Design a Sales Compensation Plan

Learning Objectives

• Design OTE and base/variable split
• Create quota-aligned commission structure
• Build accelerators and decelerators
• Model plan economics

Scenario

ScaleUp is redesigning compensation for next fiscal year.

Context:
- ARR: $8M, targeting $14M (75% growth)
- ACV: $30,000 average
- Sales team: 6 AEs, 3 SDRs
- Current quota: $600K/AE, 50% attainment average
- Problems: Top performers leaving, bottom performers coasting
- Budget: 18% of new ARR for sales compensation

Strategic priorities for next year:
- Land new logos (vs. expansion)
- Win in Enterprise segment (deals >$50K)
- Reduce discounting (current average: 22%)
- Shorten sales cycle (currently 75 days)

Instructions

1. 1Review company context and goals
2. 2Design OTE structure for AEs and SDRs
3. 3Create commission rates and thresholds
4. 4Build accelerator tiers
5. 5Add SPIFs for strategic priorities
6. 6Model expected payout distribution
7. 7Document plan rules and edge cases

Deliverables

• OTE structure for AEs and SDRs
• Commission rate schedule
• Accelerator/decelerator tiers
• SPIF program for strategic priorities
• Economic model with scenarios
• Plan document with rules

Evaluation Criteria

• Plan aligns with company strategy
• Economics work within budget
• Plan differentiates high/low performers
• Accelerators drive right behaviors
• Rules handle edge cases

Hints