How should I structure comp plans for SDR, AE and VP of Sales?

Answered by: Ravi Mohan, Managing Director

Category: Passionate Teams

Designing compensation plans for sales and business development representatives, head of sales, sales engineers, etc., is dependent upon the objectives of a company. For example, if a company is about to launch a product and they want to recruit a set of beta customers, they might pay a sales rep and/or a vice president of Sales a fixed fee for each beta customer, so the compensation would be $X base salary + $Y for each beta customer. It may also require a "draw" to attract the sales representatives.

On the other hand, a company with $20M of annual recurring revenue needs an integrated compensation plan that covers all the go-to-market professionals. Compensation consists of a base + commission for every business development professional, sales representative, sales manager, VP of sales, etc.  In between these two scenarios, there are a variety of different options to align the go-to-market team incentive with the objectives of the company. These are broad parameters but it provides a framework to define an appropriate compensation plan. We will continue to supplement this answer with specific examples and data.