Sales Rep OTE Ranges for Low Cost Cities

Someone asked how to consider potential locations for a new sales focused-office in a lower cost city. Their HQ is in the San Francisco Bay area.

For field sales, I evaluate for:

  1. Target market density and
  2. Proximity to an airport

That’s it. The rest you can adjust around.

Here’s the thing: if you underestimate OTE it generally means local sales professionals are booking enough business to support those OTE rates and then the only guaranteed money going out is base anyway.  If you overestimate OTE then, again, comp is relative to quota so (1) it stands to reason local salespeople are booking less than you thought, or (2) it may be a temporarily inflated market and/or (3) it’ll show up in attainment.

For inside sales, I evaluate for:

  1. Proximity to universities with great business (admin/mgmt, marketing, finance, etc.) and extracurricular programs (athletics, debate, etc.)
  2. Availability of housing and its cost relative to income, the population in the “young professional” age range*, and availability of social activities/nightlife. 

*Inside Sales isn’t exclusively for younger professionals, but it certainly leans that way, thus the above.

On the other hand, if it’s a question of improving the bottom-line and/or cash flow, the better solution tends to be to move everyone else out of the tier 1 city.  😉

Tracking customer training courses completed

Someone asked for some guidance on how an organization can track what trainings a customer has completed.

If you’re using Salesforce as your CRM and tracking course completion using Google Sheets, I recommend making a new object for this and then looking at an automation tool such as Zapier to automate data entry:

Google Sheets -> Zapier -> Salesforce.

Seems like it would do the trick.

About a year before we picked up our first learning management system (“LMS”) we made a custom “Course Enrollments” object for this purpose. It’s tied to Contacts so it follows them wherever they move throughout our system. Each Account then contains a rollup of the Course Enrollments entries and statuses of its Contacts.

Originally, the Course Enrollments object contained fields such as Account, Contact, Course Name, Enrollment Date, Completion Date, Score, and Passed (a checkbox that’s either true or false). Today it’s significantly deeper due to having more than 1 LMS, but the principle still holds. 

As for the person who asked, they opted to go the custom object route with most of the fields I mentioned. This allowed them to create a report showing percent completion by customer as well as percent completion by course.

Sales Compensation & Ramp Goals for New Hires

Sales comp is a huge challenge for a lot of companies. Recently, someone asked me for advice on a comp plan design that takes the “new hire” factor into account and I sent them the following:

Give the new hires a full-year compensation plan like anyone else would get, and then,
Based on start date we (a) prorate their quota and goals and, (b) prorate their variable comp.

As an example, someone starting June 1 has 214 days remaining in the year (assuming we align fiscal year to calendar year).  Let’s say their annual plan has a $75k variable on an $800k quota. Since they won’t be here a full year, we prorate everything, which loosely works out to the following:

Their quota for this fiscal year is $470k. That’s $800000 x (214/365), or 58.63% of $800k.

Next, their variable for this fiscal year is $44k. That’s the same 58.63% weight against their $75k variable.

You can implement this in your monthly goals if you aren’t already. The M1 goal would be prorated as (days remaining in the month) divided by (total days in the month) then multiplied by (the standard monthly goal).

A standard monthly goal of 20 assumes 28, 29, 30, or 31 days (depending on month/year), right? Thus, assuming a 30-day month, someone who starts on day 15 gets a goal of 10, since ((15/30) x 20) = 10.

Starting day 21 of a 30-day month gets you a goal of 6, since ((9/30) x 20) = 6.

You could then provide a draw to acknowledge the fact that they’re ramping.  Note adding a draw would change some numbers around a bit, namely the multiplier and any accelerator.