Building a world-class sales org | Jason Lemkin (SaaStr)
Topics covered
Popular Clips
Episode Highlights
Compensation Setup
Setting up initial compensation for sales hires can be a daunting task, but offers a straightforward approach. He suggests that in the early stages, the focus should be on whether a sales rep can close more than they take home, rather than getting bogged down in complex compensation structures 1. Jason emphasizes that the initial three months should allow reps to keep 100% of what they close, which, although not profitable, is an investment in their potential 1.
Everyone gets this wrong. We worry. Look at scale. When you're extremely mature, extremely mature, and very profful, you really got to tweak this stuff very carefully.
---
He also advises founders not to panic over high on-target earnings (OTE) figures, as the real cost is often much lower when broken down into monthly payments 2.
Compensation Adjustment
Adjusting compensation as the sales team grows is crucial for maintaining motivation and alignment with business goals. recommends starting with a simple plan where sales reps earn 100% of their sales initially, but this should only last for a quarter to avoid complacency 3. Over time, the goal is to have reps bring in four to five times what they take home, ensuring they are accretive to the business 3.
If you architect the simple sales funnel we talked about, and they're making a lot of money, you're making a lot of money and your equity is worth a lot of money.
---
He warns against keeping underperforming hires for too long, as it can be detrimental to both the company and the individual 4.