From the course: Sales Operations
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Incentive compensation: Accelerators
- To build an incentive compensation plan, you need three things. You need your reps quotas, you need to know what their variable pay will be, and the last thing you need to know is what will their accelerators be. And to understand accelerators, we need to understand how salespeople are paid. If we know the quota, and we know the variable target, the payout percentage is simply the quota divided by the variable pay. So for example, if the quota is one million dollars and the variable pay is $100,000, the payout percentage is 10%. In a flat line plan, for every $1 you sell, the sales rep would get 10 cents, right? However, most plans actually have a slope so the payout percentage that you get paid is less at the beginning and more at the top. This is helpful from a financial planning perspective as well as to make sure that your best reps get paid more. Using the same example above, if you set that same plan, but you paid out 5% for the first 500,000 of quota attainment, and 15% for…
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