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Sales Compensation De-Mystified

Monica Alcerreca

Sales compensation seems to have a mystic aura around it. For SMB’s that are growing fast and looking to add some oh so valuable salespeople to their company, this may be the first time that you are starting to think about HOW you reward them. 


You may have seen some very complex and sophisticated sales compensation plans from large companies. (Think thresholds, quotas, accelerators, decelerators, OMG!). But if this is your first time implementing something for your SMB, where do you even start? 

What you need to know:

  1. First, know your financials! If you want to expand your business by 100K, hiring a Sales Director for 120K, the math just doesn’t work. Start by identifying what is the potential market for an area that a salesperson can cover. Think about what the person can realistically achieve, and if there is real untapped business out there. You know your business better than anyone else. Tap into your business and industry knowledge. You must think about the bottom line that you’ll be left with. Good metrics are often Gross Margin or Net Sales rather than top-line Sales as that is the absolute number you end up with. 
  2. Identify the type of sales role that can help you tap into such a market. Do you need a Cold-Caller, an Account Manager, a National Manager? Research the market salaries for such jobs to understand what those roles are worth within the market you are looking to hire. Put together the business case. How much do you have for investing in your salesperson at a specific target? 

For emerging companies, you may find that you are not yet at a point when you can afford your full-time salesperson and their sales compensation so you may need to continue doing the sales-piece yourself. This exercise will help you map out the point at which you will be ready. Sales comp is not a one-size-fits-all. 

We can create a detailed plan that is specifically tailored to your company and your goals! Whether it is a commission structure or bonus plan, we will help you identify the plan that best supports your sales objectives.