February 2006

Sun Mon Tue Wed Thu Fri Sat
      1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28        

New Blog

Subscribe w/Newsgator

  • Subscribe in NewsGator Online

« Morning - 12/3/04 | Main | Noon - 12/8/03 »

Dec 04, 2003



Having built sales teams for startups and established companies in the enterprise software space, I like your article, but wanted to add some “devils advocate” type comments.

- “never hire a sales account exec who doesn't ask you about the comp plan 5 minutes into the first interview.”

Yes, any salesperson who claims they aren’t $ driven should look for a new line of work. However, in every deal (interview) you must correctly qualify the opportunity. Asking for the comp. plan right after small talk can be of little value until all the details are in place. A base, quota, and the OTE mean very little until you understand the Average Sales Price, length of sale, and the history of the sales organization. Hopefully a good salesperson will avoid interviews if the plan isn’t in the ballpark. In know a top 10 CRM player that has their reps. on a 400k OTE , $5 million quota. Last yr. The quota was only 2.5 and 3 reps. in NA went to club. Additionally all of the top reps. have since left the company. In context this may not be a good plan at all.

-“The maintenance on big lifestyles ensures that your sales people have an appropriate level of fear that keeps them running at full speed.”

This also can result in salespeople that over promise to close a deal. Also, nothing smells worse than a desperate salesman. A startup can add 3 great “lighthouse” accounts. If one deal goes south, most people won’t ever hear about the other two.

-“take your top sales performers at the end of the year and double their quota…”

Most companies have one plan for the direct sales team. Giving a higher quota is most likely going to push back the accelerators and create tension. If a middle of the pack rep is getting 8% commission on everything over $1 million, but the top performers don’t hit that level until $2 million, you will see a lack of loyalty and trust at the first sign of a big deal being pushed into later quarters.

Of course, everything depends on the context. The best way to build and run a sales team for Mercury Interactive is vastly different than a startup with a team of 5 people selling $1+ deals to the CFO. In fact I recently finished a project for an established ($400 million annual rev.) company that has added product sales specialist to their teams. These individuals help bring credibility to the sales process. Expensive suits are nice, but the CFO is going to be more impressed with the guy that can stand at a whiteboard and spend an hour addressing the concerns of his execs. These specialists have a quota and incentive based compensation, but sure don’t conform to the standards you wrote. In fact, many companies are finding their top reps. don’t’ have the classic CA to Oracle to Siebel backgrounds.


I actually agree with most of your comments, and while I am quite serious in my original posting, I should have added that a sales team is just that, a team. Successful selling organizations depend on a variety of specialists in the selling process, and furthermore, successful enterprise companies always balance long term relationships with customers with short term revenue targets, and this balance is exactly why SAP is so successful while many of our competitors have ebbed-and-receded. Lastly, I think you would be surprised to find that some of the most successful selling professionals at SAP don't have the "classic CA to Oracle to Siebel backgrounds", yes many do but an equal number come from the industries we sell into and are steeped in domain expertise that is leveraged not only in the selling cycle, but in the product development groups as well.

I think the overarching theme of my original post is simply that you don't want sales professionals who are 1) not hungry, 2) can't focus on deals that yield results, and 3) can't stand eye-to-eye with a C-level and be viewed as a partner, not just another sales rep.


- take your top sales performers at the end of the year and double their quota, you don't want them hanging around at the top of the chart for long. Make room for young guns to work their way up.

I can't help but disagree this comment.

The job of the sales VP is not to help the young guns make it to the top by artificially lowering the success of sales people. It's to help them achieve success by improving their selling skills. This does two things; it keeps your existing top guns (possibly) by not artificially alienating them and skills up the up and comers.

My second major objection is you don’t change the comp plan or sales territory to punish. You change it in order to maximize revenue for the company. If one territory is constantly over producing, there is the risk that one sales person isn’t getting everything possible out of the territory. You shrink the territory for better sales coverage.

At the end of the day, top performers are successful because they know how to sell their product and they know how to work the plan. If you punish via the plan – doubling their quota because they were successful – without offering an achievable upside they will find a new home where they feel valued and perceived loyalty for their work. As you yourself said – “Just remember that sales commissions are the easiest checks in the world to write, and just because some guy on your team is making an obscene amount of money doesn't mean he didn't earn it”

Comp plans are supposed to challenge and motivate. Remove the motivation and replace it with fear and you will more than likely loose reps and/or get bad deals, both leading to under performance for the company as a whole.


If a successful account executive hangs around and doesn't move up or move on, you are neither motivating him/her or those around them. I never suggested changing the comp plan midstream in response to a rep being successful, in fact I said that you should only change the plan at the beginning of the year, if change is needed. It's a little unrealistic to think that a comp plan won't need tweaking from year to year.

I think it's just poor management to allow people to become entrenched in a position, there has to be fluidity in a company else it gets stale.

Yong Su

I think your thoughts on building a sales team were valid during the boom years, but I think we're starting to see a shift in how enterprise software gets sold. Some of this shift is from the slowdown in the economy and some of this is from the change in technology and pricing models.

You always want top performing sales reps who are aggressive, but I think the days of the overly aggressive slick salesman chasing multi million dollars deals that close at the end of the quarter are numbered. With subscription based pricing and customers focusing on deployment costs, costs of ownership, and ROI, the successful sales teams are the ones that are able to forge long term partnerships with customers.


actually, my comments were based on 14 years of enterprise software experience, including the boom years (which, incidentally, started in 1995 for enterprise companies). Yes, as I have wrote before, buyers are getting very saavy at buying software, but I'm not convinced this is a wholesale shift in *how* software is sold. Subscription pricing, utility, etc. are all a drop in the bucket when compared to overall enterprise software sales. While they may portend a trend, it's not here yet. Customer value, TCO, ROI, and so on have been around for years. Long term relationships with customers... SAP practically invented it, after IBM did it first!

No, I think what we are seeing, and a subtle point in my original post, is that it takes a very unique personality to be good at selling large dollar enterprise deals, and while the expansion years of the late 90's made the business bigger, it didn't necessarily expand the pool of people who are really good at enterprise software sales.

thanks for your comments.

The comments to this entry are closed.