Compensation Plan (Comp Plan)
The structure defining how reps earn variable pay, including base/variable split, quota, accelerators, decelerators, and clawbacks. RevOps typically models and administers comp plans.
A compensation plan is the structured framework that defines how sales representatives and other revenue-generating roles are paid. It combines fixed and performance-based pay elements to drive specific behaviors that align with company strategy.
Core Components
- Base salary: The guaranteed, fixed portion of pay that does not depend on performance.
- Variable compensation (OTE split): The at-risk portion tied to performance against quota. Common splits:
- Account Executives (AEs): typically 50/50 (base/variable)
- Roles with less direct selling (e.g., SDRs, CSMs): often 60/40 or 70/30
- Quota: The target metric (usually revenue or bookings) a rep is expected to achieve in a given period.
- Commission rate: The percentage of each dollar closed that is paid out as variable compensation.
- Accelerators: Higher commission rates that apply once a rep exceeds quota, rewarding over-performance.
- Decelerators: Lower commission rates below certain attainment thresholds, discouraging underperformance and sandbagging.
- SPIFFs: Short-term, targeted incentives (e.g., for selling a new product, multi-year deals, or strategic motions).
Why Compensation Plans Matter
Comp plans directly shape rep behavior: people focus on what they are paid to do.
- A plan that heavily rewards new logos will naturally shift focus away from expansion.
- A plan that pays on bookings without clawbacks can encourage discounting or low-quality deals.
Because of this, the compensation plan is one of the most powerful levers for aligning day-to-day sales behavior with the company’s strategic priorities.
RevOps’ Role
Revenue Operations (RevOps) typically partners with Sales Leadership and Finance to:
- Design and model plans: Evaluate different structures, OTE splits, and rates.
- Run historical scenarios: Use past performance data to estimate cost, payout distribution, and likely behavioral impacts.
- Implement systems and processes: Configure CRM, compensation tools, and reporting to track attainment and calculate payouts accurately.
Getting compensation wrong is costly: it can lead to overpayment, underpayment, and misaligned behaviors that hurt growth and profitability.