Dear SaaStr: Should I Cap Commissions of My Top Salespeople? They Make So Much
Not until the company is very big — if even then.
It’s often the case that top sales reps close 2x to as much as 5x as much as an average rep. With the exact same / equal leads. And you may even end up with a rep that makes 8x or more than the average, if they can close just a ton of revenue.
And if you have a really good team, they may all end up making really good money.
It may often seem almost … easy.
It isn’t easy. It almost never is.
The last thing you want to do is dis-incent your top reps from making a ton of money. You want them to keep running. Especially when leads are relatively scarce and precious. A great rep not only closes a higher % of deals, but she also tends to generate more revenue per lead. You want to encourage that, not discourage it.
The day comes for most enterprise SaaS companies as they approach $100m when one senior sales exec makes $1m a year.
That’s a good day. Because the company probably just closed a $5m TCV deal.
Now … at some point, you’ll be so big, and sales ops so sophisticated, and your brand so strong … that you may want to somewhat cap commissions, or at least strategically reduce them as a percent of revenue. The “old quotas are going up again” thing, one way or another. But that’s a long ways off. Often well past $100m-$200m in ARR or later. Maybe never. Leads in SaaS rarely close themselves.
A bit more here: Why a Great Rep Can Close 9x More Than a Poor Rep, and Even 2.5x More Than a Good Rep | SaaStr and Your #1 Sales Rep Should Be Driving an M6 Convertible By Month 12. (And Not Buying a Panerai Watch.) | SaaStr
image from here: 110201 sales comp ppt