Should Reps Be Paid Based On Close Ratio?

Question

I know a company that pays a percentage of banked revenue but the percentage changes if they fail to hit a certain close ratio.

This means even if a rep banks $80k - they will only be paid 10% if their demo showup close ratio is 30%

If close ratio is less than 30% then they will be paid a 7% commission despite banking the same $80k for the month.

Is this a best practice? I personally feel this is not a good model

Accepted Answer

No

Answer

Funnel Ratios are coaching tools, not comp markers.

Answer

That sounds horrible. There are too many variables and factors at play, too need to just look at what is closed and call it a day

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Sounds terrible.

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Sounds fun 🤮

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What exactly is this supposed to achieve? I could see being concerned that the sales reps are spending too much time on dead end ops, but if they're still closing enough deals to hit quota, it's obviously not causing a problem. This sounds unnecessarily complicated and some kind of excuse to pay out less on commission.

Answer

Why would anyone do this? What behaviour is it trying to incentivize?

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Sounds very complicated, cumbersome, and demotivating.

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that sounds so bad. You would only go for the really hot leads or not put them in salesforce until they close

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This will lead to reps disqualifying every opp that is not an inbound

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Doesn't sound interesting at all. Good you realized it's a bad model.

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Okay, let’s say I have a close rate of 1% as enterprise sales specifically to F100.

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Eww gross

Answer

This is one of the dumbest things Ive ever heard of. Unless your calendar has absolutely no room, its usually worth going after some things that could be long shots.

Rahul Ghosh

Should Reps Be Paid Based On Close Ratio?

20 comments

Rahul Ghosh

Should Reps Be Paid Based On Close Ratio?

20 comments

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# deals per month? Where would you rather work? Daily deals for smaller $ or 1-3 per month for higher ASP?

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Sold 1.15ARR (203% avg yearly quota) as an SMB rep for a SaaS company and made £110k pre-tax. I know it depends on a lot of factors, but how much do other reps get paid in SaaS companies if they sell that amount?