How To Compensate & Scale Your Startup Sales Team
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How To Compensate & Scale Your Startup Sales Team

– Hi, I’m Dan Martell,
serial entrepreneur, investor, and
creator of SaaS Academy. In this video,
I’m gonna share with you the five steps to
compensating and scaling your startup sales team, specifically
around hiring efficiently, managing the expectations
for comp structures, and growing your team. Now be sure to stay to the end where I’m gonna share
with you an exclusive video on building your sales engine. (upbeat music) So when you start
building out your sales team, maybe you’re worried
that you’re doing it wrong, that you’re probably
gonna put yourself in a hole, or that the person that you hire isn’t gonna
feel motivated enough to really sell the product. Maybe the pricing
hasn’t been figured out. What I want to share
today are the five steps to get you to a point
where you feel confident that you’re moving
towards the right direction to build a fair comp
structure for your sales team where they can feel
value added, covered, and also feel like
they have room to grow within your business. Step one, paying a base salary. Now I really think it’s
important when you hire salespeople to cover
some level of base salary. I know there is days and areas where you can pay
somebody commission-only, and have a churn-and-burn
culture, but as I’ve seen, as I’ve worked on personally
scaling my own sales teams, and helping my
clients that I coach scale to 150 salespeople plus is having that base
really allow somebody to feel confident that
as you’re investing in them, learning, training, and growing that they don’t have
to worry month to month. The last thing you want to do is invest in somebody
for a couple of months only having them
leave because financially, they can’t afford
to keep on that track. Step two, set a quota. When you start off in sales, it’s really
important to have a target because you want to know like what are the
expectations for me. When I’m playing
a game of soccer, I want to know what’s
the scoring structure, where is the goal,
what’s the rules of the game so that I understand
what my target is, and the same thing is for sales, understanding my
quota gives me that mark. Now when you’re starting off, there is a good chance
that you’re not gonna hit that but at least you understand
what percentage of quota that you’re hitting,
and over time, you want to keep having
that percentage go up and up, so it’s really
important that as a founder, you set that quota
for your sales team based on your industry and
the pricing of your product. Step three, have a
variable compensation component. This means that a
percentage of their pay is based off of
sales that they’re making. Typically that falls around 10%, so whatever they
sell on a monthly basis, they’re getting 10% added
on top of their base salary so that they have targets,
so quota would be 100%. They know that as they
grow their sales revenue, they’re gonna get paid a
bigger, bigger commission check. It’s important to align their
activities with incentives that drive the business forward, so having that variable
structure is the way to do that. Four, use sales accelerators. As a rep grows and hits a higher
percentage of their quota, eventually there’s
gonna be a magical day where they hit 100% or higher, and what you want to do
is you want to give them an incentive to do that, and the way you do that
is through an accelerator. Typically 15% is what I’ve seen, so essentially if
they’re at 10% sales in a variable comp structure,
once they hit 100% plus, they get 15% on
the previous sales, and any more
they do ahead of that so that they’re feeling
motivated to not only hit quota but to crush it,
so you want to do that through an
accelerator mechanism. Five, hire a sales manager. Now it’s gonna be different
for every kind of company but typically if
you’ve got 10 sales rep, then you can afford
to hire a sales manager, and what you want to do is
you want to set their quota because they
got to kinda perform at 80% of the quota
for their sales team, and allow them to manage. Manage means setting
up a training structure, really coaching their new hires, making sure that their
reps are becoming efficient, and continue growing their
quota structure, hiring, firing, setting those expectations, refining the pricing model, ensuring that the reps
are pushing the right products that have the highest gross
margin within your company. The way I think about it is
that if you can get a new rep up to speed within six months. Let’s say 80% of
quota within six months, and you want to keep hiring
because that’s a great trend, and that’s what you
want to hold your manager to. Quick recap. One, make sure
you pay a base salary. Two, set a
quota for them to hit. Three, have a variable component
of their comp structure. Four, have accelerators that gets them
excited about growing. Five, hire a manager at scale so that you can
manage your salespeople, get ’em efficient, and
keep growing your business. As I mentioned,
I have an exclusive video linked up below on the three
forces of the sales pipeline. If you want to watch that,
just click that below. It’s not public. It’s an exclusive for you. If you liked this video, be sure to click
the like button below. Share with a friend,
and subscribe to my channel. As per usual,
I want to challenge you to live a bigger life,
and a bigger business. Thanks for watching,
and I’ll see you next week. Cool. (clapping) (clapping)

About Ralph Robinson

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11 thoughts on “How To Compensate & Scale Your Startup Sales Team

  1. If you’re sick of selling and want to hire someone to lead this, then watch this video for specifics on compensating & scaling your sales team.

  2. Hey Guys. I just want to thank you guys alot. I'm a young entrepreneur from Dublin and I just got accepted into an incubator. I regularly watch and rewatch videos on this channel and on valuetainment. A massive thank you from myself and my co founder. You Rock Dan.

  3. Hi Dan! great video. Do you think that this same applies to other types of employees such as designers and engineers when you are scaling a small SaaS ? like year bonus / stock options for high performers or just a bonus split equally between team members?

  4. Watch that video on Vimeo in the past, glad you linked again because I learn more each time I watch it. Thank you!

  5. We know first hand how important it is to figure out pricing. Let us know if we can help you with that or if you'd like to collaborate.

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