How to Build Effective Sales Compensation Plans for Any Customer Facing Role

Sales Hacker

A great sales compensation plan needs to accomplish quite a lot. It needs to provide fair compensation to employees in customer-facing roles. The Process for Creating a Sales Compensation Plan. Plan Compensation for Onboarding and Training. Example Compensation Plans.

When Startup Compensation Isn't About the Money

Tom Tunguz

It’s the most provocative idea about employee compensation I’ve found. Today, it’s common for startups and companies of all sizes to refer to compensation surveys that span the 10th percentile to the 90th percentile in compensation for roles, and use these benchmarks provide offers to new hires, inform promotion salary increases and new option grants, and underpin retention packages. In his book describing Google’s People Operations called Work Rules!

Startup Best Practices 12 - Customer Success Compensation

Tom Tunguz

Compensation structures are one of the most interesting questions facing customer success organizations in software startups. How should customer success leaders structure their team’s compensation in order to align the objectives of individual customer success managers with those of the larger business? Like sales compensation plans , customer success compensation plans should evolve to serve the business’s needs.

The Ins & Outs of Variable Pay Compensation Structure for Sales Teams

Sales Hacker

With increasing focus on grit and many claims of meritocracies in organizations across the country, why does variable pay compensation even exist? On top of that, why are sales people some of the few employees subject to variable compensation structures?

The Four Stages of Sales Compensation Structures in Early Stage Startups

Tom Tunguz

The ultimate goal of any compensation plan is to ensure account executive success at each stage. Your startup is just getting off the ground. You might have a few account executives and a sales leader in place; maybe some revenue and a handful of customers. The sales team costs real money, and the question before the company is: how do you know what quota plan to assign to the account executives? I’ve seen four stages in early stage software companies.

The Surprising Compensation Trends of Startup Executives

Tom Tunguz

Since 2008, there has been a secular trend to increase cash compensation and decrease equity to startup management teams. In the past 5 years, VPEs have benefitted from a 10 to 16% increase in their cash compensation, but have seen their equity grants fall by 17-19%. Above, I’ve charted the cash compensation trends, (salary+bonus), for the different roles and different locations.

A Step by Step Guide to Revenue Growth with Mark Roberge (Video + Transcript)


The last part I want to do is on compensation. Blog Posts Company Culture Compensation Customer Success Featured Videos Growth Hiring Leadership Marketing Marketing Strategy Metrics SaaStr Events Sales Scale Videos saastr annual

Benchmarks for Employee Stock Based Compensation in SaaS Startups

Tom Tunguz

Another way is to look at the cash based cost of the stock based compensation. The chart above shows the average stock-based compensation (SBC) per employee by years since founding across the basket of publicly traded SaaS companies. In summary, each year the typical public SaaS company spends about $10-20k in stock based compensation per employee. Above, I’ve plotted the median spend on stock-based compensation over the first ten years of each company’s life.

10 Tough Lessons We Learned Building a Prenicorn Outside of Silicon Valley from (Video + Transcript)


Blog Posts Company Culture Compensation Featured Videos Hiring Human Resources International Expansion Leadership Marketing Resource Type Role / Function SaaStr Events Topics Videos saastr annual

3 Key Ingredients of a Sales Compensation Plan

Tom Tunguz

For example, as Mark Roberge, CRO of Hubspot, wrote in The Sales Acceleration Formula , Hubspot adopted three different sales compensation plans throughout its early evolution which embody the three key ingredients of a sales compensation plan. Hubspot’s journey highlights the three key components of a sales compensation plan: commission ratio, acceleration and payment schedule. Payout timing is the third component of the sales compensation.

How Much to Compensate SaaS Sales Teams for New Sales, Renewals and Expansions

Tom Tunguz

Many times startup teams ask how to compensate a sales team for renewals and upsells. How should SaaS startups compensate their sales teams for upsells and expansions? What’s the best way to compensate sales teams? Developing the sales motions, customer success sophistication and compensation structures to enable this type of growth is an essential skill of enduring SaaS businesses

SaaStr Podcast #220: Leyla Seka, EVP @ Salesforce Mobile Discusses What Needs To Be In Place For Hyper-Scale


Company Culture Compensation Customer Success Diversity & Inclusion Hiring Leadership PodcastsLeyla Seka is the executive vice president of the Salesforce Mobile platform experience.

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SaaStr Podcast #225: Stephen Burton, VP of Smarketing at Harness Discusses How To Create True Alignment Between Marketing and Sales


Company Culture Compensation Marketing Podcasts SalesStephen Burton is VP of Smarketing at Harness, the industry’s first continuous delivery as a service platform. To date, Harness has raised $20m in funding from the wonderful Matt Murphy @ Menlo Ventures and BIG Labs.

SaaStr Podcast #210: Bridget Gleason, VP of Sales @ On Why The Best Sales Reps Are Not Outgoing and Extroverted


If we do stick with the kind of compensation plan though, so to speak, I do get asked by, again, a lot of founders about it. Compensation Hiring Leadership Podcasts SalesWelcome to Episode 210!

SaaStr Podcast #213: Tom Tunguz, GP @ Redpoint Ventures On Why Scoring Leads May Actually Be Dangerous


Tom Tunguz: The second reason that we’re starting to see this kind of demarcation between CSM and AE, particularly for the upsell has to do with compensation. At the beginning, maybe two or three years ago, there were lots of different ways of compensating a CSM. Compensation Early Podcasts SaaS Product Pricing SalesWelcome to Episode 213!

The Unexpected Compensation Trends of Post-Series A Startup Founder/CEOs

Tom Tunguz

There’s an interesting phenomemon occurring in founder compensation for post-Series A companies: founding CEOs are swapping cash for larger equity stakes in their companies. Each year, Redpoint portfolio companies participate in a compensation survey along with the portfolio companies of about 50 other firms, totaling about 800 startups.

12 Free Sales Excel Templates For Tracking Your Pipeline, Activities & Performance

Sales Hacker

Use these tried and true templates for tracking your sales pipeline, activities, forecasting, creating compensation plans, managing sales rep performance, and more. Sales Compensation Templates. Sales Compensation Plan Worksheet. Sales Compensation Plan Agreement.

8 Critical Questions to Ask Yourself as You Build a Sales Incentives Program for 2019

Sales Hacker

Still, they don’t always nail down the details when it comes to the things that might entice a prospective salesperson — like a well-rounded sales compensation plan , for example. Think about the compensation structure of various sales roles. How can our compensation plan be gamed?

Should CSMs Own Quota?

OpenView Labs

Owning quota does not mean a CSM cannot do right by the customer and owning revenue does not mean that compensation must consist of revenue quota for individuals. While it is true that compensation plans do motivate behaviors, when the behaviors are the right ones, is owning revenue wrong?

SaaS Inside Sales Benchmarks Survey | Take It!

Chaotic Flow

As many of you may know, Trish Bertuzzi and the folks over at the Bridge Group publish a lot of great stuff on Inside Sales strategy and operations, including inside sales compensation benchmarks, lead development rep best practices, outbound selling strategies, and on an on.

How To Create A Customer Journey Map That Works

Nimble - Sales

They can seldom boast objectiveness; moreover, current competitive market environment dictates that the time spent analyzing each such polling also seldom compensates. Traditional polls that just recently accompanied most every marketing research have become obsolete nowadays. One of the principally new approaches to analyzing the behavior and motivational points of potential buyers is mapping […].

How to Motivate a Sales Team to Improve Each Rep’s Performance (3 “Types” and 12 Tips)

Sales Hacker

This sales rep talks about money, commissions, bonuses, comp plans, incentives, and their numbers start to drop when they feel like something may affect their compensation negatively. and always shares her opinion on how the money would be better spent in direct compensation to the reps.

New Partner Program


Trujay partners will increase overall customer satisfaction and revenues, as the program offers solutions that carry Trujay’s impressive NPS rating (82), and compensates for sales of these needed services. Trujay Group is happy to announce the launch of our new Partner Program.

Hacking the Performance Evaluation

Tom Tunguz

Self-improvement elicits better performance than compensation, but both motivators work. In a review, it’s easy to focus on the compensation elements to the detriment of the personal growth feedback. So, most reviews end up being about compensation, rather than self-development. Performance reviews tax organizations, managers and employees to such an extent that some companies have abolished them outright. Reviews are emotionally complex conversations.

Surprising Trends in Startup Founder Equity Stakes

Tom Tunguz

Earlier this week, I wrote about the increase in cash compensation and decline in equity grants to VPs of Engineering and Product in startups. The graphs are broken out by last Series of investment (A, B, C and D) and show the equity compensation trends of CEOs, VP of Engineering and VP of Product. Non-founder equity grants have remained relatively constant over time, with a recent spike in post-Series A CEO compensation apparent in the last year.

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5 Best Practices for Effective Customer Escalation Management


If the escalation is so problematic that the customer is seeking compensation, review their purchasing history before extending a compensation offer. High-value customers are more valuable to retain, so you may want to give them more generous compensation offers. Still, make sure all compensation offers are in your company’s best interest. Many companies are afraid to give escalation response teams leeway to compensate or close escalations.

Diverse Startups Do Better: How To Make Yours More Inclusive At Any Stage


Here are some samples that you can use: Example of a non-discrimination policy: (Your company) is dedicated to the principles of equal employment opportunity in any and all terms, conditions or privileges of employment including hiring, promotions, termination, training and compensation.

Expert Tips from Customer Success Leaders


Recommendations for Developing Compensation Plans for CSMs. Recommendations for Developing Compensation Plans for CSMs. There’s not a one size fit all approach for compensation. When changing your compensation plan, remember that people have difficulty with change.

Are We Investing Enough in Our Managers?

Tom Tunguz

80%+ of startup operating expense flows to compensation. Seven people’s compensation might total an annual budget of $1.5M I met a seasoned executive recently. He made a bold claim. “Management is an art, and one that is overwhelmingly undervalued in Silicon Valley.” ” I wondered, are we investing enough in our managers? Talent is the largest investment of an early stage company. Retaining these employees is good business.

1 Key SaaS Sales Metric to Fine-Tune Sales Productivity


You can argue about the best sales process, the most effective sales compensation plans, and territory management, but you can’t argue with concrete data on sales cycles, the benchmarks for sales cycles from peer companies, or the fact that shorter sales cycles are consistent with faster growth.

Startup Best Practices 16 - Option Pool Planning

Tom Tunguz

At some point after the Series B, the startup should create a compensation committee that includes the head of HR and two board members who are not employees of the company. Among other responsibilities, the compensation committee establishes standard offer ranges, which include salary and equity, for all the levels of new hires. The compensation committee benchmarks the company’s offers against industry survey data and adjusts as necessary.

Customer Success: Why it’s the New Sales Frontier

Sales Hacker

They’ll also describe best practices in onboarding, training, measuring, and compensating CS reps. Join Trish Bertuzzi, CEO of The Bridge Group, Inc and Natalie Severino, VP Marketing at

How to build, manage and scale a sales team – 12 strategies from the experts

Inside Intercom

The optimal sales team structure is one that is accretive, where, roughly speaking, each sales rep brings in at least 5x his or her total compensation. Choose a compensation model – salary or bonus-heavy compensation? Align compensation to how your buyer buys.

Sales Operations Demystified: What It Is, Why It Matters, and How To Do It Right

Sales Hacker

Implementation of Recommended Compensation and Incentives Program. Manage compensation. . Compensation plan. Implement compensation and incentives program. Ownership of talent development and compensation. Formulation of sustainable compensation plan.

The Rising Importance of Reseller Channels in SaaS

Tom Tunguz

Plus, there can be some complexities in sales compensation. How does a SaaS company compensate a sales person if they are competing with a channel partner to close the same account? The notion of channel sales in SaaS companies is becoming more common than in has been in the last few years, and for some businesses like Intacct, channel partnerships drive more than 50% of sales. Channels used to be about software customization, delivery and support.

Startup Best Practices 27 - How to Use Options to Retain Key Employees in Your Startup

Tom Tunguz

Otherwise, they may leave the business, lured by the promise of greater compensation elsewhere. By granting more options at the end of the second year equal to or greater than market comparables, the startup will ensure its compensation packages are competitive. With either rubric, the message is the same: the employee is doing a terrific job and the startup would like to mark their compensation to market periodically. You’re two or three years into your startup.

Six Key Benchmarks for Your SaaS Startup

Tom Tunguz

I’ve written about When to Hire Your First Sales Person and what a hypothetical compensation plan for sales people might look like. There I assumed the typical ACV/compensation ratio was about 4:1 but in practice that number is closer to 10:1.

The Three Questions to Ask When Hiring Your Startup's Head of Sales

Tom Tunguz

” They will hire the same people from their network, structure the compensation plan identically, and apply the same sales processes and strategies. How would you structure the compensation plan to meet the needs of our business? Mark Roberge, the Chief Revenue Officer at Hubspot, has spent 20 years in startups.

How Much Should You Pay Your SaaS Startup's Sales People?

Tom Tunguz

Next, we calculate the annual commission at 9% of ACV and assume that commission is 50% of total compensation - so we double the commission to figure the take home pay, excluding benefits, of a salesperson attaining quota. If we assume the 9% is only half of the total compensation, then the sales rep truly costs about 18% for take-home pay, adding 15k for benefits per year likely increases that figure to more than 20%. How much should your startup pay its sales people?

How to Build Your Sales Operations Team from Scratch


Quota and compensation planning. Sales operations has been around for quite some time, but lately the function has been gaining momentum. Instead of behind-the-scenes sales support, sales ops now acts as a strategic partner for sales VPs and leadership.

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Startup Best Practices 11 - The 9 Box Matrix Talent Model

Tom Tunguz

These calibrations ultimately inform compensation during annual performance reviews. Last, the management team implements a talent plan which invests in the four top right boxes and includes training, mentorship, assigning new projects and retention compensation. McKinsey developed the 9 Box Matrix in the 1970s to help GE prioritize investments across its 150 business units. Not all business units were equally attractive.

PODCAST 19: How to Become a Best-in-Class VP of Sales by 25

Sales Hacker

Cash Compensation vs. Equity [34:10]. Two is compensating marketing professionals a little bit more like salespeople. But when you talk about women negotiating for themselves, they tend to be actually much worse than men — especially around compensation.

Timing Cashflows of Your Sales Commissions and Your Customers

Tom Tunguz

When experimenting with novel compensation or new sales tactics, for use in the contract, ensure that your cash flows are well-timed Your sales team is starting to close some terrific accounts. As your startup grows, your sales team will experiment with different sales techniques. For example, qualification, pricing, positioning, incentives and contract structure. This is a wonderful phase for a startup. However, there’s a common mistake to avoid.