Sales Compensation Dynamics and Managerial Alignment Discussion

In this, the first solo episode of Run the Numbers, our host CJ Gustafson gives a crash course in sales compensation. He explains how to go about designing sales rep comp plans, covering who’s involved in this process, getting the base to variable split right, on-target earnings ratios, how to baseline core achievement, the role of accelerators, what actually counts as a booking, and comp plan flaws, referencing Salesforce's early comp plans as a case study. He also delves into the art and science of SPIFs (Sales Performance Incentive Funds), explaining why SPIFs succeed or fail, the best times to run one, and how you should structure them. He finishes the episode talking about paying sales reps, commission rates and benchmarks for account executives, and what the total commission stack should look like after you factor in everybody.

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TIMESTAMPS:

(00:00) Preview and Intro

(01:44) Sponsor - Maxio | Leapfin

(03:58) Designing Sales Rep Comp Plans

(06:09) Getting the Split Right

(10:41) Baselining Core Achievement

(13:29) Sponsor - Mercury | NetSuite

(15:24) Accelerators

(18:05) Paying Sales Managers

(19:21) Case Study: Salesforce - Cash, Years, and ACV

(22:15) What Counts as a Booking

(23:15) Comp Plan Flaws

(25:31) An Introduction to SPIFs

(26:42) Why SPIFs Fail

(29:25) Where SPIFs Succeed

(30:23) Good Times to Do a SPIF

(33:37) SPIF Structures That You Can Copy

(35:28) Strategy Recap

(37:48) Paying Sales Reps

(40:44) The Total Commission Stack

(43:40) Factors That Can Push the Stack Higher

(45:15) Wrap

This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit cjgustafson.substack.com