From the course: Sales Operations
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Incentive compensation: Variable pay
- I want to talk to you about one of my favorite topics, money. Do I have your attention? Incentive compensation is a real specialty. And if you're new to it, I recommend bringing in either a consultant or an in-house person with experience in this area to perform a market analysis and give you some recommended target payout philosophies. This is tricky stuff, guys, and it's worth investing here at least when you're first gettin'goin'. There are three things you need to know to put together a great sales compensation plan. First you need quotas. Quotas are the target amounts that you want your salespeople to close during their comp plan period. The other two are variable pay and accelerators. We're gonna talk about accelerators later, but for now I want to talk about variable pay. Most sales comp plans have two components: a base salary and a variable payout. If you achieve 100% of your quota, then you get 100% of your variable pay. This is called target earnings, or OTE. For example,…
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