Creating a Sales Compensation Plan
Whether you’re building a sales compensation plan from scratch or re-building an old one, you should take the following steps in order:
- Understand the Basic Requirements of a Good Sales Comp Plan
- Establish Role Levels
- Determine Total On-Target Earnings (OTE)
- Decide Base Pay vs. Variable Pay (Commissions)
- Set Targets
- Plan Compensation for Onboarding and Training
- Know what to Include in a Sales Incentive Plan
- Create a Contract and Get Mutual Commitment
Once you understand how to create a fair compensation plan for your sales team, you can check out some examples: (see link)
- Sales Development Rep (SDR) Compensation Plan Example
- Account Executive (AE) Compensation Plan Example
Most relevant during:
GTM Fit phase
Scale phase
PMF phase
Most relevant for:
ACVs < $15K
ACVs $15K-$50K
ACVs > $50K
