Dear SaaStr: What’s The Best Way to Set Targets for the Sales Team?

Dear SaaStr: What’s The Best Way to Set Targets for the Sales Team?

First, I try to model 3 overall plans for the year:  C-90, C-60, and C-10, not just for the sales team, but the whole company. The C is for “Confidence”.  The odds you think you can hit it, from the CEO’s perspective.  A bit more on how to do that here.

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  • The base plan, the plan you use for the overall sales and revenue goals, is the C-60 plan.  A plan I as CEO/founder/etc. have a 60% confidence we’ll hit.
  • And if we hit the C-10 plan, everyone should get a significant bonus.  That’s the stretch goal.
  • The C-90 plan (the one you should make almost certainly, unless we really screw up) I only use for financial planning with the CFO.  We use that for worst-ish case cash planning.  I don’t share that with the team or externally.

So:

  • First, figure out the C-60 Plan.
  • Then, from that, figure out quotas that are realistic, that at least 60% of the sales team can hit.  You don’t want quotas no one can hit.  That’s demoralizing and counter-productive.  Use your top-performing reps to figure out what a Pretty Good rep can do.
  • Pay them market if they hit these quotas.
  • Pay them real money if in the end, they hit the C-10 plan.  And focus that back on comp for blowing out the quota.

How I do it, at 20,000 feet, at least.

Published on June 6, 2022

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