sales-compensation
Design sales compensation plans aligned with business goals and customer retention.
- Starts with the standard 50/50 base-to-variable split, then adjusts based on sales cycle length, customer churn patterns, and business model to avoid misaligned incentives
- Emphasizes tying compensation to customer outcomes and net dollar retention, not just closed bookings, to reward sticky deals over churny ones
- Guides ramp structures for new hires (3–6 months for SMB, 6–12 months for enterprise) with guaranteed draws or reduced quotas during onboarding
- Flags common pitfalls: over-complicated plans that confuse reps, missing churn accountability, and accelerators that kick in at wrong thresholds
Sales Compensation
Help the user design effective sales compensation plans using frameworks from 2 product leaders.
How to Help
When the user asks for help with sales compensation:
- Understand the business model - Ask about their sales cycle, ACV, and customer retention patterns
- Identify current problems - Determine if there are misaligned incentives or retention issues
- Design aligned incentives - Help them create comp plans that drive the right behaviors
- Consider ramp and quotas - Guide them on structuring pay for new hires
Core Principles
The standard 50/50 split is a starting point
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.
Traditional comp plans are misaligned
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