RevOps Co-op Weekly #113 - Expert Advice on How to Optimize Your 2023 Commission Plans
Compensation plans are as essential to a B2B business as its products and services. Why then, do they cause consternation? Because they are complex, detailed and ever-evolving.
RevOps Co-op provides resources, content and community for those who ❤️ revenue operations. This weekly newsletter features collected tweets, posts and thoughts on a variety of RevOps topics. We also have a private Slack community with > 7000+ RevOps pro’s from companies like Slack, Lyft, Clari, Miro and more 👉🏻 click here to join.
📣 COMMUNITY ANNOUNCEMENT! 📣
RevOps education is back…AND based on community feedback, the course catalog has expanded!
The Q1 2023 RevOps Co-op Education and Course catalog is now live! We've got 2 new additions that you should scope out:
Unleashing RevOps Impact (R.O.I.) by Jeff Ignacio (ex-Amazon, ex-Google, currently Head of SalesOps at Forethought.ai)
Course Overview: Foundational RevOps course that covers everything from marketing to sales to customer success; great fit for RevOps professionals between the roles of individual practitioner to Director level looking to level up their RevOps game
Sales Operations Masterclass by Jeff Ignacio (ex-Amazon, ex-Google, currently Head of SalesOps at Forethought.ai)
Course Overview: Learn advanced SalesOps skills; this course takes a deep dive into Sales Operations and covers everything from territory management to CRM setup best practices to forecasting and everything in between; great fit for any SalesOps practitioners looking to gain in depth knowledge in the SalesOps field
Product Management Fundamentals for RevOps by Erol Toker (ex-Google, now CEO and Founder @ Truly.co)
Course Overview: Learn the product management skills that help companies like Google and Amazon deliver better products, with great adoption and happier users, so that you can deliver the best "RevOps product" possible; this course is a great fit for anyone with ownership over the RevOps function (whether you're leading a team or a team of 1)
Expert Advice on How to Optimize Your Commission Plans for 2023
Compensation plans are as essential to a B2B business as its products and services. Why then, do they cause consternation? Because they are complex, detailed and ever-evolving. Knowing how much frustration is out there, experts from Spiff, a commission management platform, joined Matt Volm, CEO of RevOps Co-op to dig deep into comp plans. Max Sadler and Cortney Gardner, both Senior Solutions Architects with Spiff bring it all together in a recorded Q&A session.
Compensation plans.
Essential? Check.
An ongoing source of drama? A never-ending saga? Double-check.
But, when a comp plan is done right, it can be the secret sauce your team needs to do their best.
When building a comprehensive compensation plan for a sales team, we need to take into consideration the specific items that make your product and sales cycle unique. For example, you may decide that 30 demos a month is reasonable, but how complex is your product and how big of a buying decision is it for your customer? This may cause your sales team to fiercely go after the 30 demos, but most of them will hold to real potential to close.
Then the million dollar question arises, how do you compensate someone balancing the amount of effort with the amount of dollars closed - or not - on a deal? And how do you make improvements to ensure the goal aligns with your team’s capacity, and that every engagement is directed to the correct target using the correct tactics?
To answer those and other questions, we gathered in a Q&A session where participants watched Cortney, Max and Matt take a couple of real-life (but anonymous) comp plans apart, then discussed how they could be built better. With a full-house of RevOps pros on the call, there were plenty of questions that revealed important information to make use of in your next comp plan review.
Comp Plan #1 – BDR
The first comp plan presented in the Q&A session was for 5 Business Development Representatives in a growing tech startup at Series C and about $35 million raised.
The plan is based on:
- 20 demos per month quota
- Compensation of $70,000 base and $30,000 variable
- Average sales price is $60,000, sales cycle is 120 days
- Payouts are monthly
Many start ups tend to begin with a robust sales department and consider every lead ready for sales, which will end up in the hands of a BDR.
“I find it pretty surprising that the BDR is giving the initial demo,” Max says. “This could indicate that it’s a pretty straightforward product.” If the product is straightforward, a higher number of demos would not hurt, but it’s also important to take into consideration the experience level of the BDR team, and how many of those leads could be nurtured by marketing before handing them off to sales.
From Max’s perspective, it seems counterintuitive given that it’s a volume game. Plus, sales cycles and payouts are not in alignment.
When a team is scrambling for leads, going after everybody will not increase sales. It’s important to bring transparency among stakeholders to deploy the right strategies to qualify your leads, and create realistic goals for sales. This quantity play may not lead to as high of closure rates, as stated by Cortney:
“If you are incentivizing your BDRs to get quality versus quantity, your AEs are going to most likely close more deals at a higher win rate.”
Improvement Potential
It’s okay, but…
“Bringing a measure for lead quality would obviously improve things for this company”, says Matt,” but criteria for that needs to be in place and universally understood”. That’s where a RevOps conversation can start by bringing together sales and marketing to work on data segmentation, launch some nurturing campaigns and pass only qualified leads to sales.
That can help to improve the sales process, but we still need to find out how to compensate the team.
“Compensate based on sales accepted leads,” he says. “Were they the right job title, right level, right company characteristics?”
“This is something we’ve actually done a lot of work internally at Spiff here,” says Max.
“Coming up with those criteria of what qualified actually means. There’s some simple criteria you could put in there.”
This could include readiness to buy, technical fit and ability of the contact to push the sale forward in their organization. Max also recommends a mix of incentivizing both volume and qualified leads. Compensation could also include rewards for size of the deal or contract length, but it’s all based on the business’s objectives.
“It doesn’t have to be all or nothing,” he says.
While moving the sale towards closing becomes the AE’s role, having a small amount of compensation for the BDR when a deal closes is “that extra cherry on top,” he says, noting it also helps ensure higher quality leads.
…There’s more! Read full Blog here 👉 Expert Advice on How to Optimize Your Commission Plans for 2023
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RevOps Co-op provides resources, content and community for those who ❤️ revenue operations. This weekly newsletter features collected tweets, posts and thoughts on a variety of RevOps topics. We also have a private Slack community with > 7,000+ RevOps pro’s from companies like Slack, Lyft, Clari, Miro and more 👉🏻 click here to join.