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We're using comp plans from the 80s, and there's some problems with that.
We discuss how SaaS has simply changed, and provide some important reflections you can use if you need to rethink your comp plans.
***
We discuss how SaaS has simply changed, and provide some important reflections you can use if you need to rethink your comp plans.
- (00:00) - Introduction
- (02:26) - We still get lots of questions about this
- (05:24) - Why everyone does comp plans
- (08:25) - The purpose of what comp plans need to achieve has shifted
- (14:25) - The person on the ground
- (18:35) - Comp plans for multi product
- (20:52) - Comp plans without supply
***
This episode is brought to you by Growblocks. Finding and fixing problems in your GTM shouldn't take weeks. It should happen instantly.
That's why Growblocks built the first RevOps platform that shows you your entire funnel, split by motions, segments and more - so you can find problems, the root-cause and identify solutions fast, all in the same platform.
***
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Creators & Guests
What is The Revenue Formula?
This podcast is about scaling tech startups.
Hosted by Toni Hohlbein & Mikkel Plaehn, together they look at the full funnel.
With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.
If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.
[00:00:00] Toni: hi everyone. This is Toni Hohlbein from Growblocks you are listening to the Revenue Formula with Mikkel and Toni.
[00:00:05] In today's episode, we'll talk about the problem with comp plans and why you probably need to change yours. Enjoy.
[00:00:14] Do you pay your kids to bring out trash? They're
[00:00:21] Mikkel: young, but actually, so it's funny. We were just, um,
[00:00:27] Toni: So. No, it's not
[00:00:28] Mikkel: hunting, now it's not that great. Don't, don't get your expectations up there, but I was just telling you the hunting season begins in like two weeks time ish, then you can hunt, uh, deer and all that stuff, and obviously to get ready, you need to prepare basically where you're going to go hunt, because you sit in a hochsitz.
[00:00:48] This is what it's called?
[00:00:49] Toni: go to the forest,
[00:00:50] Mikkel: You go to the forest, but you sit in like a tower. And those things, you know, overwinter, they deteriorate, so you need to fix everything. And I was like, I don't know exactly when we're gonna meet, I don't know how long it's gonna take, but I can offer to take the oldest kid we have with me.
[00:01:05] It'll be good for him, he'll get out in the woods and do work. Um, and he was just, Enjoying it, like walking around with a saw, you know, breaking whatever wood he could find, um, and I didn't have to pay him a thing. He was just like, it was easy. He, he even helped out. That's pretty amazing. You don't get that.
[00:01:22] I mean, whenever I asked him to do something at home, and actually we've done it a couple of times, it's like, do you want to help clear out the table? It was like, Can I get five kroner? Dude, dude, we've done it like once or twice and it's just stuck with him and he had and he has it now he has a What's it called a one of his teeth is about to fall out
[00:01:44] and he's like, yeah, I'm gonna put it under the pillow Can't wait to see what's gonna be under
[00:01:48] Toni: actually a thing in Denmark to kind of have the tooth fairy
[00:01:51] Mikkel: Yeah, it's always been there and I kind of joke with him and said yeah when I was a kid it was just dirt under the pillow
[00:01:57] Toni: You're just shocked. And
[00:02:01] Mikkel: And my wife was like don't tell him that stuff.
[00:02:04] He's gonna have nightmares like what it's dirt?
[00:02:08] Toni: So you didn't have to pay him I can hear?
[00:02:11] Mikkel: As you can hear We've been kind of burning all our intros and we didn't have much left. So the default is still kids. And that was what we got. So sorry, not sorry. That was like, that was the personal story of the day.
[00:02:24] Toni: could have, we could have done like a Mark Roberge kind
[00:02:26] Mikkel: We could have, we could have talked about Olafur or the comp plans you had in the past, but, but anyway, one of the things we still today get asked about is how to build the perfect comp plan.
[00:02:40] What should it look like? How do we structure it? And by the way, We did an episode a while back where we talked about, you know,
[00:02:46] Toni: like five years
[00:02:46] Mikkel: it feels like five years ago where we talked about what we would call like decelerators and accelerators. We'll link it in the show notes, go back and listen to it. Because what we're going to do today is a little bit different.
[00:02:56] We're not going to give you the exactly how to structure it part, but more how you actually need to think about it. Because there's a couple of reasons people mess this up.
[00:03:05] Toni: this up. Yeah, we're gonna, we're gonna basically not help you.
[00:03:10] Mikkel: No, because we're going to link to the
[00:03:11] Toni: Basically, this, this, this episode will not be helpful.
[00:03:15] Um, and, um, I think what we, um, what we're kind of stumbling over again and again is this kind of creeping notion in the background that, Hey, something, something isn't right with this comp plan thing in general, right? Because, if, if you ask me how to build a comp plan, it's like, you know, it needs to be 50, 50, and then, you know, it needs to be this, and then accelerator, deaccelerator, and, you know, all of that stuff.
[00:03:39] But, but that is, you know, basically once you decide it all the way down the tree that you're going to have a comp plan for your account executives, and then you kind of do that thing. That's, that's pretty, and what we're trying to do is like almost go a couple of steps up, and it's like, Well, why even have a comp plan?
[00:03:55] And this is, this is, this is not a, this is not a, oh, you know, non comp plan AEs are better or whatever. Um, you know, might kind of go a little bit in that direction, but it's not about having one or not having one, but why, why, why are you having one to begin with, right? And also when did this come up?
[00:04:14] You know, who, who was actually thinking up this comp plan thing? And maybe. Maybe it's time to rethink this a little bit and spoiler alert, I don't think we have like a great answer solution kind of, Hey, this is the new setup you should be running for, but just kind of prompting you some questions, um, that you might want to think with, um, maybe a CRO, your CFO, someone else kind of, what, what is actually the right setup to kind of to have here?
[00:04:39] He
[00:04:39] Mikkel: I think it's also like we had Marc Roberge on the show not too long ago. And he talked a bit about, hey, the comp plan we're using today was invented in the eighties. It was based on perpetual sales, so it would sell like to one company and then you would get commission on the back of that. They would not have recurring, costs associated with it to you as a vendor.
[00:04:59] And that's just different. And what's happened since then is we as an industry has then, we've just innovated a bit on top of it, not really created something fundamentally new. So we added clawbacks. Yay, great. Maybe don't have that in there, but we've added incrementally to that kind of setup. And I think what we want to do is to your point, really, you know, dissect it a bit and say, is this, there are different means of compensating that could be considered depending on how your business is structured.
[00:05:24] Right.
[00:05:24] Toni: So let's start with, why, is everyone doing comp plans? Like, let's start with that, and not like, oh, it's because I did it in my last company. Um, I think there are two fundamental reasons if you boil it all the way down. number one is, market price and market expectation.
[00:05:42] Yeah. If you have an AE, that gets an on target earning of 250, 000 a year. it's, it's really difficult to get to that number without like a massive variable in there, right? So the standard is 125, 125, something in that range. and a lot of people wouldn't feel, wouldn't feel comfortable to spend 250K just in salary.
[00:06:05] so they're spending 125 and then, well, depending on this rep working out, you get more money basically, right? So it, it, it hedges the company a little bit, but ultimately what this is, what this is achieving is the, the big number two, 250. That's what this is achieving.
[00:06:22] Mikkel: Yeah.
[00:06:23] Toni: And for example, if you were to go in without any variable comp, so way more, I can expect this number to, you know, go on my bank account.
[00:06:32] Um, you would basically only be able to maybe go to 150, 170 or something like this.
[00:06:38] Mikkel: Um,
[00:06:39] Toni: And what's even worse, you might detrack the really good ones that are like, Oh yeah, no, I can get the 250 and, or beyond. Uh, and you would attract the ones that are kind of bad. It's like, ah, you know, I usually don't hit my target.
[00:06:51] So 170 is kind of a good deal
[00:06:53] Mikkel: good deal
[00:06:53] Toni: So kind of, that's, that's a problem, right? You want to get up to that 250 number. The other reason. I believe, is urgency. and we all know, you know, time kills deals, right? As long as time goes by, like, you know, people basically kind of start to realize like, maybe you don't need this thing
[00:07:11] Mikkel: thing Hmm
[00:07:12] Toni: and then you have this funky seasonality. And at the end of every quarter, suddenly a lot of deals are rolling in. Like, why is that?
[00:07:22] How can that even be? and, and you, you actually want that. As a business, you want that. It doesn't matter whether you sign a deal on December 31 or January 1st. No, it doesn't actually fundamentally matter to the business.
[00:07:34] Um, but having that line in the sand And having this reinforced and codified and those compensation plans, that's kind of, that's driving, uh, you know, the, the time urgency that you really want to have, right? Because again, growth is really not just adding ARR or revenue. It's, it's doing that in a specific time, you know, a specific time.
[00:07:57] If you can either get the ARR, but at the same time, you grow more. Or if you can grow the same AI and half the time you also grow more, right? So kind of, it's, it's really important to kind of have those, both of these items in there. Right. And I think this is, you know, a third one could be, well, you want to align it to some of the company, um, uh, targets, but I think those two are really the main reasons why people, why, why compensation plans actually exist.
[00:08:22] Yeah. Do you have a, do you have a, yeah.
[00:08:25] Mikkel: I'm just thinking there's also a couple of problems with the comp plans. When you come on the back of what we talked about, you know, just before on how basically we came from perpetual to today. And it's like, well, we pretty much only comp on new biz sales, which is just silly because as a business, it's, built around recurring revenue.
[00:08:46] So you have at some point when you pass, I don't know, 25, 50 mil ARR, probably at that point in time, you will start seeing a balance between new biz and existing business bringing in additional revenue from expansion or whatever, right? And so when you look at that and you then have a comp plan that's designed to just maximize the deal upfront,
[00:09:05] you're you kind of potentially also kneecapping the other side of the bowtie.
[00:09:10] Toni: So, that's the next thing, right? purpose of what comp plans should achieve has kind of shifted, without the comp plans changing.
[00:09:20] Um, and this is to Mark's point, it's like, Selling perpetual software. So it's basically selling the CD ROM, right? And you ship it and, you know, and, and the second you shipped it, you can, uh, you can recognize revenues and everything is great. You get paid done. You don't see that customer again, basically.
[00:09:38] Um, that, that kind of worked as a little bit like selling machinery, like heavy machinery or selling, I don't know, whatever in a, in a one off basis. That kind of makes sense, right? Um, but you know, when this shifted from high upfront cost and then nothing ever again to while it's an ongoing, you know, recurring cost stream to the customer revenue stream to you, that whole thing kind of shifted around, right?
[00:10:05] And this is, This is where then, you know, obviously winning by design and a couple of others, hey, don't forget about the other side of the bow tie and, and so forth. And, and you got to wonder, you got to wonder when those compensation plans are going to catch up with that new reality, right? And, um, so many times, In the last two, three years, people have been talking about, you know, gross retention rate being important, net retention rate being important.
[00:10:28] but if you, if you believe in the power of compensation plans, why aren't you using it in order to influence that number? That, that's kind of the, the, the thinking you might need to have. Um, and I think this is, and we'll go a bit in a, in a pro and con here maybe in a second. but this is a shift that's been kind of been missed by, by the larger market.
[00:10:49] Right. And I think, in some enterprise setups, it kind of is okay and taken care of because the account executive that sells the deal. It's also the account manager on the other
[00:11:00] Mikkel: the other side,
[00:11:01] Toni: right? Kind of, they don't, they don't change, but in, in a mid market environment, you have this throwing over the wall kind of situation.
[00:11:09] and, and what you're creating there basically is you want to maximize this deal because once you throw it over the wall, you're not going to see any of that value anymore that might come your way. Right. And that setup operationally speaking is in place because of a couple of reasons. But that is also creating this issue, uh, where we have one piece focusing on the, on the new bid side and the other one on the upsell side, which is then creating this, uh, this mismatch, if you will, of, uh, alignment with the company.
[00:11:39] Mikkel: Yeah. Yeah. You might also end up in a, at a re re at a completely wrong price point when you think about it, because if you're the AE in this scenario and you're, if I'm the A and you're the customer in this scenario and you're like.
[00:11:52] I really just need 10 licenses and then maybe it's gonna be 100. That AE is gonna be like, well, Fuck me. I'm gonna miss out on quite a lot of cash here and 10 is gonna be below the average contract values. It's not gonna help me that much towards my quota, and I kind of would like to get that check at the end of the month.
[00:12:15] They're gonna pull up all the stops to get that, you know, seat. to 50, 60, 70, whatever, however much they can discount, you know, they will pull it to the maximum they can. And then you're stuck with that cost later.
[00:12:32] Toni: I think it's, I think it's an, you know, it's two things actually. One is, yes, you're selling a bigger deal now, uh, but probably for a higher discount. Um, two, you're, um, delaying the yes. It's easier to buy 10 and to kind of go through all this other jazz. Um, you're going to make, um, rollout harder because, you know, Yes, the first 10 is going to go great because they actually have a problem in the use case and the other one's going to be more difficult.
[00:12:56] And it feels like, Oh, we aren't successful with this
[00:12:58] Mikkel: thing.
[00:12:59] Toni: And, uh, once there's a feeling of being unsuccessful, then you might drop into, ah, you know what, maybe this vendor is just not the right thing. Right. It kind of, then it drops off over there. Um, and all of this basically stemming from, um, basically maximizing the deal upfront versus doing the other thing that sounds so smart, but also here, I also want to call BS on that one, um, actually.
[00:13:22] And that's why we're saying we're not going to walk away with, Hey, that's the blueprint you should be using going forward. But me as a founder, CEO, CRO before, uh, et cetera, I do want to have as much money possible today because it is about growth. It is about like the highest AC, you know, the highest amount of revenue and the shortest amount of time.
[00:13:43] And, um, I still need to gamble. Well, will they, you know, will they actually upsell from those 10 users? Well, it's a chance. Uh, and the chance is basically codified in the discount you give. Like, yep, you know, we're not sure if you're actually going to get to a hundred, but I'm going to give you a 50 percent discount on the other 90 that you want to add, which basically to a degree is a bit more academic than it probably is, balances out the risk that I'm taking, that you might not be upselling.
[00:14:08] Mikkel: Well, the thing is, you can also, you could technically speaking, math it out to figure out, well, how many, how many new customers do I need at what price and how much will they upsell by when? You will be able to quantify that. And then it's a matter of, hey, do I want to roll the dice here? Yes or no?
[00:14:25] Toni: No, I get it, but I'm just, I'm just saying, you know, while, while every VC, PE, PLG, thought leader, person on LinkedIn is going to tell you like, well, obviously you want to sell the 10 seats
[00:14:36] Mikkel: Yeah, and
[00:14:37] Toni: you want to have the upsell, and then the upsell on that, and you know, fantastic net retention.
[00:14:41] It's like, no, the person on the ground, and that includes the CEO. And it includes the CFO
[00:14:47] Mikkel: Are they on a comp plan?
[00:14:49] Toni: They're gonna be like, no, close that bigger deal now. I wanna have it now. I think that's the other friction here is while everyone is talking all kinds of like high flying, this is how you should be doing it.
[00:15:00] when, when shit hits the fan in reality, I think people just, you know, default back to the other thing. Right. And I sometimes wonder, is it a discipline thing or is it, is it just a reality thing? And I'm actually not sure because, you know, on our side, we have the same thing actually, right? Kind of, we have, uh, currently one rep.
[00:15:17] Without compensation plans, and then one rep with compensation plans. And I had conversations with both of them about, um, how should we actually be going about, you know, in this case selling Growblocks, right? and guess what? The one without the compensation plan is like, I don't care, actually. Let's, let's sell the smaller ticket first.
[00:15:37] I get the high five. You know, implementation is easier. We upsell them later on. Let's fucking go. The other person with a comp plan is like, Toni, you know, I understand and want to play along, but no, I want to sell the 18K, you know,
[00:15:51] Mikkel: I want to sell the big deal.
[00:15:52] The big deal.
[00:15:52] Toni: I want to sell the bigger ticket. Right. And, um, and I think this is, um, that's, uh, that different behavior, it boils down to how people are compensated because that's also how you want to then direct them.
[00:16:05] Mikkel: But I think that brings us almost to another point, it's like
[00:16:07] What do you as a business want to or need to achieve? Strategically speaking. Because if you are the company that does need to bring in new biz, then fine. Like, I get it. You probably need to raise a round at some point. You need to actually show new biz growth. That's just a part, part of the game. So it makes sense that the comp plan is kind of aligned to that goal.
[00:16:30] But I think Mark's point, is more around at some point, It shifts for the business and you then have new strategic priorities. But have you then changed the comp plan?
[00:16:41] Toni: So I think this is actually why people need to think one level high up. They need to understand.
[00:16:48] that with everything in your business, as it's evolving, things need to change. Um, and, uh, and so does your comp plan. Um, and I think in the really early beginning, you probably don't care about all that. Difficult stuff. You want to get people in. Yes, you care about this being ICP, but do you actually know what ICP is at this point in time?
[00:17:07] You kind of actually don't, right? The ICP is whoever signs. That's, that's our definition. Well, not really, but that's how it could go about it in the beginning. But as that more narrows and narrows, first of all, you can now put qualifiers in the comp plan that, um, uh, incentivizes ICP versus not. Right. And the next thing is, as, as net retention is getting more important for you as a business, as a growth lever, you actually want to find ways to incentivize for that as well.
[00:17:35] Um, and I, I haven't yet seen a great comp plan that for the mid market, for enterprises different, but for the mid market, think like 10, 20 K ACVs. You know, one rep closes, the other one, um, expands where you have that kind of setup where it really is, you know, make sentence frictionless, right? Because the, there are a couple of ideas with, either having a fading out structure or having a, or there's an, there's an absolute opportunity and I'm going to run it and you need to open it before you close when the deal, there are all kinds of those things that.
[00:18:10] Kind of help and work maybe, uh, but I haven't seen it done, you know, super frictionless, for example, right? And I think this is, one of those nuts that you need to crack once you, as a, as a management team, as a revenue management team, realize and decide that the upsell is actually important, or at least, you know, net retention, including gross retention is really important.
[00:18:31] You need to find a way To also align your reps to that being the
[00:18:35] Mikkel: Yeah, don't you think it also, to some degree, reflects on the type of business you've built? Like take HubSpot, which is clearly the example from Mark Roberge. When they started, it was like a one product company. Everyone starts that way. No one starts, at least rarely starts with a platform, to be honest, right?
[00:18:53] But then, you know, they added I think maybe sales first and then support and you know, it kind of expands. And then when you think about a deal scenario, you know, sure, you can start just selling the sales piece, but then you have two other potential departments you can go and expand into all of the sudden.
[00:19:09] So there's, you know, build product to basically leverage that customer into expansion. And I think at that point in time, it, it, it, you know, it does make sense to degree to really have the focus on how do you then build a comp plan that, and, and I mean, Mark's point is, well, you can have leading indicators of retention and there's all kinds of things you can do.
[00:19:30] And I don't think, you know,
[00:19:32] Toni: I'll give you an example, because everyone is thinking like, Oh, Mark Roberge and HubSpot and they figured it out.
[00:19:37] So I can give you one HubSpot example. I talked to one of the reps there and I was like, interested in how their comp plan, you know, works. And this is three, four, five years ago. I don't remember anymore. And he told me that they obviously, you know, they had the marketing cloud, everyone wants to buy the marketing cloud or the marketing, whatever they call it.
[00:19:55] Um, and they were just kind of launching the CRM and they wanted to push the sales cloud a little bit harder. So what did they do? They simply added a, well, if you add, if you're able to add the sales cloud to the deal, you get a, I don't know, a 10%, 15 percent kicker, like something substantial, right? What did all of those sales reps
[00:20:15] Mikkel: I know where this is going now.
[00:20:17] Toni: They sold one seat for 0 dollars on the sales cloud, to all of their deals and they got a nice kicker from it, right? Kind of did that, did that do anything, right? It was literally, sometimes it wasn't even discussed with the customer. It was just added on the order form for zero. And then someone's like, what's that?
[00:20:35] It's like,
[00:20:36] Mikkel: that? Gave it to you
[00:20:37] Toni: does it, doesn't matter?. It's zero. So, you know, um, and I just want to say that, yes, HubSpot is fantastic. And by the way, kind of build that kind of company before you start complaining. But it's also not that they haven't figured, have figured this out because it is so super complex to kind of do that.
[00:20:52] Mikkel: Yeah and I mean,.
[00:20:55] even talking about one piece that's also just not considering in a comp plan is the supply. Right.
[00:21:03] Toni: So there's this. This is one shift from perpetual to recurring, right? That's one thing. Um, and then there's this, the traveling salesman to the, I'm sitting at my desk, I'm waiting for the opportunities to fall into my lap and then maybe I give them a call.
[00:21:21] Mikkel: Yeah.
[00:21:22] Toni: Maybe I prepare, maybe not. Salesman, right? We have, we have that shift now.
[00:21:28] Um, and this is not a big, Oh, you know, everyone is working from home and millennials are lazy and all that stuff. That's not what it's about. What it's about is, uh, in the, in the earlier world, you basically didn't have that specialization. You had like a full sales rep
[00:21:42] Mikkel: Yeah. Yeah. Yeah.
[00:21:43] Toni: Right. The typical, what is it kind of the,
[00:21:46] Mikkel: Rolodex, or?
[00:21:47] Toni: no, not the Rolodex, but I'm thinking about the, the traveling salesman knocks on doors and then tries to sell a vacuum up basically, right.
[00:21:53] By throwing sand in your, in your doorway. Like that, you know, that's, that's what, and, and guess what, if they didn't get out, if they didn't knock on doors, would they get any deal done? No. Right. Kind of, they need to work really fucking hard in order to You know, get the opportunity, you know, sell anything.
[00:22:10] And that doesn't mean that the super specialized AEs on our side, not in Growblocks, but in general, and you know, our side of, you know, the time, the millennium, so to speak, um, uh, are not working hard or anything, but it's, it's a different setup, right? Kind of, they are, much more a part of a production line, than they are the full production line.
[00:22:31] And, uh, when someone is hitting target or not hitting target, and I think there's still some growing up that needs to happen with AEs to realize that. And I think they do, but they don't push it well enough to management is, well, that person hit target because, uh, she got way more opportunities than everyone else.
[00:22:50] And I didn't hit target, actually better quality processing metrics, like high ACV, high conversion rate, whatever. But I just had so little input, so I couldn't kind of hit my target. but she gets paid so much and I only get paid that much because of that one number being kind of off. And that's the other thing, right?
[00:23:08] It's like, once you're that far down the specialization, um, and you know, Some people are like, you know, while they're, but I heard people are mostly running when they're listening to us. I don't know how that happened, but they're kind of going for a run, you know, they're running and under their breath like, well, you know, but they can do self prospecting.
[00:23:24] Yeah. Okay. Come on. Right. Really? Um, maybe, maybe 20 percent of that, that can kind of, you know, win back through self prospecting and so forth. But the rest, I mean, the rest is going to come from the, you know, from the opportunities that the rest of the engine needs to supply. And, um, I think it's unfair.
[00:23:42] It's actually unfair to pay people in this way. how should you do instead? I don't know. I honestly don't know because, you wanna have, uh, you wanna have that, uh, specific expectation on ARR because that ties you back to the OTE, which you wanna achieve, right? Um, doing that through opportunity or something like that doesn't work.
[00:24:01] And it's actually, for reps, What's actually more important than, knowing what the com plans is and so forth is actually, okay, dear CRO, give me a guarantee that you're going to supply X amount of opportunities over that timeframe. That's what I, that, that's actually way more important for me than to kind of know this fucking comp plan.
[00:24:20] Um, and I think again, kind of with that shift there, there's a little bit to think about, you know, is, is that the right way then still to incentivize everyone if it's kind of whacked like this? Yeah. Um, and, and I just don't think so anymore.
[00:24:34] Mikkel: it's also like when you think about, so the Traveling salesman is such an easy example. Person does everything. They even have the product in the car so they can close the deal right there,
[00:24:42] Toni: Yeah.
[00:24:43] Mikkel: But today you have full cycle AEs, you have, uh, product assisted sales, product led sales, you have pods, you have, you know, there, there's actually a couple of different ways to run this sale, which then also will influence how should you, how should you build then a comp plan, right?
[00:25:00] Um, and I think your point, in a previous episode we did was, well, when, um, When you then have the talk about the comp plan, you obviously need to say, well, I'm going to get you 80 percent there by giving you this amount of opportunities. I don't think you might not want to put it in the actual writing in the comp plan, but you gotta make sure that the distribution is fair.
[00:25:20] You, you simply have to, um, otherwise you're always going to screw yourself.
[00:25:24] Toni: yourself. No, but even talking about that the distribution is fair assumes that you have enough opportunities to begin with.
[00:25:29] Mikkel: Yeah, true.
[00:25:30] Toni: many, many times, There just might not be enough in the business to, to distribute anything. Right. Um, and I think as more people wake up to that reality, by the way, and I would even say kind of, if you were to drive the comp plan around that, you know, maybe you should make a campaign out of this Mikkel, uh, take it,
[00:25:51] Mikkel: Add it to Asana, add it to Asana.
[00:25:53] Toni: you know, maybe this whole quota on the street equals revenue. actually starts to fade away. If you actually make the comp plan around how many opportunities do you receive? And then here's the expectation, how many I want you to convert. And if you hit that expectation with some other qualifiers, you get paid, right?
[00:26:10] Then you as a CFO is like, Oh, wait a minute. That's how this works. Uh, well, do we have so many opportunities? No. Well, you know, sorry, can't hire another AE right now.
[00:26:19] Mikkel: Oh, you're gonna pay us per opportunity, but you get to keep, you know.
[00:26:24] Toni: Yeah. But, but you know what I mean? Kind of, you know, if, so that's another way to think about this. Have we. Have we solved now this supply capacity kind of conundrum and the newbiz existingbiz?
[00:26:36] Mikkel: Yeah, totally
[00:26:37] Toni: don't, I don't think so. I don't think, but sorry, if
[00:26:40] Mikkel: I do think we're going to do another episode, um, in the near future, going into all some of the different types of setups, because this has all been also focused on an individual comp plan. And there's so many other routes you can take it as well.
[00:26:54] And I just think it's an You know what? It's not going to be like, we're going to then ship a, here's the new framework for COMPLANT, but I think it's an important conversation to have in the industry, actually.
[00:27:05] Toni: the thing is also, and we kind of discussed this, um, the, the comp plans that we're living with in SaaS, which is a subscription business, obviously, um, they came in, they came from a perpetual world and before it was perpetual software, it was, you know, perpetual machinery, whatever. Right. Um, but then there are a couple of other.
[00:27:25] Subscription businesses that we could have taken a clue from, but didn't. Um, insurance, uh, phone, uh, banking, all of these things. Um, and, uh, those, they have, they work with different compensation models to incentivize for, well, the recurring aspect of their business. And they also have an issue with. The, um, the money isn't upfront paid, you know, many, many times in the mid market, it's like one invoice.
[00:27:52] And it's, it feels like an annual perpetual
[00:27:55] Mikkel: Yeah, yeah,
[00:27:57] Toni: Um, and in those businesses, the, no, you know, you will not have the customer in this case, pay a year's worth of insurance money. Um, they're going to do it in monthly increments. Uh, and how are you then going to, you know, incentivize the rep and pay the rep?
[00:28:12] Like. You got to think about this. Um, and, uh, they came up with a couple of other approaches and, uh, maybe we dive into that.
[00:28:18] Mikkel: Good thing you teased it and we didn't cover it in this episode. Because we are at the end, so, you know.
[00:28:24] Toni: That's it. if you haven't yet, please hit subscribe, uh, helps us, uh, to drive the cause. and, uh, otherwise thanks for listening and I hope you, you beat your,
[00:28:35] beat your time.
[00:28:37] Mikkel: Have a good one.
[00:28:38] Toni: Bye bye.