Creating a SaaS Sales Compensaton Plan

Most CEOs have discovered that SaaS sales compensation can sometimes be a very delicate balancing act. The best solution is to find a point where every employee within your sales organization is motivated to offer results that encourage smart growth. Cloud based sales compensation packages can be designed with expansion stage companies through specific practices which will incentivize every sales function to performance to its optimal level.
Bonus focus or sometimes called commission compensation plans offer tremendous upside which helps in growth and give time to CEOs to influence their people. Everyone is provided with incentives with intentions of performing revenue-driving activities which produce these results.

The values placed on given performance measures vary yet the main idea behind it is to offer a conducive environment that delivers upsides to the over-performers and acknowledge the agency through rewarding. Despite the model helping to retain and appeal sales talent with A-levels, scaling is also made easier since the up-front investments within sales headcounts are going to be made less expensive. Therefore, as one works hard on how to promote growth efficiently through evolving compensation model, the following are the tips to keep in mind for each level in the hierarchy of your sale organization. Below is creating a SaaS sales compensation plan.

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Creating a SaaS Sales Compensaton Plan

A. Inside and Outside Sales Rep

These are the members responsible for closing down new business, and their capability to accomplish objectives should accurately be reflected by their compensation. For example, leading indicators may be the basis of their salary while commission and bonus is simply a reward for performance against revenue targets. The main goal here is efficiently and effectively reward. By companies trying to consider at least part of a rep’s pay, teamwork is encouraged. Both bonus incentivizes and individual’s performance commissions important to maintain since individuals are given incentives to work harder and best practices followed.

B. Sales Executives

These are members in the sales organization charged with every aspect in the company’s sales distribution model. Sale executive compensation is meant to operate specifically based on meeting specific goals in sales and the target set for profits, and the key corporate objectives should be achieved with the help of an executive or a manager. The compensation ultimately is supposed to be a bonus, a confluence of salary or a commission. Breakdown of the given three components will always vary greatly depending on individuals hired, the objective of the company and motivation of the hired person. However, the main point should be the whole sales organization performance towards meeting the objectives should be greatly tied to sale executive compensation.

C. Lead Generation Reps

Here reps are required to preserver constant rejection since the role is quite exhaustive. Since the responsibility of actual closing of the business is not theirs, it is very difficult to structure a commission program or a bonus. With this, a part of their roles compensation package can still be tied to results. It doesn’t matter how one’s sales teams commission or bonus is structured, a cap should not be placed on the amount of a variable compensation a person is meant to earn since if a company’s commission and bonus payouts are still tied to results, then there is no point of encouraging managers to quit performing after their payout limit is reached.

This should be done with moderation since poor company culture can be created and morale of the team killed when any real incentives are removed. When sales commissions are being received, it is very important to put into consideration each person’s context situation. For example, lead general reps are most likely to be fresh individuals from college while VPs are likely to be secured financially. Lastly, SaaS sales compensation plans should be kept as simple as possible for employees’ sake for their easier interpretation since your goal is help them achieve financial success through illuminating their path. It is very important to avoid some common mistakes that may lead to the failure of a team and these mistakes include:

1. Complicating the plan

. A compensation plan is supposed to be kept simple and this makes it easier for reps to understand at what point they stand at any given time. Too much detailed information and trying so hard to address every situation will get you blogged down.

2. Not aligning metrics with business goals

The compensation plans are supposed to be related to the incentive behaviors which are going to work towards stage of growth and company’s specific business model.

3. Treating a plan like contract

Your sales reps should not be bored, confused or feel intimidated by your goals. Instead the plan should be treated as if it’s a marketing asset and it should also be kept simple and clear.

4. Metrics used in the plan cannot be tracked

When plans that are impossible or difficult to measure are used, the plan is likely to be killed faster and therefore metrics that are incomplete, estimated, dynamic or subjective should be avoided.

5. Real time visibility is not provided

Reps should be provided with ways on how to calculate the amount they are able to make and the position they hold in relation to the quota they own. Having well-defined dashboards boosts motivation and alerts managers to help them know the individuals who require coaching and help.

6. Staffing challenges not prepared for

Sales turnover may sometimes turn out to be typically high. This is very important to put into consideration together with ramp-up time since this will help during new hires and potential challenges which are not anticipated for. Therefore, to be on safer side some wiggle room should be incorporated.

7. Ad-Hoc Spiffs room is not reserved in your budget

The flexibility of launching quick campaigns and contests is supposed to be put into consideration when making the plan. This is because it may provide an extra boost when needed.

Conclusion

When coming up with a SaaS sales compensation plan, the tips to make it a success is very much important to consider and then mistake that could ruin it should also be avoided. If the organization’s sales capability to reach particular targets and objectives is largely tied to its compensation plan, then this helps give sales teams enough opportunity to generate more money for both the organization and themselves.

 

Omri Erel
Omri is the Head of Demand Generation, as well as the Lead Author & Editor of the SaaSAddict Blog. Omri established the SaaSAddict blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to SaaS and cloud migration.
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