Sales Commission Structures

$80 Million Valuation. $12 Million ARR. And his Sales VP just bought a new Audi. (While the Founder hasn’t taken a salary in 6 months.) It looks like a "fairness" issue. But when I dug into the P&L, I saw it was actually a solvency issue. I sat with the founder as he reviewed the payroll. "We are growing 40% YoY," he said. "Why is there no cash?" I didn't guess. I looked at the Cash Conversion Cycle. And there was the leak. The Sales team was incentivized on Bookings (Net-90 terms). The Commission plan was built on Payouts (Net-30). Do the math: - Rep closes a $100k deal in January. - Rep gets paid $10k commission in February. - Customer doesn't pay the invoice until May. - For 90 days, the company is financing both the customer’s purchase AND the sales rep’s bonus. The founder wasn't running a SaaS company. He was running an interest-free bank. We didn't just "have a chat." We restructured the financial model. New Policy: Commission triggers on Cash Receipt, not Contract Signature. The VP argued it would hurt morale. I argued that insolvency hurts morale more. We implemented the change. The "Cash Gap" closed. The founder started taking a salary again in 90 days. This is why I always audit the Comp Plan before the P&L. If your incentives are faster than your collections, you are engineering your own cash crisis. Don't finance your own destruction. #CashConversion #Finance #Founder #SaaS

The singer Jessie J may have said “It's not about the money, money, money,” but sometimes it is… I’d argue that one of the biggest factors that impacts #CustomerSuccess and retention in SaaS companies is the sales comp plan. And there is no easy answer. Every sales coverage model and comp plan has pros and cons, with respect to churn and growth: 💡 TCV Comp: The “old school” model from on-premise software and hardware is to compensate salespeople on “total contract value,” regardless as to whether the bookings was new or a renewal. The upside of this model is salespeople have a big incentive to make sure clients renew. The downside is reps can make their quota on existing customer retention and growth can suffer. 💡 No Renewal Comp: If Account Executives make money only on new bookings, they can focus on growth. However, if a CSM needs help from a rep for a “resale,” the salesperson has no incentive to help. 💡 Partial Renewal Comp: Some companies give AEs a small amount of comp for renewals (e.g., 20% of on-target earnings come from renewals). On one hand, this is good because it gives reps “skin in the game” on renewals. On the other hand, the 20% dilutes rep commission on new bookings. In addition, the 20% may not be enough to incentivize action. 💡 Net ARR Comp: I’ve met a few larger organizations that pay a rep on the “net growth” in their territory. This means they give a rep a starting Annual Recurring Revenue base for a territory and then pay them on net growth of the base. For example, if the rep has 10 accounts totaling $10M of ARR, then they get paid only on growth ABOVE $10M ARR. This ensures the rep stays close to customers. But it definitely penalizes a salesperson for a big churn that may have been out of their control. 💡 Activation-Based Comp: Some companies try to walk the line by paying reps once clients are activated / onboarded. This ensures salespeople don’t (unintentionally) sell “bad deals” and do use their relationships to assure deployment. On the flip side, this approach can create tension between Sales and CS. What sales comp models have you tried and how do they affect renewals? There is no perfect answer. Every approach comes with a “Price Tag.” See what I did there?

I coach dozens of sellers making over 500K-1M/year, and there’s one thing they have in common which nobody talks about that’s foundational to their success: They have great comp plans! Each of these sellers has a high OTE (On-target Earnings), fair quota, and generous accelerators which allow them to get financially rewarded when they crush their number. So how do you know if you have a great comp plan which allows you to make life-changing money? In today’s video, I share everything you need to know about tech sales comp plans. This training includes critical information to maximize your income, including: - What are good OTE’s for SMB, Mid-Market, Commercial, Enterprise, and Strategic segments? - What is the quota range you should expect based on your segment? - What’s a great commission % in software sales? - What are accelerator bands and how do they work? - How much do you need to sell to make 500K-1M as an Enterprise AE? Here are a few of the top insights from the video: 1. The key to making 500K+ is the unique combination of a high OTE plus a low quota. This gives you an opportunity to blow out your quota and get into accelerators quickly, where the real money is made. 2.  Comp plans with a 5x OTE to quota ratio are highly favorable, 6x is much more common, and 7x is less than ideal. So if your OTE is 300K, a 1.5M quota is great, a 1.8M would be more common, and anything over 2.1M is less than ideal for making big money. Enterprise AE’s at large companies (Oracle, Salesforce, SAP) typically see 7x + ratios, since they have bigger deal sizes in that segment. I’ve seen clients with a 300K OTE and a 900K quota (3x ratio), which has incredible earning potential. I’ve also seen clients with the same 300K OTE and a 3M quota (10x), which becomes more challenging because you must sell 9M ACV to hit 300% of quota. Please note that I’m referring to growth quotas, not renewals. So if you work in a consumption model, just look at your growth number. 3. Most commission plans have accelerators that multiply 1.5x, 2x, and 2.5x when you overachieve. So if your base commission rate is 10%, that means you make 15%, 20%, or 25% of revenue based on the overachievement band that you’re in. 10% base commission is healthy, 15%-20% commission in accelerators is good, and anything over 20% is excellent. 4. The best comp plans have no commission decelerators. For example, anything over 200% will pay at the highest accelerator level. At larger companies, decelerators are more common, typically when you reach 200% of quota. This means that your commission rate goes down, which actually encourages reps to sandbag for next year once they reach the highest commission tier. Decelerators = demotivators. At the end of the training, I share a link to a free income planner to help you calculate how much you need to sell to make 500K-1M based on your own comp plan. Watch the full training here: https://lnkd.in/g_dptprk

I’m often asked, “What makes a fair commission structure?” Is there a threshold? Should new and legacy business be treated differently? And how much should you include? Here’s how to strike that balance between recruiter motivation & business profitability: 1: Define clear thresholds → Set realistic, achievable targets that align with market conditions → Thresholds can be motivating, but only if they feel attainable → A fair threshold means your recruiters feel challenged but not defeated 2: Separate legacy from new business → Consider a higher commission on new business to reward growth efforts and lower on legacy clients to support stability → Acknowledging the different effort levels here makes it feel fair on both sides 3: Keep it transparent → The best systems are clear and understandable.  → Set a straightforward formula that both sides can track in real-time, reducing questions and boosting trust 4: Regularly review the structure → Markets change, and so should your commission plan. → Build in annual reviews to keep the structure aligned with business goals and market shifts A fair commission structure rewards effort and quality without sacrificing profitability. It’s a win-win that builds long-term success for both recruiters and directors. If you’re rethinking your commission system, drop a comment or reach out.

403,000 creators on the roster for this Influencer campaign... 🤯 This Korean beauty brand quietly built one of the most effective influencer engines in the world. In 2024, they pulled in $350M profit with 71.7% YoY growth. Here’s how they did it: Their pricing is unbeatable. Quality is strong. Free delivery in the US + Europe. The product → solves itself. But the real growth lever? Influencer distribution at a scale almost no one talks about. When we started digging, we found hundreds of creators promoting them. Then it became thousands. Then more. In total, we identified 403,000 creators inside their influencer program — all posting across Instagram, TikTok, and YouTube. One of our team members (80K+ IG followers) even got free products from them. They are everywhere. Here’s the crazy part: Instagram alone brought them $73M in referral revenue last year. That’s 27.6% of their total revenue… from one channel. The content isn’t flashy. It’s not viral. It’s not meant to be. PR hauls. K-beauty reviews. Routine videos. Aesthetic product shots. Simple, predictable UGC. But when 403,000 creators post versions of the same thing every day… the internet gets saturated fast. This is the real engine: Their referral program turns small creators into a growth army. Tier 1 — Rising Star • 10% commission • No free products • Must have 500+ followers • Most people quit here — which makes the next tiers even more valuable Tier 2 — Star • Unlock at $300 referred sales • Monthly sponsored products • Priority access • Earnings for inviting other creators → This is where the flywheel begins Tier 3 — Superstar • Unlock at $5,000 referred sales • 11% commission • Double earnings with Rewards Links • $200–300 product bundles • VIP campaigns + manager • Annual gifts → Top creators stay loyal because the economics get better over time Here’s the twist: Creators earn the same amount the follower saves. If a customer saves $10, the creator earns $10. New customers → commission up to 11% Returning customers → 2–5% It’s aggressive. It’s simple. It’s addictive. Most creators end up with “YesStyle” in their bio and keep it there because it’s the easiest passive income they get. And no — their videos don’t go viral. They don’t need virality. They have scale. A single video getting 1,000 views doesn’t matter. A hundred thousand videos getting 1,000 views each is a different story. Add link-in-bio traffic + referral sharing + constant UGC visibility… And you get $73M in Instagram-driven revenue. If you want a full-breakdown comment "KOREAN" and I will send it to you. PS: must be following :)

Hiring enterprise AEs. $350k OTE. 45 interviews. 0 offers signed You think it's your brand. The market. Or your requirement to be in office 3 days a week.  It’s not. It's your commission plan. Experienced reps have spent their careers at companies that pay at close. Signed contract. 10% paid.  That's the model they know, the model they budget around – and the model they'll take over yours when they have a choice. Usage-based SaaS that pays monthly commission on actual consumption cannot compete with that. Not on talent. I keep seeing founders treat this as a motivation problem.  It isn't. It's structural. The fix is a split payout: 25% at signing, 25% at go-live, then trailing commissions on monthly usage, with a true-up at month 12.  Total commission lands near 10% of realized revenue — in line with traditional SaaS. The rep gets meaningful income upfront.  The company gets alignment between what it pays and what it collects. That's not generosity. That's the price of access to the candidate pool you actually want.

IMO more orgs should tie AE comp to what happens AFTER signature. I mean, your reps get paid at close. Then they tend to disappear. CS inherits an overpromised deal. Customer realizes 8-week implementation was actually 16 weeks. ROI projection was complete bullshit. 6 months later customer submits their churn notice and your rep's already spent their commish on a bunch of On Clouds and a fancy humidor. Comp plans reward the signature. Period. Doesn't matter if customer goes live. Doesn't matter if they hit their goals. Doesn't matter if they expand or churn. Just get the signature and move on. So that's exactly what your reps optimize for. You can easily set up a 4-tier commish structure that fixes this: Tier 1 - Base commission at signature: 8% of ARR. - Rep closes deal. - Gets baseline comp immediately. Tier 2 - Go-Live bonus (+1%): Total 9%. - Customer completes onboarding within agreed timeline. - Must be actively using core features. - CS confirms product deployment. Tier 3 - Success metric achievement (+1%): Total 10%. - Customer hits outcome from business case within 90 days. - Examples: cost savings target, efficiency gain, revenue goal, etc. - Must be documented and verified. Tier 4 - Expansion unlock (+2%): Total 12%. - Customer adds seats, upgrades tier, or buys additional product within 12 months. - Minimum 20% ARR expansion from original deal. - Rep also earns standard 8% commission on the new expansion ARR. So, what changes with this? Reps start asking different questions during sale: - "What does success look like 90 days after launch?"  - "Who's responsible for implementation on your side?"  - "What would cause this to fail internally?" They stop overselling. They qualify harder. They care about customer readiness because their comp depends on it. They stay engaged post-sale. They check in with CS. They help remove blockers. They build relationships that lead to expansion. An SA member we worked with rolled this out a bit less than 18 months ago. Churn dropped 22%. Implementation time dropped 31%. Expansion revenue doubled. Same reps. Same product. Different incentives. Some reps pushed back: "Why should I get penalized if customer doesn't implement properly?" The answer: you're not getting penalized. You're getting baseline commission at close. Bonus is for making sure they succeed. If you're consistently selling to customers who can't implement or won't see value, that's a qualification problem. Fix it. Best reps loved it. They were already doing this work. Now they get paid for it. Mediocre reps weren't huge fans. They were used to dumping deals on CS and running. Suddenly they had skin in the game. Three of them quit. Fine. Don't let the door hit you in the ass on the way out. If you pay reps to care about customer outcomes, they'll start caring about customer outcomes. Plus, your CS team will appreciate not inheriting disasters anymore.

QVC, Inc is the #2 brand shop on ALL of TikTok Shop. $18.1M in the last 30 days. 353,215 units sold. The best part? QVC has been running the TikTok Shop playbook for 40 years they just used to call it a TV channel. So how does a legacy home-shopping giant hit #2, right behind Medicube? By rebuilding their entire model hosts, hero demos, live selling, impulse buys — as a distributed creator army. 82% of QVC's revenue comes from one channel: → Affiliates: ~$14.8M (82%) → Self-promotion: $1.8M (10%) → Shopping Mall / organic: $1.4M (8%) They've turned 44,813 creators into virtual sales associates roughly 100x the creator network of a typical brand shop with 17–21% commissions (well above the 5–15% most brands offer), product seeding across nearly 50,000 SKUs so every creator's niche gets matched to something, and low creative mandates so casual affiliates can just post and cash in. And that army floods the algorithm at a scale most brands can't touch: → 93,799 videos in 30 days (~3,100 a day) → 26,088 livestreams (~870 lives a DAY — the QVC TV channel, reborn 24/7) → @qvc's own account did $1.3M from livestream alone Smaller brands get a couple hundred videos a month. QVC does that before lunch. But here's what makes QVC different from every viral beauty brand above and below them: They don't have a hero SKU. They have a department store. → ~50,000 SKUs = something for every creator's audience → No single product is even 5% of revenue — trend-proof and recession-resistant → A $20–$432 price ladder: $27 Mr. Christmas tree for impulse, $135 Bissell vac for replenishment, $179 Convert-a-Bench for the high-ticket gift buyer AOV lands at $51 — nearly 2x Medicube's $26. QVC proved you can win TikTok Shop without racing to the $15 impulse floor. Then there's the multiplier pure-play brands can't copy: decades of infrastructure. Instant supplier relationships to load 50K SKUs on day one. Logistics to actually deliver furniture and appliances. And 1.6M TV viewers who followed them straight onto TikTok. This is the entire TikTok Shop playbook, run by the company that basically invented live selling: I broke the whole thing down their full TikTok revenue model, the scaling pillars that got them to #2, the owned-livestream engine, and exactly what they're doing. Want the full breakdown and how we're seeing brands scale on TikTok Shop right now? Comment "QVC" and I'll send you the complete PDF. (Make sure you're connected with me so I can DM you)

Most founders set sales compensation too low at first. Then they overcorrect and overpay for talent. After hiring over 100 salespeople, I’ve found the compensation formula that actually works: Start with this principle: Your product's price must support the cost of sales. In other words, you can’t pay someone $100k per year to sell $1k SaaS subscriptions For B2B SaaS, use this simple math: - Annual quota should be 5x On-Target-Earnings (OTE) - Example: $500k quota = $100k OTE - Split OTE 50/50 between base salary and variable compensation - This keeps cost of sales at 20-25% of revenue (consider fully loaded costs) But the structure matters as much as the numbers: 1. No commission-only roles. Ever. 2. Pay "straight-line" up to 100% of quota 3. Add accelerators above 100% 4. Keep it simple - math should work on a napkin 5. No draw against commission for new reps For ramping reps, try this: Month 1: Full base + 100% variable (no quota) Month 2-4: Increase quota 25% each month Month 5+: Full quota Remember: Sales comp drives behavior. If you want to change behavior, change the compensation. Don't overthink it. Your future economics will wash out your current economics. Focus on getting good people and helping them succeed.

CEOs, CFOs, and RevOps Leaders—this is the silent drag on your SaaS growth. You’re investing in building a revenue flywheel, but if your incentive structures are not aligned across GTM teams, you’re likely spinning in place. Here’s what we’re seeing in most B2B SaaS orgs: 💰 Sales and Marketing are incentivized to build pipeline and close deals—regardless of fit or future value. 📉 Because teams are going wide across markets and use cases, companies suffer from low win rates, muted expansion, and retention risk. We’ve spoken with countless GTM leaders who use sales metrics like win rates, average contract value, and days to close to score accounts and prioritize their GTM strategies. They understandably prioritize Segment A.  This makes sense, understanding how we compensate and how we define success for our sales and marketing teams. Customer value metrics including lifetime value and net revenue retention are absent from their analysis.  These are the metrics that drive ARR growth and company valuation. But ask your Product, CS, Finance, or RevOps team—they’ll all point to Segment B as the key to durable growth. This is a classic example of incentive misalignment resulting in revenue drag. ✅ RevOps insight: To fix this, you need to align the incentive strategies across the GTM team with the drivers of company valuation: -Measure pipeline creation by ICP/Non ICP opportunity ratio.  Target +70% of pipeline in ICP. -Pay higher new logo commission rates for closed wins in high-value (LTV) customer segments -Include an NRR growth component in both marketing and sales incentive plans 💡 When your GTM motion prioritizes quality over quantity, you unlock efficiency, retention, and genuine scale. RevOps isn’t just reporting and operations—it’s the growth engine that makes alignment possible.