The Basic Requirements of a Good Sales

Plan

Keep it Simple. A summary of your compensation plan must f

Show Causality. Make compensation directly related to the desired e

Think Short. Keep the time between activity and compensatio

Fair for Everyone. All compensation must be fair and equa

Must be Easy. Easy to measure. Easy to adminis

 Good Sales Compensation
an

pensation plan must fit on a single page.

ated to the desired effect you wish to achieve.

vity and compensation under 60 days.

must be fair and equal to everyone.

asure. Easy to administer.

Jr. SDR (MDR)

SDR

Sr. SDR (ADR)

Jr. AE (SM)

AE

Sr. AE

Jr. CSM (ONB)

CSM

Sr. CSM (AM)

Description

Junior Sales Development Rep, aka Market Rep: entry-level position

Sales Development Rep: up to 2 years of experience

Account Development Rep: 2+ years of experience, focuses on bigger deals

Junior Account Executive, aka Sales Manager: <2 years experience, smaller/volume-based deals

Account Executive: 2-4 years experience, focused on SMB/Mid-Market

Senior Account Executive: 4+ years experience, focused on larger/strategic deals

Junior Customer Success Manager: responsible for onboarding customers

Customer Success Manager: responsible for helping the customer use the product (sometimes renewals)

Account Manager: responsible for renewal, upsell & cross-sell

 Base Variable OTE

Jr. SDR (MDR) $60,000

SDR $80,000

Sr. SDR (ADR) $100,000

Jr. AE (SM) $140,000

AE $200,000

Sr. AE $220,000

Jr. CSM (ONB) $100,000

CSM $140,000

Sr. CSM (AM) $200,000

This is an example of estimated OTEs for these roles in the San Francisco Bay Area, last
updated in 2018. We recommend researching OTEs in your geography, and consulting
with local recruiters before finalizing your numbers.
 Base Variable OTE

Jr. SDR (MDR) $40,000 $20,000 $60,000

SDR $40,000 $40,000 $80,000

Sr. SDR (ADR) $60,000 $40,000 $100,000

Jr. AE (SM) $70,000 $70,000 $140,000

AE $100,000 $100,000 $200,000

Sr. AE $120,000 $100,000 $220,000

Jr. CSM (ONB) $90,000 $10,000 $100,000

CSM $115,000 $25,000 $140,000

Sr. CSM (AM) $150,000 $50,000 $200,000

Highly Leveraged Common A Common B Customer Success

25% / 75% Base/OTE 50% / 50% 60% / 40% 90% / 10%

Used by senior
Used in established
Used in hypergrowth salespeople. Less leverage and less
markets with an existing
companies, often Accompanied by an upside. Often used for
pipeline, 50% of which
uncapped to offset the annual guarantee on BD roles that focus on
comes to you - often
risk. the bonus to create a strategic relationships.
transactional sales
higher "base" salary.

Not only should you have a good understanding of compensation packages in your geography,
but you should also carefully consider how heavily leveraged you want your compensation plans
to be.

There are a few examples and situations to consider below, but click back to the article for more
information.
 Base Variable OTE

Jr. SDR (MDR) $40,000 $20,000 $60,000

SDR $40,000 $40,000 $80,000

Sr. SDR (ADR) $60,000 $40,000 $100,000

Jr. AE (SM) $70,000 $70,000 $140,000

AE $100,000 $100,000 $200,000

Sr. AE $120,000 $100,000 $220,000

Jr. CSM (ONB) $90,000 $10,000 $100,000

CSM $115,000 $25,000 $140,000

Sr. CSM (AM) $150,000 $50,000 $200,000

Do not set targets without careful consideration.

By now, you should have read and understood the difference between top down, bottom up, and business-case target setting metho
your LTV and how that affects the business case for setting targets in the way you have chosen.
 Target to Attain

Process 100 inbound leads/day

@ avg. ACV of $10k, 20 SQLs/month | @avg. ACV of $25k, 12 SQLs/month

Develop 10 SQAs (ABM-focused SDR)

$500k / year, LTV 1+ years

$800k / year, LTV 2 years

$1.2M / year, LTV 2+ years

Onboard 100s clients/month

Onboard 2-3 clients/month, manage 20-50

Grow business by @2M, 5-10 accounts

own, bottom up, and business-case target setting methods. You should also have a firm grasp of
you have chosen.
 Month 1 Month 2 Month 3 Month 4

Draw (guaranteed) $7,500 $5,000 $2,500 $0

What AE Sold $0 $16,000 $78,000 $98,000

Commission Earned $0 $1,600 $7,800 $9,800

Pay-Out (non-recoverable) $7,500 $5,000 $7,800 $5,800

Pay-Out (recoverable) $7,500 $5,000 $2,500 $4,200

Debt $7,500 $10,900 $5,600 $0

How to read this table:

Each month, the rep is guaranteed a declining amount of commission draw.

Month 1: the rep draws $7.5k and sells nothing.

Month 2: the rep draws $5k and sells $16k. Of the draw, $1.6k was earned with sales. The rest is a draw on future
months.

Month 3: the rep draws $2500 and sells $78k. The rep earned $5.3k in commissions more than their guaranteed
draw.

In Month 3, the non-recoverable draw plan pays out $7,800. That's what the rep earned in commissions that month,
and it's greater than the guaranteed draw.

In Month 3, the recoverable draw plan pays out only $2,500: the guaranteed draw amount. The remaining $5k in
commissions earned is used to pay off the debt accruing from the first two months of employment.

Month 4: The non-recoverable payout plan pays out all the commissions earned. The recoverable plan pays out
$4,200, since the rep is now required to pay off the last remaining debt balance.

For more information, head back to the article.

Now You Are Ready to Draft a 2-Page (n
Plan and Get Mutual Commitm

A REMINDER:

Keep it Simple. A summary of your compensation plan must f

Show Causality. Make compensation directly related to the desired e

Think Short. Keep the time between activity and compensatio

Fair for Everyone. All compensation must be fair and equa

Must be Easy. Easy to measure. Easy to adminis

CLICK THIS LINK TO GO TO THE COMPENSATION

t a 2-Page (no more) Comp
ual Commitment

NDER:

pensation plan must fit on a single page.

ated to the desired effect you wish to achieve.

vity and compensation under 60 days.

must be fair and equal to everyone.

asure. Easy to administer.

OMPENSATION PLAN TEMPLATE

 Week 1 Week 2 Week 3 Week 4 Week 5 SQL SQL HQ WON SQL

$100

Jan 4 1 4 5 6 20 2 0 $2,000

Feb 4 5 4 5 18 2 2 $1,800

Mar 5 6 4 3 1 19 3 3 $1,900

Apr 4 3 5 5 17 3 1 $1,700

May 5 3 4 5 2 19 3 2 $1,900

Jun 6 7 4 5 22 4 6 $2,200

Jul 2 5 2 3 4 16 3 3 $1,600

Aug 4 4 6 6 5 25 4 4 $2,500

Sep 5 5 5 4 19 5 3 $1,900

Oct 5 5 4 4 18 2 4 $1,800

Nov 5 5 4 4 3 21 3 4 $2,100

Dec 3 6 4 2 15 4 6 $1,500

229 38 38

TO USE THIS TABLE:

Replace any text in blue with your own data. First, set compensation levels for your plan in cells J2, K2 an

Then, keep track of results in columns B-F. The remainder of the sheet will update itself as you do.

In this scenario, you should already have done the modeling to know that you have a certain amount of varia
available to bring in a certain number of deals. In this hypothetical, we need 30 deals from $40k in variable co
SDR.

This table uses an accelerated model, compensating SDRs a progressively larger amount for SQLs, high quality
HQ) and won deals. This is meant to incentivize quality of meetings in addition to a minimum level of meet
 SQL HQ WON Payout

$150 $300

$300 $0 $2,300

$300 $600 $2,700

$450 $900 $3,250

$450 $300 $2,450

$450 $600 $2,950

$600 $1,800 $4,600

$450 $900 $2,950

$600 $1,200 $4,300

$750 $900 $3,550

$300 $1,200 $3,300

$450 $1,200 $3,750

$600 $1,800 $3,900

$40,000

for your plan in cells J2, K2 and L2.

et will update itself as you do.

have a certain amount of variable comp

deals from $40k in variable comp for the

amount for SQLs, high quality SQLs (SQL

n to a minimum level of meetings-set.
 Tier 1 Tier 2
Sales SPIFF $80,000 8% Carry $20,000 12%

Jan $70,000 0 $70,000 $5,600 $0 $0 $0

Feb $81,000 0 $80,000 $6,400 $1,000 $1,000 $120

Mar $105,000 0 $80,000 $6,400 $25,000 $20,000 $2,400

Apr $102,000 2 $80,000 $6,400 $22,000 $20,000 $2,400

May $92,000 2 $80,000 $6,400 $12,000 $12,000 $1,440

Jun $127,000 0 $80,000 $6,400 $47,000 $20,000 $2,400

Jul $69,000 3 $69,000 $5,520 $0 $0 $0

Aug $102,000 1 $80,000 $6,400 $22,000 $20,000 $2,400

Sep $95,000 0 $80,000 $6,400 $15,000 $15,000 $1,800

Oct $112,000 2 $80,000 $6,400 $32,000 $20,000 $2,400

Nov $100,000 1 $80,000 $6,400 $20,000 $20,000 $2,400

Dec $145,000 1 $80,000 $6,400 $65,000 $20,000 $2,400

$1,200,000 12

TO USE THIS TABLE:

Replace any text in blue with your own data. First, set compensation levels for your AE's tiered plan in cells D2

Then, keep track of results in columns B & C. The remainder of the sheet will update itself as y

You should have already done the work to determine how much variable comp you have available to drive the
case, we assume that we have $80k in variable comp to bring across $900k - about 30 deals with an

This hypothetical scenario uses a combination of an accelerated comp plan and a business model plan. This
incentivize closing as reps move closer to their quarterly goals. It also incentivizes reps to increase deal sizes (o
build into the model.)
 Tier 3 SPIFF
Carry 15% $1,000 Payout

$0 $0 $0 $5,600

$0 $0 $0 $6,520

$5,000 $750 $0 $9,550

$2,000 $300 $2,000 $11,100

$0 $0 $2,000 $9,840

$27,000 $4,050 $0 $12,850

$0 $0 $3,000 $8,520

$2,000 $300 $1,000 $10,100

$0 $0 $0 $8,200

$12,000 $1,800 $2,000 $12,600

$0 $0 $1,000 $9,800

$45,000 $6,750 $1,000 $16,550

$121,230

E:

or your AE's tiered plan in cells D2, E2, G2, H2, J2 and K2.

of the sheet will update itself as you do.

mp you have available to drive the goals you need. In this

s $900k - about 30 deals with an ACV of $30k.

an and a business model plan. This is meant to further

ivizes reps to increase deal sizes (or any other SPIFF you
.)