In SaaS business, how should I handle commissions in a case that a salesman closed an initial smallest-product sale for 1 user, and after some time, the client upgraded to the biggest product for 10 users?

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JASON LEMKIN

There’s no perfect answer here, but what most startups do is comp the sales rep for any additional revenue in the 3–12 months following the sale.

This will frustrate you, especially if the upgrade is from customer success, or is simply automated. You’ll have to pay up in a scenario where it seems the rep did no work.

But that’s not the way to think about it. You have to align incentives, and sales reps have to make an honest wage. And sales is hard.

If the upsells are super easy, and the reps don’t have to do much, rather than take away the commission … think about increasing the quotas. That usually will align behaviors and incentives better.

By paying the reps on all the revenue in Year 1, or at least, the first X months … you incent the rep to go “all in” helping and guiding the prospect during the sales process.

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Published on November 8, 2017
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