The Truth about Sales Commission Plans

We all know how difficult it can be to hire a good sales team, and keeping them motivated once they’ve joined the team can be even harder. This is why executing a solid commission plan that everyone benefits from is key. Tom Tunguz wrote a killer article that breaks down the data of different commission plans.This article focuses on Flat, Linear, and Geometric quota attainment.

“When designing a sales compensation plan, it’s important to take into account the overall goals of the business including hiring an account executive retention, in addition to the desired efficiency of the sales organization. By calculating the commission rate and comparing it to benchmarks, your management team can determine exactly which trade-offs to make. Again, this is the most basic form of a sales commission plan, but it serves to explain the theory and the impact on other metrics.”

Tom T

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The Theory and Data Underpinning Sales Commission Plans

Every startup’s sales commission plan is different. But it’s key to understand the theory and the benchmark data that governs the creation of sales commission plans to create a good one for your business.