Designing an effective sales compensation plan is crucial for attracting, motivating, and retaining top sales talent in the SaaS industry. A well-crafted plan not only rewards performance but also aligns sales behavior with company goals. In the competitive world of Software-as-a-Service (SaaS), the right compensation structure can be a game-changer in building a high-performing sales team. This in-depth guide explores how to set fair quotas, structure commissions for recurring revenue, introduce enticing incentives, stay on top of compensation trends, and avoid common pitfalls. By the end, you’ll know how to create a compensation plan that appeals to top SaaS sales professionals and keeps your business profitable.
TL;DR (too Long; Didn't Read)
- Set realistic yet motivating quotas: Establish sales targets that are attainable for most reps (aim for ~80% of the team hitting quota) to drive performance without discouraging the majority. Use data and clear objectives to balance attainability with ambition.
- Align commissions with SaaS revenue models: Use commission structures tailored to recurring revenue (ARR/MRR). Common practice is a 50/50 pay mix (base vs. variable) and quotas around 4–5× a rep’s OTE, meaning commission rates of roughly 10–20% on new annual contract value.
- Incorporate accelerators and SPIFFs: Motivate over-performance with accelerators (higher commission rates for above-quota sales) and short-term bonuses or SPIFFs for specific goals. These incentives boost morale and drive focus on key targets.
- Stay current with industry trends: Benchmark your plan against SaaS industry standards. For example, ~82% of SaaS companies use accelerators, over half use clawbacks to discourage churn, and fewer than 15% cap commissions, allowing top earners uncapped upside.
- Design for retention and cost-effectiveness: Structure compensation so that high performers are well-rewarded (uncapped commissions, recognition programs) while ensuring the overall cost of sales (typically ~20-25% of revenue) stays sustainable. Consider multi-year incentives or equity for long-term retention.
- Use compensation as a talent magnet: Advertise compelling On-Target Earnings (OTE) and a fair, transparent plan. Top SaaS salespeople are attracted to plans with competitive pay, realistic quotas, and significant upside for overachievement.
- Leverage niche SaaS job boards for hiring: Platforms like The SaaS Jobs board focus exclusively on SaaS roles, connecting you with candidates who have relevant industry experience and are actively seeking SaaS sales opportunities.
- Avoid common compensation pitfalls: Steer clear of mistakes like setting unattainable quotas, over-complicating the plan, capping earnings, or changing plans mid-year. Ensure your plan aligns with business goals (e.g. recurring revenue and retention) and is clearly communicated to the team.
Quota Setting for SaaS Sales Roles: Balancing Attainability and Motivation
Why quotas matter: Quotas are the sales targets that reps strive to meet, and in SaaS they’re often tied to recurring revenue (monthly or annual subscriptions). Setting the right quota is a delicate balance. It should be ambitious enough to drive reps to excel, but realistic enough that a large portion of the team can achieve it. If quotas are too high and only a tiny elite can hit them, most reps will feel defeated and stop trying. On the other hand, if quotas are too low, reps might sandbag their efforts and the company could be leaving revenue on the table. The goal is to find that sweet spot that keeps your team motivated and your company’s growth on track.
Best practices for quota setting: Start with your company’s revenue targets and break them down by the number of reps and the capacity of each territory. Use historical data and sales forecasts to ground your quotas in reality. For example, analyze past performance to see what a strong rep can sell in a year, given your average deal size and sales cycle. A common guideline is that a fully ramped sales team should collectively be able to achieve around 60–80% of their quota on average in a good year. In fact, many SaaS companies apply the 80/20 rule to quotas: design quotas such that roughly 80% of reps can attain them (rather than only 20% succeeding). This ensures the majority of the team stays motivated and engaged, rather than feeling the goal is impossible.
Attainable but still a stretch: An attainable quota doesn’t mean “easy.” It should require effort and skill to hit, and exceptional performance to exceed. A helpful benchmark is to tie quota to On-Target Earnings (OTE). Many SaaS businesses set annual quotas at about 4 to 6 times a rep’s OTE. For instance, if a salesperson’s OTE (base + commission at 100% quota) is $120,000, a common annual quota might be around $600,000 (5× OTE). This ratio ensures that if a rep hits quota, the company is paying about 20% of that revenue in compensation, which is a healthy cost-of-sales range. It also means the quota is substantial yet achievable if the market conditions are right. When deciding quota periods, consider your sales cycle and company stage: newer startups with fast sales cycles might use monthly quotas to drive urgency, whereas enterprise-focused SaaS with longer cycles might opt for quarterly or annual quotas.
Tailor quotas to roles and ramp up: Not all sales roles are equal. A Business Development Rep (BDR/SDR) booking meetings will have different metrics than an Account Executive closing deals. Similarly, account managers handling renewals might have quotas based on retention or expansion revenue rather than new sales. Design quota metrics that fit each role’s responsibilities. Also, account for ramp time. New hires typically get a grace period to learn the ropes – for example, an AE might have a reduced quota for the first 3–6 months (e.g. 50% quota first quarter, 75% second quarter) until they are fully ramped. This acknowledges the onboarding time and helps new reps gain confidence before being held to the full quota. Providing a ramp quota (or a guaranteed draw against commission) in early months can be a strong selling point when hiring, as it shows you set realistic expectations.
Maintain flexibility and review: SaaS markets change quickly, so review quota attainment regularly. If you find that only a small fraction of the team is hitting quota consistently, investigate why. It could be a sign the quota is too high, territories are imbalanced, or other factors (like marketing lead flow or product issues) are holding the team back. Adjusting quotas mid-year is generally not ideal (it can demoralize or anger reps), but you might make exceptions for major market shifts or if you clearly set a mid-year review policy. More typically, use the data from one year’s results to inform the next year’s quotas. Engage your sales team in the process too – top reps often have insights into the market and can provide feedback on whether quotas feel fair. When reps have some input or at least understanding of how their targets were set, they are more likely to buy in and commit to reaching them.
Commission Structures Tailored for SaaS: Recurring Revenue Models and Best Commission Splits
The SaaS commission mindset: In SaaS sales, the commission structure needs to account for recurring revenue. Unlike one-off product sales, a SaaS deal often involves an ongoing subscription (monthly or annual recurring revenue). The most common approach is to pay commission on the Annual Contract Value (ACV) or first-year value of the deal. For example, if a rep closes a new customer on a one-year $50,000 subscription, and the commission rate is 10%, they earn $5,000. If that customer renews the next year, the question is: do you pay another commission? Many SaaS companies have separate roles for new business and renewals; new business Account Executives might only get commission on the initial sale, while Customer Success or Account Managers get smaller commissions or bonuses for renewals and upsells. The key is to align incentives with revenue growth: reps should be rewarded for bringing in customers who stick around, not just for signing deals that churn quickly.
Pay mix and commission rates: SaaS sales compensation usually involves a base salary plus commission (variable pay). A typical pay mix is 50/50 – meaning half of the OTE is base salary and half is the target commission if they hit 100% of quota. Some roles or companies might do 60/40 or 70/30 (more base for very complex long-cycle sales, or more variable for mature products), but 50/50 is a common starting point. The commission rate is essentially the target commission divided by the quota. For instance, a $60,000 variable on a $600,000 quota is a 10% commission rate. Industry benchmarks often put new business commission in the ~8-12% range of the revenue for hitting quota. This might increase for beyond-quota sales (thanks to accelerators, which we’ll cover next). The rationale is that if a rep consistently hits quota, the company is paying about 10% of revenue in commission, plus the base salary (another ~10%), totaling ~20% of revenue for sales compensation, which is sustainable. Top performers who exceed quota will earn more, but that extra pay is coming from additional revenue they brought in, so it’s a win-win.
Recurring revenue and timing: One challenge in SaaS is that revenue comes in over time, but commissions are often paid upfront. If a deal is billed monthly, you might still pay the commission on the annual value immediately upon closing. This carries a risk if the customer cancels early – you’ve paid commission on revenue that didn’t fully materialize. To mitigate this, some companies include a clawback clause: if a customer cancels within, say, 6 months, the rep might have to forfeit or pay back a prorated portion of their commission (often deducted from future commissions). Another approach is paying commissions in installments (for example, half at signing, half after 6 months of service), but many salespeople prefer the immediate payout. You’ll need to strike a balance between protecting the business and keeping the commission attractive and simple. Clawbacks are fairly common in SaaS – over half of SaaS companies use them to discourage “churn-and-burn” sales tactics.
Multi-year deals and prepaid contracts: SaaS customers sometimes sign multi-year agreements or pay upfront for a year to get a discount. These scenarios warrant special commission considerations. If a deal is multi-year, you have options: pay the rep only on the first year value; pay on the total contract value (but that could be huge upfront cost); or pay a portion on signing and another portion when the later years actually start or are paid. A common compromise is to pay full commission on the first year and a smaller commission (or bonus) on the subsequent years when they renew. However, if a multi-year deal is paid fully upfront (cash in hand), many companies will commission the entire amount since the revenue is realized. In fact, offering a commission kicker for multi-year or upfront payment deals can encourage reps to secure more cash for the business. For example, you might say: “If you close a 2+ year contract or get annual prepayment, we’ll pay an extra X% or a flat bonus.” This rewards reps for deals that improve cash flow and customer commitment. Just be sure to structure it so that the cost is justified by the value (e.g., a slightly higher commission rate for a prepaid annual deal, because immediate cash is more valuable than monthly payments).
Splitting credit and roles: In SaaS sales, sometimes multiple team members contribute to a sale. For instance, a Sales Development Rep (SDR) might qualify the lead, an Account Executive closes the deal, and an Account Manager later upsells the customer. You’ll need to decide how to split commissions or credit in such cases. One approach is to give SDRs a smaller bonus for deals they sourced (e.g., $X per qualified opportunity that closes, or a percentage of the deal). The AE typically gets the bulk of the commission for new business. If the AE also manages the account for renewals, you may pay a lower commission on renewal revenue (e.g., 2-5%) since it’s easier to retain than acquire new customers. If a separate Customer Success Manager handles renewals, they might have a bonus program tied to renewal rate or expansion. Ensure your plan clearly defines who gets paid on what to avoid territorial disputes. The guiding principle is to align each role’s incentives with what they control: hunters (new business AEs) earn most on new ACV, farmers (account managers/CSMs) earn on renewals and upsells, and SDRs are rewarded for feeding the sales pipeline.
No cap, no ceiling: To attract top SaaS talent, it’s important that your commission plan feels fair and potentially lucrative. One common mistake to avoid is capping commissions (limiting how much a rep can earn). Capping might protect budgets in theory, but in practice it discourages your superstars – once they hit the cap, you’ve effectively told them to stop selling or they won’t get paid for it. Unsurprisingly, most SaaS companies (only 14% as per one industry survey) do not cap commissions. Instead, they embrace the philosophy that if a salesperson can massively exceed their quota, both the company and the rep benefit. By keeping commissions uncapped, you send a message: there’s no limit to your earnings here if you keep delivering great results. This can be a powerful selling point when recruiting experienced reps who want to know that they won’t be penalized for success.
Incentives and Bonuses for SaaS Sales Teams: Accelerators and SPIFFs
Beyond base commission: While the core of a compensation plan is base salary and commission, the best SaaS sales organizations spice it up with additional incentives. These can take the form of accelerators, SPIFFs, bonuses, contests, and recognition programs. Such extras can ignite motivation, drive specific behaviors, and create a fun, competitive sales culture. The key is to structure them so they reinforce your goals (and don’t unintentionally encourage bad behavior like end-of-quarter discount giveaways or sandbagging).
Accelerators – reward going over target: An accelerator is an increased commission rate that kicks in once a rep exceeds a certain threshold of performance, usually 100% of quota. For example, if your standard commission is 10% of sales up to quota, you might pay 12% on any revenue above quota. Many SaaS companies use accelerators to handsomely reward over-achievers – in fact about 82% of SaaS startups have accelerator schemes in place. A typical design is something like: 1x quota attainment earns standard commission, but at 1.2x quota you might earn 1.5x the commission on that extra 0.2x, etc. In practice, if a rep with a $500k quota brings in $600k (120% of quota), their commission might be, say, 10% on the first $500k ($50k) and 15% on the extra $100k ($15k), totaling $65k instead of $60k. Accelerators create a strong incentive for reps to push past the finish line and not stop at the quota. It tells your team “the more you sell, the more lucrative it gets.” This not only drives revenue but also helps retain top performers – they feel rewarded for that extra effort. As a bonus, word gets around: if reps in the industry hear that your salespeople earn very attractive payouts for big years, they’ll be more inclined to want to join your team.
SPIFFs – flash contests and targeted bonuses: A SPIFF (also spelled SPIF or spiff) is typically a short-term incentive to drive a specific behavior or boost morale. It’s often a one-time or time-bound contest. For example, you might announce, “This quarter, any rep who sells at least $100k in new ARR of our new product module gets a $2,000 bonus,” or “Whoever books the most new logo deals this month gets a $500 Amazon gift card and a trophy.” SPIFFs can focus on anything you want to emphasize: maybe you need to push a new feature, or clear out old inventory (in a hardware context), or simply kickstart activity in a slow season. The reward can be cash, gift cards, trips, gadgets, or even creative perks like dinner with the CEO or an extra day off. The key with SPIFFs is to make them exciting but not distracting. Use them sparingly and ensure they align with quarterly objectives. Too many overlapping contests can confuse priorities. But a well-timed SPIFF can provide a mid-quarter boost and keep the team engaged.
Bonuses for milestones: In addition to commissions, some SaaS comp plans include bonuses for hitting certain milestones or objectives. For instance, you might have an annual bonus for hitting an annual revenue target or a higher commission rate if the entire team hits the collective goal (to encourage teamwork). Another common practice is a President’s Club or similar program: top performers (say the top 5-10% of the salesforce) are rewarded with an exclusive trip, experience, or luxury item. This kind of incentive is both a reward and a status symbol – making President’s Club is a bragging right and many salespeople will work hard to earn it. The cost of a trip to Hawaii for a few reps is small compared to the revenue they bring in, and it helps with retention and morale. Additionally, consider non-cash recognition: public shout-outs, trophies, “Salesperson of the Month” awards, etc., which feed the competitive spirit and recognize achievement in a visible way.
Strategic use of incentives: When layering incentives on top of base commissions, be mindful of the behaviors you might accidentally encourage. For example, an accelerator that doubles commission after 200% of quota might lead a rep who is already at 199% in December to pull a big January deal into December just to get the kicker – which could rob next quarter’s pipeline. Or a SPIFF on a certain product could cause reps to focus only on that and neglect other business. To avoid these issues, set some rules (like “deals must be full price to count for the SPIFF” to avoid excessive discounting, or limit the timeframe to prevent pulling deals too far forward). Design contests that are fair across your team – if one rep has a tiny territory, a pure volume contest might always favor the rep with the biggest territory. Maybe instead use improvement or per-account metrics for contests. Always communicate the rules clearly and keep them relatively simple. Salespeople should instantly understand how to earn a bonus; if they need a spreadsheet to decipher it, the incentive loses impact. In summary, incentives work best when they are meaningful, timely (immediate feedback is powerful), and aligned with both rep motivation and company strategy.
Trends in SaaS Sales Compensation: Industry Benchmarks and Evolving Practices
Keeping up with the industry: SaaS sales compensation isn’t static. As the SaaS business model evolves and market conditions shift, compensation practices also change. One recent trend is the push toward more data-driven and performance-aligned plans. Companies are using analytics to fine-tune quotas and commission rates, ensuring they fit the current market reality and the cost-of-customer acquisition. In uncertain economic times, we’ve seen some companies adjust quotas or OTEs downward or upward to reflect changing buying behavior. For instance, early 2023 saw many SaaS firms missing targets due to market slowdown, prompting a reevaluation of overly aggressive quotas. Smart organizations treat the comp plan as a living framework – reviewed at least annually (if not more frequently) to ensure it’s competitive and driving the right outcomes.
Benchmarking OTEs and pay mix: As competition for top sales talent grows, many SaaS companies are benchmarking their OTE (On-Target Earnings) against industry data. Late-stage SaaS startups in major markets (SF, NYC, London) have reported AE OTEs in the $200K+ range for enterprise roles. Salaries in major tech hubs tend to be 5–20% higher than elsewhere, though the rise of remote work has started to level this out somewhat. Additionally, the balance of base to variable can vary by stage: companies with well-established products might lean towards a higher variable portion (to keep reps hungry) whereas very early startups sometimes offer a higher base (to compensate for the uncertainty and heavy prospecting required). The guideline of 50/50 or 60/40 splits still holds in most cases, but we see some mature SaaS firms experimenting with 70/30 (lower base, higher commission potential) to really put earning potential in the rep’s hands. The underlying idea is not to let fixed salaries get so high that mediocre performers hang around just for the comfort – a healthy dose of “at-risk” pay ensures your team is self-motivated and that top performers can truly differentiate themselves in pay.
Emphasis on lifetime value and retention: A major trend in SaaS is aligning sales compensation with customer lifetime value (LTV) and retention, not just new bookings. This is a response to the “growth at all costs” era where reps were paid on any and all deals, and companies later realized some of those deals weren’t good for business (e.g. they churned quickly or were unprofitable). Now, many SaaS firms structure comp plans to encourage high-quality deals. For example, compensating sales on the net ARR they bring (new ARR minus any churn from their accounts) or requiring a minimum customer retention period for full commission. As mentioned, clawbacks are common if a customer cancels within a short time. Some organizations even tie a portion of commission to first-year renewal – e.g. the rep earns 70% of their commission at signing and the remaining 30% if the client renews next year. While that might not be popular with all salespeople, it’s one way to ensure incentives for selling customers who will stick around.
No more “set and forget”: Evolving practice also means not setting comp plans in January and ignoring them until next year. Sales leadership and finance teams are increasingly monitoring how the comp plan is performing mid-cycle. Are payout costs in line with budget? Is the plan producing the intended behavior (for example, are reps pushing multi-year deals if you incentivized that)? If not, adjustments might be made in the next planning cycle. However, one trend is clear: avoid changing the plan too frequently or retroactively. Trust is paramount – if reps fear that the rules will change on them arbitrarily, the plan loses credibility. Leading companies gather input and simulate changes, but implement alterations on a go-forward basis (typically at the start of a new fiscal period) rather than mid-stream, unless there is an extreme circumstance. Communicating the “why” behind any change is also a best practice – for instance, explaining that you’re increasing commission rates on multi-year deals because the company values long-term commitments, etc.
Modern perks and timing: To stay competitive, some SaaS companies are refining the timing and form of compensation. One noticeable practice is faster commission payouts – instead of quarterly true-ups, many pay commissions monthly (or even immediately after a deal is booked and signed) to give near-real-time reward. Behavioral psychology suggests quicker reward reinforces the effort more effectively. Additionally, the use of signing bonuses or stock options as part of a compensation package is a trend to attract talent in a hot job market. Top SaaS reps often expect equity, especially if joining a growth-stage startup, so offering stock options (and explaining their potential value) can complement the cash comp plan. Lastly, the use of specialized sales compensation software (some of which even provide real-time commission dashboards to reps) is on the rise. These tools improve transparency – a rep can see exactly what each deal earned them, track their attainment and forecast their commission for the quarter. This level of visibility can increase trust in the comp plan and keep reps engaged (it’s motivating to see that next deal inch you closer to a bonus or accelerator).
Structuring Compensation Plans to Retain Top SaaS Talent (While Staying Cost-Effective)
Keep your stars happy and loyal: The best SaaS salespeople are in high demand. They know their worth, and if they aren’t satisfied with their compensation or career growth, they won’t hesitate to entertain other offers. Retaining top talent means ensuring your comp plan continues to reward them appropriately as they succeed. One critical element is to provide uncapped earning potential, as discussed earlier. If a superstar can blow past quota, let them reap the rewards – whether that’s 150% of OTE, 200% of OTE, or more in a breakout year. This not only keeps them financially satisfied but also gives them a reason to stay and invest their efforts in your company’s opportunities. They’ll think twice about leaving if they know they have built a rich pipeline and next year could be even more fruitful under your plan.
Differentiating performance: A well-structured plan makes a clear distinction between average performers and rockstars. This can be through steep accelerators, special recognitions, or promotion opportunities for top sellers. High performers are often ambitious; they want to see that by being in the top 10%, they get significantly more pay and perhaps faster career advancement (like moving into enterprise accounts or leadership roles). If your plan is too flat – for example, if you had an unusually high base pay and low commission variance, such that everyone ends up clustered around similar earnings – your stars might feel they are carrying the team without enough reward. Industry experts caution against overly high fixed pay for this reason: too large a base salary can promote complacency and fail to differentiate the high achievers. Instead, keep the variable portion meaningful enough that top performers can maybe double their base or more with commissions, while underperformers feel the pinch and either improve or self-select out.
Cost-effective design: Retention isn’t just about paying people more; it’s about paying smartly. You want a plan where if everyone performs as expected, the total sales compensation is a manageable percentage of revenue (often 20-30%). To achieve this, tie the big payouts to big results (which bring in revenue to fund those payouts). For example, accelerators ensure you only pay extra when the company is also getting extra. If your top rep earns 170% of their OTE, ideally they also brought in 170% of their quota in revenue – so the company can afford it. Problems arise if you guarantee high pay regardless of results. To avoid that, some companies implement a **threshold** – e.g., a rep must achieve 50% of quota before any commission kicks in. This prevents paying substantial commissions to low performers who aren’t covering their own cost. Just ensure any threshold is reasonable, as zeroing out commissions for too long can lead someone to quit. Another cost-control mechanism is scaling accelerators such that only truly exceptional performance yields the very large multipliers. In essence, by aligning payout with performance, you make the plan self-funding: when sales are great, reps earn great money (and the company can afford it); when sales are tougher, the lower commission checks naturally keep expenses in line.
Long-term incentives and growth: Beyond the immediate comp plan, consider other incentives to retain your top folks. Equity grants (stock options or RSUs) vesting over multiple years can be golden handcuffs, encouraging talent to stay to reap those rewards as the company’s value grows. Likewise, annual retention bonuses or milestone bonuses (e.g., a bonus after 3 years of service or for exceeding quota 4 quarters in a row) can add stickiness. Even setting up leadership development paths – such as “Team Lead” titles, mentorship roles, or a path to Sales Manager – can keep a senior rep engaged because they see a future with the company. Remember that retention isn’t only about money; it’s also about culture and support. If your comp plan is generous but the work environment is toxic or the tools and leads provided are poor, people will leave. So, support your top talent with things that help them succeed: good enablement, a steady flow of qualified leads, and a positive culture that celebrates wins. In many cases, top performers stay where they feel they can keep winning and growing.
Review and recalibrate for fairness: One subtle aspect of retention is perceived fairness. Top sellers want to know the comp plan is fair not just to them but overall. If they feel a colleague got an unfair advantage (like a better territory without adjustment in quota, or some special deal), it can breed resentment. To avoid this, strive for balance in territory design and quota allocation. If one rep inherits a huge book of business (e.g., a departing rep’s accounts), adjust their quota upward or split the territory so that others have opportunity too. When you make changes, be transparent about why. Also, don’t forget to solicit feedback from your top performers when planning the next year’s compensation scheme – they often have the most to say since it affects them a lot. By incorporating their feedback, you not only improve the plan’s effectiveness but also make them feel valued and heard, which itself can boost loyalty.
Attracting SaaS Sales Talent Through Effective Compensation Planning
Your comp plan as a recruiting tool: In the war for talent, especially for experienced SaaS sales professionals, your compensation plan can be one of your strongest recruiting pitches. Top salespeople often have multiple options, so they will compare OTEs, commission structures, and how realistic those are across offers. To attract the best, first ensure your OTE is competitive for the role and market. Research salary benchmarks for SaaS sales roles at similar company sizes and stages. If you’re a startup competing with big tech companies, you might need to offer a higher upside or additional equity to lure talent away from safer options. Don’t shy away from stating the OTE in job descriptions – serious candidates appreciate the transparency and it saves time by attracting those who are comfortable with that range.
Highlight what makes your plan attractive: Simply having a high OTE isn’t enough; savvy candidates will want to know how the plan works and if they can realistically earn that OTE (or more). Be prepared to discuss quota attainments and team performance in interviews. For example, if in your company 70% of reps hit quota last year and the average attainment was 95%, that’s a strong selling point – it shows the targets are achievable. If only 20% hit quota, a discerning candidate will worry that the OTE is more fantasy than reality. Emphasize positive aspects like uncapped commissions (“there’s no cap, so some of our reps actually exceeded their OTE by 50% last year”), accelerators (“we pay higher rates if you go past quota, so high performers are really rewarded”), and any unique perks (“we have a President’s Club trip to Hawaii for top performers” or “we pay commissions monthly, so you don’t have to wait long to get your earnings”). These features signal that your company invests in sales success and trusts its reps to win.
Show a clear path and support: Great salespeople also look for growth and support, not just dollars. In your hiring process, make it clear that the comp plan is coupled with the tools for them to hit it. For instance, mention if you have robust marketing lead generation, sales engineering support, or training programs that help reps ramp fast. If you offer a reasonable ramp period or a guaranteed draw for initial months, point that out – it reduces the risk for a new hire. Communicate that your sales goals are aggressive but achievable, and that you celebrate and reward success. Sometimes companies even let candidates speak with a currently successful rep (or at least share anonymized data) to validate that “OTE isn’t just a number on paper – our median reps earn close to it, and top reps exceed it.” This transparency can build trust with candidates who have heard horror stories of jobs where the advertised OTE was unattainable.
Leverage referrals and networks: Often the best SaaS salespeople know others in the industry. A strong compensation plan will get talked about. If your team is happy and making good money, encourage them to refer former colleagues or friends. Word of mouth (“I’m killing it here, you should come over”) is powerful. Additionally, ensure your plan is not overly convoluted – a plan that’s easy to understand is easier to sell to a prospective hire. If a candidate is confused or skeptical about how they actually earn their money, they might pass. During interviews, be upfront and perhaps share an example commission calculation. This level of openness signals respect and will attract talent who value honesty.
Positioning and employer branding: Beyond the plan itself, include compensation in your employer branding for sales roles. For example, your careers page might highlight: “Average SaaS AE at XYZ Company earned 110% of OTE last year” or “10 of our reps made over $200k in 2024”. These are eye-catching facts for someone considering where to apply. When working with recruiters or posting on job boards, provide specifics like base salary range, OTE, commission rates, bonus opportunities, etc. A lot of job ads are vague about commission (“competitive commission plan”); being specific can make your opening stand out to serious sales pros. Just be sure that whatever you advertise is accurate and you’re confident a good rep can hit those numbers – otherwise it can backfire in early turnover. In summary, a compelling comp plan that is well-communicated can significantly improve your ability to attract top-tier SaaS sales talent.
Leveraging Niche Job Boards like The SaaS Jobs to Hire Top SaaS Sales Professionals
Finding the right candidates where they are: Traditional job boards and LinkedIn can yield tons of applicants, but quantity is not quality. For specialized roles like SaaS sales, niche job boards have emerged as valuable channels. The SaaS Jobs board, for example, focuses exclusively on SaaS opportunities. This means when you post a sales role there, you’re broadcasting it to an audience that is already in the SaaS ecosystem – people who understand subscription models, ARR, and the nuances of selling software-as-a-service. The candidates coming from a niche board are more likely to have relevant experience (like selling a B2B SaaS product) versus a general job site where you might get a plumber, a retail manager, and a SaaS AE all applying to a “sales job” posting because the filtering isn’t precise.
Quality over quantity: The advantage of a niche board is curation. The SaaS Jobs board, for instance, is known to list roles from companies that have a SaaS product and need talent familiar with that world. As a hiring manager, you might receive fewer total applications than on a giant site, but a much higher percentage will be on-target. This saves time and increases the likelihood of finding that perfect fit. It’s akin to fishing in the right pond – you cast your line where the fish you want are known to swim. Moreover, experienced SaaS salespeople often check niche boards because they trust that relevant, higher-caliber jobs will be posted there, rather than wading through countless irrelevant postings on a generic site. In other words, by using a SaaS-focused job board, you’re likely tapping into a pre-screened talent pool of folks who have chosen to build their careers in SaaS.
Employer branding on niche platforms: Niche job boards can also bolster your employer branding within the SaaS community. Candidates browsing these sites are typically keeping a pulse on interesting SaaS companies. By having your company and role featured there, you signal that you’re a serious player in the SaaS space. It can be particularly useful for startups or smaller companies to gain visibility among the exact talent they want. Some boards or associated newsletters might highlight featured jobs or companies, giving you extra exposure. When you post, make sure your job description speaks the SaaS language to resonate with the audience. Mention your product, the ARR or growth metrics if you can, the sales cycle, etc., to show candidates this is a context they know. Also, highlight the strong compensation plan and any details about OTE and commission – since these boards cater to sales pros, that info will be keenly noted. A clear, enticing job post on a site like The SaaS Jobs can draw in passive candidates who regularly scan for the “next big thing” in SaaS sales roles.
Building connections through niche communities: Often, niche job boards are part of a larger community or run by organizations deeply embedded in the industry (for example, The SaaS Jobs is a Cobloom brand). Engaging with these communities – whether by participating in forums, attending SaaS meetups, or even writing thought leadership content – can complement your recruiting. If your company is known and respected in SaaS circles, your job postings will naturally attract more interest. Consider reaching out to the board operators for any guidance or promotional opportunities; they might have insights on what kind of sales roles are getting the most traction or how to make your post more appealing to their audience. In summary, leveraging niche job boards is about meeting the talent in their world. It’s a highly effective way to source top SaaS sales professionals who might not be actively looking on general job sites but are keeping an eye out for promising opportunities within the industry.
Common Mistakes in SaaS Sales Compensation and How to Avoid Them
Even with the best intentions, companies sometimes design comp plans that miss the mark. Here are some common SaaS sales compensation mistakes and tips on how to avoid them:
- Unattainable Quotas: Setting sky-high quotas that only a tiny fraction of reps can hit is a morale killer. If historically only 20% of your team makes quota, that’s a red flag. Avoid it: Use data-driven methods to set quotas that a majority of the team can realistically achieve with strong effort. Aim for that 60-80% attainment sweet spot so that success is broadly within reach. You can always use accelerators to reward the few who go far beyond.
- Over-Complicating the Plan: It’s easy to bolt on spiffs, multiple commission tiers, exotic formulas, and a laundry list of KPIs. But if the plan becomes too complex, reps won’t understand how to maximize their earnings and may feel manipulated. As SaaStr’s founder quipped, a plan with too many accelerators, decelerators, and micro-incentives can confuse even the leaders. Avoid it: Strive for simplicity and clarity. The plan should be explainable on one page. Each rep should be able to calculate their own commission for a deal without needing an advanced degree. If you do have complex components, provide tools or calculators and train the team on them.
- Capping Commissions: Putting a hard ceiling on earnings (e.g., “we won’t pay commission beyond 200% of quota”) might save a bit of budget on paper, but it absolutely sends the wrong message to your top performers. It essentially says, “we don’t want to pay you any more even if you bring in more business.” Avoid it: Don’t cap – as noted, the vast majority of SaaS companies avoid caps because they want to encourage unlimited success. Instead, budget for some over-performance. If someone truly goes way beyond expectations, celebrate it rather than feeling like it’s a problem.
- Too High a Base Salary: In SaaS, offering a very high fixed salary with a small variable can reduce the urgency to sell. Reps might become complacent since most of their income is guaranteed. It can also make it hard to distinguish and reward the stars. Avoid it: Keep a balanced pay mix (50/50 or 60/40 are healthy ranges in many cases). This ensures reps have skin in the game. Higher variable (at least 40-50% of OTE) creates motivation to close deals and also means high performers earn a lot more than low performers, which is what you want.
- Frequent or Mid-Year Plan Changes: While it’s important to tweak plans based on learning, changing the comp plan too often – especially in the middle of a period – erodes trust. Salespeople plan their year and pipeline around how they’ll get paid. If you suddenly alter the deal, it breeds frustration. Avoid it: Lock in the plan for the year (or whatever your sales cycle is) and stick to it. If adjustments are needed, announce them for the next period. Any mid-year change should be an absolute last resort, and if it must happen, ensure it only affects future sales, not retroactively devaluing what reps have already sold.
- Ignoring the SaaS Metrics that Matter: A simplistic plan might pay on pure bookings without regard to discounting, contract length, or churn. This can lead reps to close bad-fit customers on huge discounts or one-year-and-done deals just to get paid. Avoid it: Align incentives with quality revenue. For example, consider tying commission to revenue after discounts (to discourage excessive discounting), and incorporate accelerators for multi-year or high-margin deals. Implement clawbacks for quick churns so reps think twice about overselling. In short, reward behaviors that drive healthy ARR – not just any ARR.
- One-Size-Fits-All Plans: Using the identical structure for every role (SDR, new business AE, account manager, etc.) can be a mistake. These roles have different functions and value drivers. Avoid it: Customize where appropriate. SDRs might be better on bonuses per meeting or pipeline created, whereas AEs need revenue-based commissions, and account managers might have a mix of renewal and upsell targets. Tailoring ensures each team member is incentivized on what they control.
- Poor Communication and Rollout: Sometimes the plan itself is fine, but it’s not communicated well. If reps don’t fully grasp the plan or discover “fine print” rules too late, trust in leadership diminishes. Avoid it: Present the plan clearly at the start of the year. Provide examples and FAQ. Encourage questions. Ideally, give the team a written plan document they can reference. Transparency is key – if any part of the plan is complicated (like how an accelerator works or how split deals are handled), make sure it’s explained with scenarios. A well-informed team is an empowered team.
By sidestepping these common pitfalls, you can create a compensation plan that is both effective and respected by your sales team. Remember, the goal is a plan that drives the right behaviors, is fair and exciting for your reps, and ultimately fuels the growth of your SaaS business.
Wrapping Up
Designing a sales compensation plan for a SaaS company is part science, part art. You need the science of data and benchmarks to set achievable quotas and sustainable commission rates, and the art of understanding human motivation to craft incentives that truly inspire your team. A great plan will attract top talent, as sales professionals will see that they can flourish both professionally and financially at your company. It will also keep your existing stars happy and engaged, reducing turnover and increasing productivity. Along the way, staying flexible and informed about industry trends ensures that your compensation strategy remains competitive in the fast-evolving world of SaaS.
In summary, focus on aligning the plan with your business goals – be it new customer acquisition, revenue growth, or retention – and making sure that it rewards the behaviors that drive those goals. Be clear and transparent with your team about how the plan works, and foster a culture where success is recognized and well-rewarded. With a solid compensation plan in place, complemented by tools like niche SaaS job boards to bring in great talent, you’ll build a sales team that not only hits its numbers but also sticks around to propel your SaaS business to new heights.
