Should You Pay Reps More For Deals They Hunt Themselves? Sometimes. Here’s When.

Q: Should sales reps be compensated differently based on how much prospecting they do? For example, if all of their leads come inbound (without effort on their part) should they receive a lesser % per deal vs a rep that prospects for their own leads?

It often makes sense to pay reps more from raw accounts they prospect than inbound leads. At least, in the earlier days.

But, context matters:

  • In a “lead rich” environment, where reps already have enough leads to hit their plan, there’s little incentive for a rep to do outbound. Even a higher commission won’t incent them in most cases. It’s just so much more work to do outbound than to call back someone that hits “Contact Me”. And the sales cycles are much faster from inbound leads.
  • In a “lead poor” environment, where reps get some leads but not enough to hit plan, there’s a partial incentive to do outbound, but only just enough. And not all inside reps are very good at outbound anyhow. But some will do it for a higher commission, or if forced to to hit their plan.
  • In field sales and Big Deals, outbound into strategic accounts is often core to the playbook. Even if there are leads and ABM, it’s rarely enough. $250k+ deals do come in from inbound, but in many SaaS companies, most come from a targeted account and proactive strategy.

So …

  • In a lead-rich inside sales environment, you can provide, say, a 50% higher commission for deals the rep prospects themselves into. But they may not do THAT much of it. You are better off putting energy into hiring a head of demand gen, and hiring more sales reps.
  • In a lead-poor inside sales environment, >some< reps will do more prospecting if you pay them more for deals they hunt — but only some. Others just aren’t good at it and still won’t do any. But paying the ones that want to more does tend to work as an incentive.
  • In a field environment with big accounts, you don’t usually need to differentiate between outbound and inbound. It’s a named account strategy, and everyone is covering their accounts one way or another.

Some guidelines. And a related post here: A Framework For Your First SaaS Sales Comp Plan | SaaStr

Published on February 25, 2021

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