So recently I caught up with a sales exec I’ve known for a while that is doing pretty well, especially for this macro environment.

He’s making over $500,000 a year as an AE.  And that’s much, much, much more than he made in his last role.  And he deserves it — he’s crushing it.

And yet he just complained and complained and complained about his comp to me.  I asked him how much he closed, and how much he took home.  It seemed like a very fair comp plan to me.  Then I asked him if he felt underpaid compared to the other reps, and he said no, he wasn’t #1, but he was in the top tier.

No, he complained about his $70k base salary.

I talked to him and explained that it hardly matters in sales what your base is, what matters is attainment.  How much of your OTE you make, and how many folks, in general, hit their OTE.  That you really want 70% or more of your reps hitting full quota and full base OTE.

He got it, but he couldn’t get it out of his head he wasn’t being paid fairly.

I asked him what would be fair?  He said an $85k base.

From a very, very good rep making $500k+.

It was just a reminder to me how important psychology is in comp plans.  Everyone resents being “underpaid” — even if they aren’t.  And a tough learning for me is very few appreciate being “overpaid”.  They just adjust to higher comp.

So if nothing else, in tougher times, make sure folks are not only paid fairly, but, if possible, that they see it that way.  Many folks, especially in sales, won’t see comp the way you do, and importantly, won’t always see things holistically:

  • Sales reps will focus way too much on the nominal OTE and not enough on true attainment and what folks really take home
  • Sales reps can be very sensitive to having “high market” base comp, even if it doesn’t help them hit their OTE, or even makes it harder to hit their OTE
  • Sales reps do not like comp plans that are non-traditional, even if they come out ahead.  It’s usually way too much work to try to explain it to them.  Fair enough.
  • Sales reps really, really don’t like to wait for their bonuses.  Even if they’d make more if they did.  You often have to wait to pay bonuses in the early days until cash is received.  But later, it’s not worth it.

SaaS founders often aren’t quite as in tune with sales reps’ thoughts on comp as they think they are.  It’s worth it trying to get more aligned.

A related post here:

Dear SaaStr: Do Salary Increases Help With Retention?


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