Cutting Through the Confusion of Sales Comp Plans
When it comes to paying salespeople, it can be difficult to determine the right split between guaranteed income and commission-based earnings. In this episode, the hosts lay out their approach to building sales compensation plans.
About This Episode
As a business owner, it’s important to ensure you’re attracting top talent while remaining profitable, and knowing whether you’re paying your salespeople too much or not enough can be challenging to work out on your own.
Brian asks Tim and Robb to share from their experiences of helping MSP owners devise these structures, diving into the philosophy behind setting base pay, bonuses, and commissions.
2:07 – Tim provides a quick overview of how he and Robb structure a sales person’s compensation, highlighting the difference in comps between one-year contracts and two-year contracts.
5:27 – Brian asks Tim and Robb to expand on their reasoning behind the way they handle one-year contract commissions. The guys discuss the importance of adopting a two-year contract minimum from a business perspective.
11:32 – Tim and Robb share their success benchmarks for a sales person, starting with expectations for new hires and moving into what they believe quotas should be for established salespeople. Brian asks them about evaluating a new salesperson’s effectiveness and ability at the 90-day mark, and they break down what an owner should see from a new hire at four months, five months, six months, and beyond.
16:54 – Tim lays out how to shift the compensation structure for companies that outsource lead generation and for those times when an owner – or someone else in the company – hands a prospect to a sales person.
20:18 – The guys calculate how much an MSP salesperson should be making annually with a base salary of $40,000, sharing that if they continually fill their pipeline properly and stay on target with closed deals, they could easily be making six figures in their second year. Tim and Robb wrap up the episode with a reminder that a salesperson should be able to figure out their commission in about five minutes, otherwise the compensation structure is too complicated and should be revised.
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