Dan Martell - How To Compensate & Scale Your Startup Sales Team

When you start building out your sales team, maybe you're worried that you're doing it wrong, that you'll put yourself in the hole, or that the person you're hiring isn't going to be motivated enough to sell the product? Maybe the pricing hasn't been figured out, or maybe the pricing isn't figured out yet? What I wanna share today are the 5 steps to get you to a point where you feel confident that you re moving towards the right direction, to build a fair comp structure for your team where they can feel value added, covered, and have room to grow within your business.

00:00:00.000 Hi, I'm Dan Martell, serial entrepreneur, investor,

00:00:02.100 and creator of SaaS Academy.

00:00:03.680 And in this video, I'm gonna share with you

00:00:05.680 the five steps to compensating and scaling

00:00:08.240 your startup sales team,

00:00:10.340 specifically around hiring efficiently,

00:00:13.840 managing the expectations for comp structures,

00:00:16.560 and growing your team.

00:00:19.920 Now, be sure to say to the end,

00:00:21.260 where I'm gonna share with you an exclusive video

00:00:24.360 on building your sales engine.

00:00:30.000 So when you start building out your sales team,

00:00:44.980 maybe you're worried that you're doing it wrong,

00:00:48.120 that you're probably gonna put yourself in the hole

00:00:50.260 or that the person that you hire

00:00:51.700 is gonna feel motivated enough to really sell the product.

00:00:54.680 Maybe the pricing hasn't been figured out.

00:00:56.340 What I wanna share today are the five steps

00:00:58.140 to get you to a point where you feel

00:00:59.620 confident that you're moving towards the right direction

00:01:02.660 to build a fair comp structure for your sales team

00:01:05.820 where they can feel value-added, covered,

00:01:08.820 and also feel like they have room to grow

00:01:11.020 within your business.

00:01:12.600 Step one, paying a base salary.

00:01:16.180 Now, I really think it's important

00:01:17.540 when you hire salespeople to cover

00:01:19.600 some level of base salary.

00:01:21.700 I know there's days and areas

00:01:23.500 where you can pay somebody commission only

00:01:26.020 and have a churn and burn kind of culture,

00:01:28.500 but as I've seen, as I've worked on personally scaling

00:01:31.400 my own sales teams and helping my clients that I coach

00:01:34.620 scale to 150 salespeople plus,

00:01:37.320 is having that base really allows somebody to feel confident

00:01:40.600 that as you're investing in them, learning, training,

00:01:44.400 and growing, that they don't have to worry month to month.

00:01:47.160 The last thing you wanna do is invest in somebody

00:01:48.820 for a couple months, only having them leave

00:01:50.600 because financially they can't afford to keep on that track.

00:01:54.400 Step two, set a quota.

00:01:57.440 When you start off in sales,

00:01:58.880 it's really important to have a target

00:02:00.380 because you wanna know like,

00:02:01.600 what are the expectations for me?

00:02:03.240 If I wanna know, you know,

00:02:04.520 when I'm playing a game of soccer,

00:02:05.620 I wanna know what's the scoring structure?

00:02:07.720 Where's the goal?

00:02:08.940 What's the rules of the game

00:02:10.460 so that I understand what my target is?

00:02:12.200 And the same thing is for sales.

00:02:13.780 Understanding my quota gives me that mark.

00:02:16.640 Now, when you're starting off,

00:02:17.840 there's a good chance that you're not gonna hit that,

00:02:19.880 but at least you understand

00:02:20.760 what percentage of quota that you're hitting.

00:02:23.340 And over time, you wanna keep having that percentage go up

00:02:26.240 and up.

00:02:27.140 So it's really important that as a founder,

00:02:28.680 you set that quota for your sales team based on your industry

00:02:32.500 and the pricing of your product.

00:02:34.660 Step three, have a variable compensation component.

00:02:39.000 This means that a percentage of their pay

00:02:41.620 is based off of sales that they're making.

00:02:44.320 Typically that falls around 10%.

00:02:46.880 So whatever they sell on a monthly basis,

00:02:49.200 they're getting 10% added on top of their base salary

00:02:52.300 so that they have a target.

00:02:55.020 so quota would be 100%.

00:02:56.860 They know that as they grow their sales revenue,

00:02:59.420 they're gonna get paid a bigger and bigger commission check.

00:03:01.960 It's important to align their activities with incentives

00:03:05.300 that drive the business forward.

00:03:07.260 So having that variable structure is the way to do that.

00:03:10.360 Four, use sales accelerators.

00:03:13.280 So as a rep kinda grows and hits a higher percentage

00:03:17.400 of their quota, eventually there's gonna be a magical day

00:03:19.740 where they hit 100% or higher.

00:03:21.680 And what you wanna do is you wanna give them

00:03:23.240 an incentive to do that.

00:03:24.720 And the way you do that is through an accelerator.

00:03:26.480 Typically, you know, 15% is what I've seen.

00:03:29.500 So essentially, if they're at 10% sales

00:03:31.860 on a variable comp structure, once they hit 100% plus,

00:03:35.340 they get 15% on the previous sales

00:03:38.760 and any more they do ahead of that

00:03:40.500 so that they're feeling motivated to not only hit quota

00:03:43.240 but to crush it.

00:03:44.340 So you wanna do that through an accelerator mechanism.

00:03:47.380 Five, hire a sales manager.

00:03:49.980 Now, it's gonna be different for every kind of company

00:03:51.680 but typically, if you've got 10 sales rep,

00:03:53.940 and you can afford to hire a sales manager.

00:03:56.040 And what you wanna do is you wanna set their quota,

00:03:58.940 because they gotta kind of perform,

00:04:00.580 at 80% of the quota for their sales team

00:04:05.160 and allow them to manage.

00:04:06.560 And manage means setting up a training structure,

00:04:09.420 really coaching their new hires,

00:04:11.520 making sure that their reps are becoming efficient

00:04:13.860 and continue growing their quota structure,

00:04:15.960 hiring, firing, setting those expectations,

00:04:19.460 refining the pricing model,

00:04:21.140 ensuring that the reps are pushing the right products

00:04:23.780 that have the highest gross margin within your company.

00:04:26.600 And the way I think about it is that if you can get a new rep

00:04:29.620 up to speed within six months,

00:04:31.760 let's say 80% of quota within six months

00:04:34.200 and you wanna keep hiring because that's a great trend

00:04:36.680 and that's what you wanna hold your manager to.

00:04:39.280 So quick recap, one, make sure you pay a base salary.

00:04:42.320 Two, set a quota for them to hit.

00:04:44.740 Three, have a variable component of their comp structure.

00:04:47.560 Four, have accelerators that gets them excited

00:04:50.360 about growing in five, hire a manager at scale

00:04:53.020 so that you can manage your salespeople,

00:04:54.360 get them efficient and keep growing your business.

00:04:56.820 As I mentioned, I have an exclusive video linked up below

00:05:01.040 on the three forces of the sales pipeline.

00:05:04.260 And if you wanna watch that, just click that below.

00:05:06.460 It's not public, it's an exclusive for you.

00:05:09.520 If you like this video, be sure to click

00:05:11.080 the like button below, share it with a friend

00:05:13.000 and subscribe to my channel as per usual.

00:05:15.080 I wanna challenge you to live a bigger life

00:05:16.800 and a bigger business.

00:05:17.840 Thanks for watching and I'll see you next week.

00:05:20.300 Cool.

00:05:23.020 Thank you.

Dan Martell - February 05, 2018

How To Compensate & Scale Your Startup Sales Team

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