You always want to compensate your reps based on what they can actually control. You want to tie as much of people’s compensation as you can to things like “meetings set” or “demos given” — actual activities. When you’re at a startup, it’s hard to figure out what your quotas should be — there’s usually no precedent, so you throw a number out there, and if someone hits 100% of the quota, you still don’t really know if they’re a good rep or not. You have no idea what good is, and anyone can get lucky occasionally. Focus on metrics like close ratio. How many deals on a rep’s plate resulted in a close? Now look at how this number stacks up against their rate and frequency of engagement with prospects. If someone has a lot of good engagement with prospective customers but they have a low close ratio, that doesn’t mean they’re a bad rep. It means they need help.
Author: Don Otvos
Source: First Round Review
Subjects: Compensation, Human Resources, Marketing / Sales