Marginal gains, compounding returns
You finally have your SaaS sales compensation plan up and running. And it’s working—for the most part. But after a few months, maybe those business goals continue to be out of reach or your sales reps aren’t performing as well as you’d like, or you simply feel like you’re paying too much.
One of the biggest things first-time founders intuit wrong is how much sales efficiency plummets … just as it is getting good. Usually, most SaaS start-ups follow a pattern where the CEO starts off doing founder-led sales. Then, after she hires a few sales reps, and makes a few mistakes.
Sales compensation is a more complex topic for SaaS/subscription revenue companies. Unlike traditional software sales, the job of sales doesn’t end when a new customer signs a contract. Instead, it is crucial to retain customers over many years, as that is how you maximize your revenues.
So a while back on SaaStr, we did a couple of posts about how B2B and SaaS marketing needed to catch up. That you needed your VP of Marketing to make a real lead commit, to have a true quota of some form. Not just get you blue pens with your logo on it.
One key post I missed on the VP Sales journey was how to pay this critical role. I don’t think it’s necessarily as nuanced and interesting a topic as how to pay and scale the sales team itself, or how to hire for this role.
I’m not ashamed to admit that when I set up our first SaaS sales comp plan, I had no idea what I was doing. In my first start-up, yes I sold to the enterprise. I sold $6m our first year (man, that sounds good looking back on it).