Dan Martell - February 05, 2018


How To Compensate & Scale Your Startup Sales Team

Topics
compensation and scaling sales team
Hosted by
Dan Martell
Episode #9 How To Coach & Advise Startups w⧸ Peter Lalonde @ Positive Venture Group 8 Steps To Succeeding In Life

Episode Stats


Length

5 minutes

Words per minute

166.4

Word count

979

Sentence count

52


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

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.

Transcript

Transcript generated with Whisper (turbo).
Topics generated with Qwen2.5-3B-Instruct.
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00 Hi, I'm Dan Martell, serial entrepreneur, investor,
00:00:02 and creator of SaaS Academy.
00:00:03 And in this video, I'm gonna share with you
00:00:05 the five steps to compensating and scaling
00:00:08 your startup sales team,
00:00:10 specifically around hiring efficiently,
00:00:13 managing the expectations for comp structures,
00:00:16 and growing your team.
00:00:19 Now, be sure to say to the end,
00:00:21 where I'm gonna share with you an exclusive video
00:00:24 on building your sales engine.
00:00:30 So when you start building out your sales team,
00:00:44 maybe you're worried that you're doing it wrong,
00:00:48 that you're probably gonna put yourself in the hole
00:00:50 or that the person that you hire
00:00:51 is gonna feel motivated enough to really sell the product.
00:00:54 Maybe the pricing hasn't been figured out.
00:00:56 What I wanna share today are the five steps
00:00:58 to get you to a point where you feel
00:00:59 confident that you're moving towards the right direction
00:01:02 to build a fair comp structure for your sales team
00:01:05 where they can feel value-added, covered,
00:01:08 and also feel like they have room to grow
00:01:11 within your business.
00:01:12 Step one, paying a base salary.
00:01:16 Now, I really think it's important
00:01:17 when you hire salespeople to cover
00:01:19 some level of base salary.
00:01:21 I know there's days and areas
00:01:23 where you can pay somebody commission only
00:01:26 and have a churn and burn kind of culture,
00:01:28 but as I've seen, as I've worked on personally scaling
00:01:31 my own sales teams and helping my clients that I coach
00:01:34 scale to 150 salespeople plus,
00:01:37 is having that base really allows somebody to feel confident
00:01:40 that as you're investing in them, learning, training,
00:01:44 and growing, that they don't have to worry month to month.
00:01:47 The last thing you wanna do is invest in somebody
00:01:48 for a couple months, only having them leave
00:01:50 because financially they can't afford to keep on that track.
00:01:54 Step two, set a quota.
00:01:57 When you start off in sales,
00:01:58 it's really important to have a target
00:02:00 because you wanna know like,
00:02:01 what are the expectations for me?
00:02:03 If I wanna know, you know,
00:02:04 when I'm playing a game of soccer,
00:02:05 I wanna know what's the scoring structure?
00:02:07 Where's the goal?
00:02:08 What's the rules of the game
00:02:10 so that I understand what my target is?
00:02:12 And the same thing is for sales.
00:02:13 Understanding my quota gives me that mark.
00:02:16 Now, when you're starting off,
00:02:17 there's a good chance that you're not gonna hit that,
00:02:19 but at least you understand
00:02:20 what percentage of quota that you're hitting.
00:02:23 And over time, you wanna keep having that percentage go up
00:02:26 and up.
00:02:27 So it's really important that as a founder,
00:02:28 you set that quota for your sales team based on your industry
00:02:32 and the pricing of your product.
00:02:34 Step three, have a variable compensation component.
00:02:39 This means that a percentage of their pay
00:02:41 is based off of sales that they're making.
00:02:44 Typically that falls around 10%.
00:02:46 So whatever they sell on a monthly basis,
00:02:49 they're getting 10% added on top of their base salary
00:02:52 so that they have a target.
00:02:55 so quota would be 100%.
00:02:56 They know that as they grow their sales revenue,
00:02:59 they're gonna get paid a bigger and bigger commission check.
00:03:01 It's important to align their activities with incentives
00:03:05 that drive the business forward.
00:03:07 So having that variable structure is the way to do that.
00:03:10 Four, use sales accelerators.
00:03:13 So as a rep kinda grows and hits a higher percentage
00:03:17 of their quota, eventually there's gonna be a magical day
00:03:19 where they hit 100% or higher.
00:03:21 And what you wanna do is you wanna give them
00:03:23 an incentive to do that.
00:03:24 And the way you do that is through an accelerator.
00:03:26 Typically, you know, 15% is what I've seen.
00:03:29 So essentially, if they're at 10% sales
00:03:31 on a variable comp structure, once they hit 100% plus,
00:03:35 they get 15% on the previous sales
00:03:38 and any more they do ahead of that
00:03:40 so that they're feeling motivated to not only hit quota
00:03:43 but to crush it.
00:03:44 So you wanna do that through an accelerator mechanism.
00:03:47 Five, hire a sales manager.
00:03:49 Now, it's gonna be different for every kind of company
00:03:51 but typically, if you've got 10 sales rep,
00:03:53 and you can afford to hire a sales manager.
00:03:56 And what you wanna do is you wanna set their quota,
00:03:58 because they gotta kind of perform,
00:04:00 at 80% of the quota for their sales team
00:04:05 and allow them to manage.
00:04:06 And manage means setting up a training structure,
00:04:09 really coaching their new hires,
00:04:11 making sure that their reps are becoming efficient
00:04:13 and continue growing their quota structure,
00:04:15 hiring, firing, setting those expectations,
00:04:19 refining the pricing model,
00:04:21 ensuring that the reps are pushing the right products
00:04:23 that have the highest gross margin within your company.
00:04:26 And the way I think about it is that if you can get a new rep
00:04:29 up to speed within six months,
00:04:31 let's say 80% of quota within six months
00:04:34 and you wanna keep hiring because that's a great trend
00:04:36 and that's what you wanna hold your manager to.
00:04:39 So quick recap, one, make sure you pay a base salary.
00:04:42 Two, set a quota for them to hit.
00:04:44 Three, have a variable component of their comp structure.
00:04:47 Four, have accelerators that gets them excited
00:04:50 about growing in five, hire a manager at scale
00:04:53 so that you can manage your salespeople,
00:04:54 get them efficient and keep growing your business.
00:04:56 As I mentioned, I have an exclusive video linked up below
00:05:01 on the three forces of the sales pipeline.
00:05:04 And if you wanna watch that, just click that below.
00:05:06 It's not public, it's an exclusive for you.
00:05:09 If you like this video, be sure to click
00:05:11 the like button below, share it with a friend
00:05:13 and subscribe to my channel as per usual.
00:05:15 I wanna challenge you to live a bigger life
00:05:16 and a bigger business.
00:05:17 Thanks for watching and I'll see you next week.
00:05:20 Cool.
00:05:23 Thank you.