The Right Compensation Plan - Sales Influence Podcast - SIP 584
Update: 2025-08-18
Description
Compensation Structure
- A base plus Commission plan is optimal for long sales cycles (3-5 months), providing a motivating base salary and Commission tied to quota to encourage salespeople to accelerate revenue beyond targets.
- In this model, salespeople earn a percentage of base salary as Commission, with payouts starting at 50% of quota and increasing as they achieve higher percentages.
Motivation and Performance
- Accelerators like 150% payout for sales above quota and 200% payout for exceeding 1.5 times quota create financial energy driving salespeople to sell more.
- A quota-based Commission plan outperforms a percentage of sales plan by tying rewards to quota achievement rather than raw sales performance.
Plan Design
- Effective plan design involves setting a base salary, quota, and determining the Commission structure with specific percentages and payouts for each quota level achieved.
- This structure creates a financial incentive that motivates salespeople to hit their numbers and accelerate revenue beyond quota, benefiting both the individual and the company.
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