sales compensation

It should come as no surprise to you that sales compensation varies widely by both geography and industry. The general rule is the more complex, and the more expensive the product, the more you must pay people to sell it. The same may be true even if your product is not so complex, but hard to sell for whatever reason.

Technology is often leading the way for higher compensation with six figure comp plans typical, and enterprise software sales the most difficult and most rewarding category. Hardware sales with their lower margins and sometimes commodity status usually is found in the mid to lower levels (unless it is more complex and more expensive (ala big systems).

So, how do you benchmark your plans in a competitive market? Several sources of data await you:

  • Job board postings
  • LinkedIn
  • Industry reports, some free and some for a fee
  • Interviews and networking with other managers

Just to highlight regional differences, in the SF Bay area there can be 20-30% differences from metro counties to areas inland, and not atypical across many areas of the country, generally tracking with the cost of living with housing as your key index and the local unemployment rate another key factor on what you will need to pay to attract (and key here) to retain good sales people.

A trap many employers fall into sometimes is shooting for the goal of what is “the least I can pay to get decent sales talent?” The biggest problem with this is it often leads to higher turnover. You may snag that desperate rep with your not-quite-competitive plan because they need to land. But unfortunately you probably won’t keep him or her. Once you do the math on what it cost to recruit and hire another salesperson, add in the lost opportunity cost, the management overhead and retraining, it should become abundantly clear that you want to have a competitive package that meets both your needs and the salesperson’s as well….