Help users design sales compensation plans. Use when someone is hiring their first sales rep, restructuring sales comp, trying to align sales incentives with business goals, or dealing with comp plan issues like sandbagging or churn.
Help the user design effective sales compensation plans using frameworks from 2 product leaders.
When the user asks for help with sales compensation:
Jason M Lemkin: "It's usually 50/50, right? 50% base, 50% bonus for a sales rep." The standard OTE structure is 50% base salary and 50% variable commission. This is a common baseline for quota-carrying roles.
Sahil Mansuri: "Sales comp plans are stuck in the stone ages... What we haven't done is built a modern technical sales compensation plan that actually aligns the needs and incentives of the business, the customer and the rep." Consider designing comp that rewards long-term retention and net dollar retention, not just closed deals.
If your business depends on customer retention, comp plans should include components tied to customer outcomes, not just initial bookings. Reps who close churny deals should earn less than those who close sticky customers.
New sales hires need ramp periods with guaranteed draws or reduced quotas while they learn the product and market. Typical ramps are 3-6 months for SMB and 6-12 months for enterprise.
Complex comp plans with many variables lead to confusion and gaming. Simple plans where reps understand exactly what actions increase their pay are more effective.
For all 2 insights from 2 guests, see references/guest-insights.md