Three types of a compensation plan for a presales organization
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A few weeks ago, a presales leader reached out to me looking for advice on how they should rethink how they comp their presales organization. After reflecting on my own experience, I wrote a pretty lengthy response on a holistic way to look at Presales compensation plans. Below is my response to this presales leader:
Hi,
Happy New Year to you too! Yes, I have been involved and developed numerous compensation plans, and I have learned that the comp plan needs to reflect the company’s journey. Here is how I see the best strategies based on company size:
A company-sized between 1 to 500 employees is getting ready for growth; therefore, I recommend the presales comp plan to align with the company's annual target. This compensation plan will allow the first set of hires to focus on team collaboration (e.g., knowledge sharing, jumping into others' deals, etc.). In my opinion, this compensation plan highlights the most critical competency needed in building a solid presales group.
A company Size is between 1500 to 5000 employees; then it is getting ready to scale it. When a company is at this stage of maturity, I recommend that the presales compensation model aligns with a pod/franchise model. This model helps to align a presales consultant to focus on a specific territory or sales director. When moving to this model, I recommend seeing this model as an additive to the previous model mentioned above. In other words, you can start blending the two to create a model that is OK balance. For example, someone can structure a compensation plan as 70/30, where 70% of the target is at a sales director and 30% is aligned to a business segment (e.g., commercial, mid-market, enterprise, strategic). When a company is starting to scale, this model helps achieve two outcomes:
Scaling requires more focus on the business growth target and focusing presales consultant to a sales director. It helps ensure everyone is aligned to the same outcome.
If you scale too fast, this can create silos in a presales organization; therefore, aligning a percentage of their target to a shared pool will ensure that the pre-sales organization continues to share and help each other out while the business keeps growing.
Finally, if the company size exceeds 5000 employees, the company is well established and has matured its process, Go to Market, and sales force. At this size, companies have presales organizations that are mature with a build-out presales enablement, documented procedures, and tools to help ensure Presales is efficient as possible. Therefore, at this point, the focus will be on maximizing a sales territory's full potential (e.g., driving as many billings as possible). To ensure that a presales consultant is aligned to that outcome, I recommend that every presales consultant’s compensation plan be based on the sales contributed by the sales reps they support. In other words, a presales consultant will be 100% align to a specific set of sales reps. This model is sometimes known as the mercenary model.
In summary, I hope the above helps with comping up with your own compensation strategy. Here is how I keep track of which model to use when:
Growth Model - aligns to the company’s target.
Scale Model - splits the alignment between a sales territory and a shared target.
Maturity Model - aligns to a specific set of sales reps.
