We created a library of compensation plan templates for you to use in order to simplify sales compensation design. With 20 adjustable templates, Compensation Hub is free to explore, modify, and share with your team.
Now, we’re sharing our most popular templates of the first quarter.
To our surprise, after actively campaigning for more multi-year accelerator programs to promote longer-term contracts, neither the Single Rate Commission with Contract Term Multiplier nor the Commission with Multi-Year Accelerators plans made the top three. (To see why we love these plans, see: 4 sales compensation best practices to help you for 2023, Multi-year deals are your most important play in 2023, and Is your sales comp plan fit for a recession?)
Instead, the Single Rate Commission, Commission with Accelerators & Decelerators, and Commission with Accelerators earned the top spots.
Below, we look at each plan and why leaders like them.
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A flat rate commission plan, also known as a single rate commission plan or fixed rate commission plan, pays a set commission rate on all deals. This rate remains the same regardless of quota attainment, different products, longer contract terms, or other variables.
It’s a near-perfect plan if you’re a small team with one to two sales reps. Leaders and reps alike love its simplicity and directness.
“I want the simplest plan there is,” said Lori Richardson, Founder of Score More Sales and Women Sales Pros. “This one is very easy to understand, and you won’t spend hours analyzing it or trying to game it. This plan could be a great starting point for a lot of people.”
With this plan, reps can understand how they’re paid and, as a result, focus their attention on deals rather than how to game their comp plan.
What is an accelerator in sales?
An accelerator is a commission rate that’s higher than the base commission rate and is typically earned upon reaching a certain threshold to attainment. Accelerators incentivize sales reps to continue performing at a high level even after they’ve achieved their quota.
The accelerator rate is often a multiple of the base commission rate, such as 1.5x or 2x.
Commission with Accelerators & Decelerators
This commission structure features a three-tiered system that motivates sales teams to achieve quota. And it does so by rewarding them with a higher commission rate on all deals beyond quota.
The addition of a decelerator pushes reps to achieve at least 50% of their quota goal in order to begin earning their full base commission rate. Before reaching 50% of their target, the rep earns half of their base commission rate.
Then, after passing 50% of their quota period’s attainment, the full commission base rate goes into effect. An accelerator, a rate that is 1.5x the base rate, then applies to all deals closed within the quota term after the rep reaches 100% quota.
While this plan adds complexity to tracking, Commission with Accelerators and Decelerators encourages reps to have a consistent flow of won deals throughout the quota period.
“When a rep misses their number badly, it cascades upward,” said Pavilion CEO and Founder Sam Jacobs. said. “I think it’s pretty compelling when a 10% miss on a $20M business equates to $2M. That’s why I think having a baseline level of productivity and performance like a decelerator should be baked into the comp plan.”
Commission with Accelerators
Not a fan of decelerators? You’re not the only one.
Decelerators are a hot topic on our webinars with many citing that this comp plan mechanic actually discourages reps.
If you’re in that boat, then consider our most popular compensation plan template of Q1: Commission with Accelerators.
This commission structure is designed to motivate and reward sales teams for exceeding their quota. Once the team passes 100% of its quota within the quota period, the commission rate increases for every subsequent deal.
This structure itself features a flat commission rate until the rep hits their quota. That means it’s easy to understand, and allows your sales team to feel rewarded even if they fall short of their quota while also rewarding overperformance.
“For an early-stage company between zero to $10 million in annual recurring revenue, I love a flat-rate commission with an accelerator,” said Insights Partners Operating Partner, Sales & Customer Success Pablo Dominguez.
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Curious about what other comp plan templates Compensation Hub includes? Check out 20 AE and SDR comp plan examples. Keep an eye out for Sales Leadership compensation plans coming soon.
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