What is Inside Sales – Ultimate guide to the sales compensation plan

1. Inside Sales Compensation Plan Examples

More than 50 percent of larger IT Companies are planning to increase their revenues in 2020 through the inside sales model. But hiring just inside sales reps does not complete your job, you have to decide on the right compensation plan. The example is the biggest craving path to success.

The compensation plan makes the actual difference in increasing the sales of an organization. Obviously, the question is repeatedly asked by the Companies about the right compensation plan example. Here, we will discuss the top five inside sales compensation plan examples and their benefits so that you can quickly decide which plan will work best for your organization.

2. Common Sales compensation factors

Generating a perfect compensation plan always demands dealing with plenty of challenges –

• Set quotas accurately – More than 80 percent of the Companies rely on quota-based compensation plans where setting the right quotas is the primary requirement. If quotas would be aggressive then it may lead to a lack of motivation. To set the quotas accurately, you need to forecast sales wisely with the right data analytics.
• Weighting compensation plans – Inside sales representative's salary should always be the right combination of base salary and bonus. The base inside sales representative salary should be defined nicely so that representatives can feel a sense of security. At the same time, the bonus should be defined in such a way that it could motivate the employees to give their best shot.
• Satisfactory inside sales representative salary – Any inside sales representative with a proven track record of success is high in demand. So, you need to pay competitive salaries to retain the best resources as per the latest market trends. Do proper research and decide the pay accordingly to deal with seasoned reps. In the case of less seasoned, the salary scale could be less as compared to skilled marketing experts. Here, the structure of compensation is the major factor that affects your Company's sales directly.

3. Outbound Sales compensation plan example

Outbound sales reps are responsible for lead generation and maximizing conversions. They don’t close the deals actually but hand it over to account executives. They are usually freshers who passed out recently and don’t demand higher salaries. Here, are the tips on how to structure salary plans for outbound sales reps.

• Simpler compensation plan – For beginners, keep the salary structure simple and divide it into three sections only – base, bonus, and kicker. The Base is the fixed amount that is unaffected by the performance. The Bonus amount is variable depending on the performance of reps. The Kicker is the additional amount that is tied to deal closure or any other special requirement.
• Base vs bonus – The Base is the fixed value that comprises 70 percent of the total salary and the rest 30 percent is the bonus amount.
• Bonus calculation – The bonus calculation depends on Company rules and it varies from Company to Company. This is an important part of the salary that motivates employees and encourages them to give their best shot.

4. Inbound Sales compensation plan example

Inbound sales reps generally follow the people who have shown interest in your products, downloaded content, or fill out the registration forms, etc.

• Compensation plan – Here, also the compensation plan should be simpler than an outbound sales compensation plan. It should be divided into two parts only i.e. Bonus and Base value. Mark up 60 to 80 percent salary as the base amount and the rest is marked up as a bonus amount. Like outbound sales reps, inbound marketing experts are freshers in their career or they have minimum experience in marketing activities. The salary packages can be kept lower here.
• Bonus Calculation – Mark 70 percent of the bonus amount with accepted opportunities where account executives can help you in qualifying the deals. 20 percent of the amount can be tied to deal closure and 10 percent is tied to hitting SLAs. All these things should be clearly defined in the salary structure of inbound sales reps.

5. Account executive Compensation plan Example

AEs are the inside sales reps whose tasks are associated with deal closures. The major difference in the AE compensation plan from the inbound and outbound sales compensation plan is the commission. As per the basic compensation rule, for the AE salary, 50 percent would be the base amount and 50 percent would be the bonus. Let us see how salary structure should be defined for account executives inside sales reps.

• Bonus threshold – This is a great opportunity to motivate your employees and covers Company costs too. It implies that AE would not be paid any bonus until they will not reach a certain percentage of the quota. For example, in the case of ABC Company, AE needs to hit 80 percent of the quota before claiming the bonus.
• Commission criteria – Company should never put a cap on commission in case of the AE compensation plan. Why should any AE be punished if he hits 200 percent of quota?
• Increase quota gradually – There is no professional who can hit the sky in the first attempt only. So, you should keep ramping quota as AE starts performing better with the passage of time. It could be 2000 Rs for the first three months then it can be increased to 4000 Rs for the next 3 months and so on.

6. SaaS Reps compensation plan Example

SaaS Founder suggested an innovative compensation plan consisting of a high quota, base salary, and commission that equates to 8 to 11 percent ACV. However, there were some problems associated with the plan –

• Incentives were not attractive which lead to poor retention.
• The low commission was not inspiring the reps to stay connected with customers and Companies were not able to lead a customer-centric organization.
• Medium performers were making good enough but extraordinary marketers were earning only optimum.

As a result, revenues fall dramatically and there was an immediate need for a new compensation plan with a competitive base salary, double bonus, flexible commission scheme, etc.

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