Your sales team is heart of your sales organization. They drive revenue and help the company reach goals, but the need to be motivated to close deals. Your sales compensation plan, when designed strategically, helps motivate reps to reach and exceed quota. However, it's important to remember that not all sales team roles are the same, and your sales compensation plans should reflect that.
A Breakdown of Sales Compensation
Your sales compensation plan is made up of several parts, but ultimately, it lays out the plan for reps to achieve quota and reach company goals. Typically, sales compensation plans consist of a sales rep pay mix and commission structures.
Pay mix is the ratio of base salary to target incentives that make up the On-target Earnings (OTE) and is an important part of a pay philosophy. Companies may focus on different ratios of salary to incentive pay, but typically this varies by sales role. For example, a pay mix may be explained as 70% salary and 30% incentive pay, and displayed as 70/30.
Sales Commission Structures
Sales commission structures are the most common variable incentive pay model. There are several different kinds, including fixed-rate and tiered commissions. Essentially, each commission structure operates around a sales rep earning commission for each deal closed, whether it is a fixed dollar amount or percentage of total revenue for a deal.
Compensation for Different Sales Team Roles
Your team is made up of a wide variety of resources. While they share the same overarching goals, they do not all share the same responsibilities. First and foremost, it's important to consider what sales resources you need to achieve goals. This starts with a strategic sales plan, specifically, a sales capacity plan.
Your sales capacity plan helps you identify and ensure you have the right amount of people on the sales floor, the proper processes in place, and the right technology to make everything run smoothly. In turn, this helps you identify the specific sales roles you need on your team to be successful.
Start your planning by looking at your different sales roles and responsibilities. Typical sales roles include the Account Executive, Sales Development Rep, Sales Specialist, Customer Success Rep, and Sales Manager.
The Account Executive (The Closer)
Account executives (AE) are your traditional sales rep. They often work with prospects that have been previously qualified through an established interest in your company's products or services. Given their responsibilities, account executives have more impact on the ultimate outcome of a deal than any other member of the sales team.
Because AEs are primarily responsible for closing deals, they are the direct drivers of revenue. Therefore, they should be encouraged and rewarded for doing exactly that—closing deals (and the bigger the better).
Typically, AEs perform best with a pay mix of either 50/50 or 60/40.
Sales Development Rep (The Hunter)
Sales development reps (SDRs) are the traditional cold caller sales reps. They find new leads for account executives to track and are often the first point of contact a new lead has with your organization. SDRs uncover leads from a variety of sources, building contact lists, and then reaching out to contacts to gauge their interest.
Because Sales development reps are primarily responsible for bringing in new business, they are the not as closely involved with closing a final deal. They do, however, help qualify the best leads for AEs. Consider incentives that motivate SDRs to pass high quality leads to AEs and also reward them for leads they brought in that later close.
An SDR role is considered more of an entry-level sales role, and typically sees a pay mix of 65/35.
Sales Specialist (The Expert)
Sales specialists support sales by presenting demos and developing proposals. The more complex the sale, the more important it is to have a sales specialist present to help with any in-depth industry-specific questions and challenges that may arise.
Sales specialists don't close deals, but they play an important part in the sales process. Consider different incentives depending on the challenge of the sale. For example, incentives may differ for an existing customer demo vs. a new prospect demo.
Sales specialists tend to perform well with a 70/30 pay mix.
Customer Success Rep (The Farmer)
When a sale is made, the Customer Success Reps focus on renewing that sale as well as up-selling and cross-selling current customers with different add-ons and product offerings. Your customer success team helps guarantee you aren’t losing on-going revenue by tending to your current customers and reducing churn.
A well-built Customer Success Rep incentive plan will recognize the daily consultative outreach and up-selling activities that keep the Customer Success Rep harvesting.
Because the customer success role can be trickier by managing existing customer accounts, they usually have a pay mix of 75/25.
The Sales Manager (The Leader)
Every sales team needs a leader, and the best sales teams rely on a sales managers to keep them focused on the deals that matter. In addition to monitoring team performance, coaching is a critical responsibility for sales managers.
Because a large portion of sales manager responsibility lies in monitoring team success, they should be rewarded for their team's performance.
Because sales manager focus more on team performance than closing deals , a pay mix of 70/30 is common.
Moving Forward with Your Sales Team
With all of this, putting together your sales team requires more than hiring individuals to fill titles. It’s crucial you consider the specifics of each person’s tasks, how those responsibilities move the team towards the given goal, and how to properly reward each member for doing so. From there, the right incentives will motivate each sales team role to achieve company goals.
Get more sales compensation planning tips in our Ultimate Guide to Sales Compensation Planning.