Lemon #21. Key points for a B2B
While reading the Balderton B2B Sales playbook, I learned some key points related to variable compensation for a B2B sales team:
- First of all, here’s a clear picture of how the outbound sales team should be structured as the VC funding goes on.
- Metrics to be targeted
Like ARR; upsell and expansion rate, nº of opps, TCV, churn for customer success…
You want sales to focus on getting more logos in but be incentivised to help grow account too, so pay on expansion but make sure the rates on new ARR are higher.
- Monthly vs Quarterly
You want people to close deals now and focus on those opportunities, not be rewarded for chasing big deals that may never happen, so pay quarterly but have monthly incentives or even weekly for SDRs
- Linear commissions vs accelerated
Low commissions to start, then increasing with level of performance.
- Ramp up time
Quota in initial periods (AEs should ramp in under 6 months and SDRs in 2 months)
- Levels of commissions will have a substantial impact on the profitability of the model
Try to target <15% (10%-12% ideally) for the whole ‘food chain’ (sales, sales management, etc)
The details @ The Balderton B2B Sales playbook.