The way most SaaS companies structure sales leadership compensation creates inter-team competition in a *NEGATIVE WAY* that costs millions of $’s in revenue and 100’s of hours of headaches a year. Here’s why (and a simple change you can make to fix it): Typically sales managers are compensated on the performance of their direct reports. For example, if their 8 Account Executives crush their targets, the manager's compensation reflects this. This sounds reasonable, right? But what about the rest of the sellers? What about the other 25 Account Executives who need to succeed for your company to hit its growth goals? Sales Managers have different strengths and need to be incentivized to help the ENTIRE sales organization, not just THEIR team. That’s why every time I started a new sales leader role here’s what I did…. I switched the manager comp plan so 20% of their variable earnings were based on the total sales orgs performance, not just their direct reports. I often got pushback, but this simple change always led to stronger collaboration, teamwork, and unity. And helped us avoid account controversy, resentment and entitlement. Sales leaders aren't coin-operated, but they are human and humans respond to incentives. Make sure you're incentivizing the right behavior. And create one team.
Not a potential customer, but I'd like to learn more about your software. Is there anyone I could chat with to learn more?
the best revenue leaders prioritize the business success first, and align incentives and priorities at the org level accordingly.
as I was reading this I started getting nervous... "20% of their variable earnings were based" - WHEW!!!! I've tried doing a full shared pool based on the entire team's success and found that for front line managers, it didn't work. There was no need to worry about the low performers b/c the high risers would average the entire thing out. I like that you are talking about aligning team performance to individual manager comp - but keeping it as a smaller percent of their variable comp.
Great insights on sales leadership compensation! -Sales leaders aren't coin-operated, but they are human and humans respond to incentives- Collaboration is key to unity and success! 💡👏
Founder | 2x Exits | Start-up & scale-up SaaS vet up to +250m. | Empowering people to help each other grow self and business.
10mo“And helped us avoid account controversy, resentment and entitlement” Per usual, I agree. This statement to expand, allows the decisions and actions of the sales and post teams to benefit the customer. Which adds exponentially to revenue and retention.