evangelist

Thanks folks for sharing your thoughts!

Ace

Arsonist

CEO

Anytime!

swizard

Celebrated Contributor

Sales Evangelist

🎉

Chep

WR Officer

Bitcoin Adoption Specialist

Maybe make it so the accelerator kicks in for closed wons so people are highly motivated to bring in quality leads.

swizard

Celebrated Contributor

Sales Evangelist

Sounds good. what else would your recommend Chep?

Chep

WR Officer

Bitcoin Adoption Specialist

I also love the idea of tailored spiffs so maybe putting out a poll to your employees about something they all want and then have the rep with the most (meetings, demos, closes however you want to gauge it) win the spiff, but don't have it affect the accelerators. I think gamifying the sales process always makes it more fun and competitive!

swizard

Celebrated Contributor

Sales Evangelist

great approach, thanks!

Chep

WR Officer

Bitcoin Adoption Specialist

Hope it helps :)

swizard

Celebrated Contributor

Sales Evangelist

It does, thanks 🤟

Full_Send

Opinionated

Mid Market AE

Just to piggyback off the gamification point, you want to make the spiff more than just cash which is super impersonal, but you don’t want it too specific like a target gift card, ya know?

In addition, I’d add a retention/multi year bonus to the commission if possible. I always felt slightly cheated if I closed a 3 year and only got paid on 1, once.

a great incentive for reps to stay and sell high quality is a residual in any form even if a once a year pay out

Salespreuner

Big Shot

Regional Sales Director

Glad. Got to follow this 💯

swizard

Celebrated Contributor

Sales Evangelist

Cheers VKN!

swizard

Celebrated Contributor

Sales Evangelist

what's your take on it?

Salespreuner

Big Shot

Regional Sales Director

Excellent 👍👍

swizard

Celebrated Contributor

Sales Evangelist

hehe

Salespreuner

Big Shot

Regional Sales Director

🙂

swizard

Celebrated Contributor

Sales Evangelist

🤝

34fifty

Valued Contributor

Team Lead

Depending on the stage your company, You might want to reward your sales team for either account acquisitions or revenue generated. I've seen teams running a hybrid too.

swizard

Celebrated Contributor

Sales Evangelist

thanks!

RahRahBooty

Executive

Business Development

I work on an annual quota. On top of our commission, my company usually does quarterly bonuses which I like. Q1 was 10% of our variable for bringing in a certain percentage of our quota, I’ve seen 10k for Q2 for a percentage, last Q3 they gave us a bonus for hitting a certain number of net new meetings. But yeah, other than that.. accelerators are nice.

swizard

Celebrated Contributor

Sales Evangelist

Looks like your company does know how to motivate and reward performing teams!

DaveyDimes

Acclaimed Answer

Account Executive

I sell a fintech SaaS product and have really enjoyed my commission structure over the last few years.

I get a specific percentage based on the total ARR of every deal I sell. This is paid out monthly. I would receive an increased percentage for any deals sold on an annual contract or included multiple products.

All bonuses were based on hitting a quarterly number. Once the number was attained you received a bonus on your next commission check. Then for every deal, you closed above 100% of attainment had an increased percentage.

The structure overall was very lucrative it kept you motivated on a quarter-by-quarter basis. It was also nice because it avoided having to bully deals across the line on a month-to-month basis. The focus was always to keep deals in the quarter and allowed to build real value and urgency around incentives and discounts.

swizard

Celebrated Contributor

Sales Evangelist

Sounds great DaveyDimes! Thanks for sharing!

beerisforclosers

Politicker

Account Manager

It's nice if it's achievable, though perhaps that's what you mean by fair. I would add that our company switched to halves so we can get accelerators in Q2 and Q4. They did it to try and help us out during the pandemic, but we're all hoping it sticks. It's been awesome.

swizard

Celebrated Contributor

Sales Evangelist

Thanks for sharing! 🙏

GeneralCharles

Member

Country Manager

I think it is key to create a structure that is clear and understandable for both the reps as well as finance/accounting. The amount of times I have had fights with finance about my pay out.....

goose

Politicker

Sales Executive

Make it simple. I sold cloud services to mid-market and commission paid equaled monthly recurring revenue sold on a muti-year term.

Sell $5,000 in MRR, get paid $5,000 in commission. Sell $100k, earn $100k.

OTE was 50/50.

Blackwargreymon

Politicker

MDR

The Brutal Truth About Selling podcast / youtube vids are great

Clashingsoulsspell

Politicker

ISR

Does progressive mean kickers/accelerators?

iSell

Opinionated

ADR

Uncapped, capped simply creates a performance ceiling

ClosHER

Business Development Manager

Following as I’ll be doing this in 6mo.

Clemax

VP Sales

How I've set up the current commission of my team :

Progressive structure (ARR based)
0-80% 4%

80-100% 6%

100-120% 8%

120+% 10%

Target is attainable, based on historical data and taking in account seasonality. (in Europe during the summer nobody works)

Now, what is most important imo is the payout schedule :
When the deal closes, you get 75 %.
25% is paid out the next year, at renewal and the churned amount is deducted (SaaS)

No cap

MR.StretchISR

Politicker

ISR

the key philosophy behind should be making it worthwhile. the rest are technical elements. often sales managers forget the motivation of sales reps - which is essentially MONEY

Mr.Floaty

Politicker

BDR

the key philosophy behind should be making it worthwhile. the rest are technical elements

Cyberjarre

Politicker

BDR

Some guys in the UK and they are PHENOMENAL

Bravado is a community of trusted sales professionals endorsed by their customers.

Products

The War Room Jobs Salary Guide Tech Sales U

Company

About Us How It Works Blog Bug Bounty

Contact

Press Careers

If you are hired as a contract sales rep by a Bravado customer, we may ask you to prove access to the employee email account provided to you by that customer. This data will be shared with customers to track your sales productivity; customers can use this data to confirm you meet the minimum activity requirements to pay out your ramp stipend and commission.

swizard

Picking community's brain - creating attractive commission model

51 comment

Related posts

If sales people didn’t have quotas, and were paid just a flat rate of whatever they sold, do you think think that A)Salespeople would work just as hard? B) Create a better culture within the Sales Org? C) Create better relationships with their buyers?

Is starting your own business the only option for a laid-off salesperson after you reach the milestone age of 50 ? How does one get hired at 50+ without compromising pay, dignity, location and happiness ?

Since pandemic pushing everyone to wfh, many people are of the opinion that all aspects of businesses (at least for software) can be done remotely. How many of you still believe that persona touch goes a long way to close a sales deal?