- 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)