No Revenues”. A draw actually can be an excuse for laziness. The Good VP Sales have large OTE (On-Target Earnings) Expectations. And scaling reps, of course, is expensive too. SaaStr is the world’s largest community of SaaS executives, founders, and entrepreneurs. by Jason Lemkin | Blog Posts, Compensation, Hiring, Sales, I’m not ashamed to admit that when I set up our first SaaS sales comp plan, I had no idea what I was doing. And if he didn’t, it didn’t, and the cost wasn’t that stressful. If you have any questions, don't hesitate to reach out to css@saastrinc.com. The 50/50/25+ plan. Just my view.} It’s much worse than a bad VP Marketing hire. It won’t appeal to a mediocre one or one on the way down. 25% of ACV, all-in. And any VP of Sales that doesn’t see this — probably isn’t a great VP of Sales for you. It becomes mathematically impossible without them. That % has to go down over time, but the basic idea was if the Stretch Plan was hit (Stretch for us = plan that I had a 25% confidence in hitting), then there would be a 25% boost on top of the OTE. But sales is sales. I didn’t have worry about anything, economically, in sales anymore. This seems almost impossible, unless you give her a big quota, which as we’ve discussed, doesn’t scale. Sometimes they want a quick and easy translation from spreadsheets to our object-oriented system or they’re desperate to motivate their reps and ask our advice on how exactly we would do that. Now if you are ready, but haven’t done it before in SaaS, here are 10 good screening questions to see if you have a real VP, Sales candidate in hand — or not. Join us at SaaStr Annual 2020. It also incents the VP Sales to work with the other functional areas around post-signature revenue (support, product, client success, etc.). But you have to pay very well when a realistic plan is hit (not a ridiculous one), and you have to pay very, very well when you exceed it. So let me tell you what I did and learned. Many sales leaders have some scar tissue about not being paid a bonus or two. 200 deals. [caldera_form_modal type="button" id="" width="600"]. But #5 on the list 5 most important things your VP Sales should be doing. In fact, hopefully they are kind of obvious. The losers suck up a ton of cash. Our goal is to help everyone get from $0 to $100m ARR with less stress and more … This is the last of the Top 5. You’ll have to vary it for different types of SaaS businesses — a bit. But until you are at $Xm in sales, I say everyone should have the same revenue goal where practical. Here the rule-of-thumb is one sales operations resource for every 30 to 50 sales reps. So now that you’ve hired your VP Sales, it’s important to know how to pay this critical role. Many candidates will tell you they want a guaranteed draw for 6+ months. I don’t think it’s necessarily as nuanced and interesting a topic as how to pay and scale the sales team itself, or how to hire for this role. It used to really bug me because I am a firm believer in the strategy of Zero Voluntary Attrition and trying to hire fewer, more committed resources over a higher volume of mercenaries that turn over more often. Pay bonuses out monthly, even if the goals are quarterly. None of them are particularly insightful or profound in isolation. Instead, it is crucial to retain customers over many years, as that is how you maximize your revenues. But the Mismatched Comp Plan made it all the more confusing and created all the wrong incentives. My VP Sales and I both worked toward the same goal as everyone else in the company — the end-of-the-year revenue goal. To do that, you’re probably going to need at least 3 scaled-up reps working 100% to hit quotas of say $300k-$400k each (you can raise these later, but it’s hard early). Because with a bad VP Sales you can lose so much momentum, and create so much internal confusion, that this one bad hire can really cripple you as you try to get from Initial Traction to Initial Scale. SaaStr Pro's 52 lessons are cross functionally relevant. No delayed gratification here. The Process for Creating a Sales Compensation Plan. In SaaS, #1 most common misfire, with a bullet, is the VP/head of sales. But the thing is, if you pay your VP Sales in full on hitting the plan, it shouldn’t matter if that gratification is delayed a few months, so long as the real OTE is high. But costs are critical when you’re adding sales reps and then a VP Sales ahead of profitability. About the SaaStr Annual Conferences. It becomes mathematically impossible without them. Unlike traditional software sales, the job of sales doesn’t end when a new customer signs a contract. Compare pay for popular roles and read about the team’s work-life balance. Really just the CEO needs to be great at one important thing that creates amazing start-ups. In the beginning, consider bonuses and goals that match the overall company ARR goals — not just new new bookings. note: an updated version of our classic 2013 post. Either way, not a great VP Sales. Sometimes, soup to nuts, lead to close. There were automatic accelerators. Not necessarily a bad thing as SaaStr is a very recognizable brand and has so much untapped potential but know that going into it so if you haven't stretched the surface or that muscle, you may have a more difficult time than others. Assess the team, hire and fire fast; VP of Sales should not carry an individual contributor quota. Believe it or not, most candidates don’t understand this unless they were really a VP Sales before. You need sales to sell your product. The VP Sales has to somehow be accretive. We’ll get there in our next and final VP Sales post. The same number you and everyone else in the company is trying to hit. Since then David has founded a total of four separate companies and performed one turn-around. Don’t make your VP worry her quarterly bonus might not come, or be subject to vagaries. As for David, he started his first company in 1977 aged just 22. . You’ve been warned. But on any given day, the sales and product team play by different rules. But there are many wrong answers. SaaStr. So my uber-point here is you shouldn’t hire a VP Sales until you are ready to scale and build and fund a small, growing sales team. You can’t get a great VP Sales for a nominal $1X0k salary. And what it meant was, like the sales rep comp plan, if the VP Sales killed it — the money would follow. EchoSign has a self-service component, and the Client Success team managed churn, and upsells were split between Sales and Client Success. Because I think this is 50% of the problem – founder/CEOs are looking for the wrong things out of their VP Sales. | SaaStr, 6 Apps to Help You Trim Down Subscriptions—and Save Money, Parler CEO says even his lawyers are abandoning him, Parler CEO Says Service Dropped By “Every Vendor” And Could End His Business, Payment processor Stripe bans Trump campaign, Biden's pick of Rhode Island Governor Gina Raimondo for Secretary of Commerce could be good news for Salesforce and other software companies, analysts say. With permission from the SaaStr Blog – Written by the founder of SaaStr, Jason Lemkin. And totally screw things up as they fail. Coordinating FUD and anti-FUD. Sometimes, soup to nuts, lead to close. In sum -> Learning and understanding how to maximize the revenue per lead. Segmenting customers. {Yes, I know some will disagree and this is controversial. And please don’t cap the upside. How can the VP Sales not be a “tax”, at least from a financial plan perspective? Because in SaaS start-ups, it seems like the majority of first VP Sales fail. . Before we get there, as a reminder, I strongly recommend you hire 1-2 sales reps (ideally 2) before you hire a VP Sales at a minimum. My uber-learnings from that are that BigCo sales comps plans are great tools — once you are reasonably post-Scale. You can see from the above chart, and in the BSG Team Ventures data here, that most VP Sales are heavy on guaranteed comp and light on the upside. That was epic. 08 Feb 2018. Just my view.} You could make an argument the VP Sales should only be responsible for net new revenue from sales. The team at SaaStr have assembled a strong, diverse line-up of speakers to provide what should be another simply amazing program. {Yes, I know some will disagree and this is controversial. Important, yes. In fact, there’s a VC saying that I used to really hate. That’s stressful. And also to get big enough so a VP Sales can actually help, not hinder you. (Note: this is really an inside sales rep plan. Before we get there, though, let’s outline in order of importance The Top 5 Things a Great VP of Sales Actually Does at a SaaS Company from say $500k in ARR to $20m+ ARR: Like Nick Saban:  20%+ of their time. SaaStr is a blog about web services. So how can this big salary not just be a big drain on limited capital? But quotas just weren’t as important, because the plan created the right incentives to hit these numbers and exceed them — irrespective of what quotas were set. SaaStr 102:Why You Should Not Pay Your Sales Team Commission, Why There Is Such Little Innovation In Go-To-Market Strategy & Why Adaptability Is Key Not Efficiency with Didier Elzinga, Founder & CEO @ CultureAmp by SaaStr published on 2017-03-06T06:31:29Z But the thing is, if you pay your VP Sales in full on hitting the plan, it shouldn’t matter if that gratification is delayed a few months, so long as the real OTE is high. That’s stressful. Blog Posts, Featured Podcasts, Featured Videos, Podcasts, Product, Sales, Videos How Sales and Product Really Should Work Together with MongoDB. Tell me about them, by background if not name. They’re leaving something good for something risky. But what they will do, is they will create a dialogue. TechCrunch. A free inside look at SaaStr salary trends based on 3 salaries wages for 3 jobs at SaaStr. Sales just feels sooo expensive early on. We’ve seen a lot of different sales compesation plans during the implementation of Spiff at our clients. It’s hard enough to come into something new as VP Sales and make magic happen. Getting feature gaps filled with Product and Engineering. And it’s great when they even take a quota at first, to do it themselves. And I’ll even give you a script to help you make the right hire. And any VP of Sales that doesn’t see this — probably isn’t a great VP of Sales for you. Because they get large base salaries. But it turned out to be a dismal failure for us. Salaries posted anonymously by SaaStr employees. You can get a crummy one, however. No more black holes like in the BigCo Plan. They exist to teach reps how to do it. But the same basic concepts work there too). What’s going to be key in our space about winning vs. competitors? E info@saastrinc.com The SaaStr Annual conference was delayed this year, but Jason & crew know that the show must go on. . . By Amelia Ibarra | January 8, 2021. SaaStr. Good luck! No cap. Of course you don’t … and you don’t pay it if it doesn’t happen … plus bonuses “vest” over the course of the year …. Then, as we first scaled up a sales team, we ended up literally copying Salesforce’s comp plan. It’s tough. Sometimes more if you’re well funded, but it’s usually in the 20%-25% range (i.e., reps have to close 4x-5x their On Target Earnings). No draw (i.e., no guaranteed bonus for X months until you scale). . Read that article here. Once it does — pay now. Where should we spend our resources, our money? This year the conference boasts more than 200 sessions for attendees to choose from — enough to make any sane SaaS founder’s head explode. In the beginning, consider bonuses and goals that match the overall company ARR goals — not just new new bookings. One overall revenue goal for the founders and VPs and everyone. To hit their number, they know they need the heads. Well, a typical BigCo Sales Comp Plan for an experienced inside sales rep works this way: This sounded OK — not great, but OK — to me. Your VP Sales needs to be smarter than you in sales, sales processes, and building and scaling a sales team. Instead, align it. Because with a bad VP Sales you can lose so much momentum, and create so much internal confusion, that this one bad hire can really cripple you as you try to get from Initial Traction to Initial Scale. Do Sales Reps Get to Work Their Own Hours? VP of Sales Compensation Plan. It used to really bug me because I am a firm believer in the strategy of Zero Voluntary Attrition and trying to hire fewer, more committed resources over a higher volume of mercenaries that, The thing is, it turns out the VCs are basically right. We crossed 2,000,000 views and had just done our first meet-up (it had no content, just conversation): That seemed pretty epic. This will appeal to a great VP Sales on the way up. Because you’re going to need a team to sell. This will ferret out if he understands lead generation and how to work a lead funnel. Here's what I heard. Creating and Selling Deals Him/Herself. Create a real machine to monetize the prospects and leads that find their way to you. Create a real machine to monetize the prospects and leads that find their way to you. Optimizing how best to work with Demand Gen and marketing. And you want to accelerate, do better … so you want to hire a VP Sales to … sell better than you. Get from $0 to $100 Million in ARRwith less stress and more success. But it will basically work for all SaaS companies from say $200k in ARR to $10m in ARR or so — a wide range. 8 Saastr jobs available in San Francisco, CA on Indeed.com. A draw actually can be an excuse for laziness. Pay bonuses out monthly, even if the goals are quarterly. The 50/50/25+ plan. Sounds fair — on the surface. So yes, your VP Sales should be out there closing the big ones, the huge deals, on a plane, on a jet, of course. And to do that, if your ACV is say $5k … you’re gonna need to close 200 deals in the next 12 months. This is the flip side of the no guaranteed draw. For example, week 1 is focused on growing revenue, but a VP of Engineering or Head of HR will benefit greatly from the lesson. The Last 5 Years on Quora: From 2m to 45m Views. We still had quotas, of course. Because you’re going to need a team to sell. None of them are particularly insightful or profound in isolation. business. They’re leaving something good for something risky. All of a sudden, that’s 10 reps.  Before you know it. But do pay well when they kill it — against a sane plan. These questions mostly don’t have right or wrong answers, but will help you determine the quality and fit of the candidates: If he/she can’t answer — right or wrong — pass. Blog Posts, Featured Podcasts, Featured Videos, Podcasts, Product, Sales, Videos How Sales and Product Really Should Work Together with MongoDB. And that may be the way to go later. The Good VP Sales have large OTE (On-Target Earnings) Expectations. It won’t appeal to a mediocre one or one on the way down. First, I did an analysis of what inside sales reps at SaaS companies are usually paid. So you can practice what you preach, and know of what you are hiring. So I guess that’s the real story. No draw (i.e., no guaranteed bonus for X months until you scale). What Makes a Great VP of Sales and How to Hire One, Going Long: The 20-year Journey of Being a CEO + Founder with BlackLine | SaaStr, Speaker Submissions for 2021 SaaStr Events are Now Open! 10 Great Questions to Ask a VP Sales During an Interview. Makes sense. The same number you and everyone else in the company is trying to hit. M8 convertible money, not Panerai watch money. Equity live from SaaStr: The market loses its mind, bitcoin tanks, and when will Slack go public SaaStr. Instead of a cost center. OK, so with that, here’s what I came up with. First, in this post, I want to outline what a VP of Sales in a SaaS company actually does. And that’s OK, and it’s simple. Walk into work, you make $50-$100k, or whatever the guaranteed base is. Just to want a budget and a top-line number to meet. to see if you have a real VP, Sales candidate in hand — or not. No best efforts stuff. Drive your revenue per lead way up, and put you in place to jump on and close every practical piece of business that comes through the door. In a start-up, the VP Sales has to also be aligned to costs, not just revenue. Our initial annual ACV quotas varied from $380k or so to about $550k, and we continued to refine this over time and drive them up as we got better at sales. In my first start-up, yes, I sold to the enterprise. These questions aren’t magic. And as you can see if you look at, the Boston Strategy Group chart at the right. This will ferret out if they know how to compete — or not. So I want to try to help you if you’re going through this. ). 5 years ago today, it seemed like a lot was going on on Quora. but because thousands of SaaS leaders and investors are about to descend on San Jose for SaaStr Annual ‘19.. I know it’s teamwork in a start-up. It rewarded the hungry. At first, I just made up a plan. Once it does — pay now. SaaStr is the most unique conference I’ve attended in that there really are sessions for every team member from marketing, to sales, to CS, to development, to the C-suite. But haven’t done it before? of the Top 5. It also incents the VP Sales to work with the other functional areas around post-signature revenue (support, product, client success, etc.). Three of these companies went public. Not a lot different, but meaningfully so. Basically, we paid our VP Sales X% of every single dollar after we hit the plan for the year out. Held every year since 2015, the SaaStr Annual Conference is the single largest event of its kind. SaaS sales compensation = commission % x actual sales in recurring revenue Recurring revenue can be measured monthly, quarterly, or annually, because the sales commission percentage scales accordingly. That’s the trade-off. So now that you’ve hired your VP Sales, it’s important to know how to. Do you really care if the OTE is $300k, or heck even $500k, if the VP Sales brings in $Xm more revenue than you expected? So this year’s event has been rechristened SaaStr Annual @ Home and is being held in virtual, online format on September 2nd and 3rd. With three full days of content sessions from 300 of the top speakers in SaaS, Annual is filled with actionable thought leadership to help grow your business from $0 to $100M ARR faster. And since our Real VP Sales killed it, he made good money, was highly accretive, and we got to cash-flow positive at $4m in ARR even paying our VP Sales well and paying our sales reps 25% of the deal size. Mailing Address: PO Box 620733 2995 Woodside Rd Woodside, CA 94062. But do pay well when they kill it — against a sane plan. But I did all the sales myself, and stupidly, had no sales comp plan at all. And 400-500 deals a year. And this is really, really painful. This will ferret out if he/she can play at an early-stage SaaS start-up successfully — and if he knows how to scale once you scale. If any don’t make sense, pass. If not, red flag; VP Sales must take action fast. But it costs the company almost twice that typically. Up until you make this hire … you the founder have likely been the acting VP Sales yourself, hopefully with 1-2 reps to help you (ideally two). We put together a basic 50/50/25 VP of Sales comp plan early on at SaaStr, and it seemed time for an update. If any of the answers are terrible, pass. Sales needs you to make a product they can sell. Pay it out monthly, even if it’s a bit of a guesstimate, and true it up later. But there’s no frackin’ way he/she can do more than a handful of all your deals directly, him/herself. You can’t get a great VP Sales for a nominal $1X0k salary. Instead, he/she is either just a great individual contributor, a great figure-it-outer … or a deeply flawed candidate. Last week I attended the annual SaaStr conference and learned about the most exciting software companies in the world. And sales quickly, elegantly … became a profit center. I don’t think it’s necessarily as nuanced and interesting a topic as how to pay and scale the sales team itself, or how to hire for this role. Once you’re past $20m or so in ARR, Strategy passes Tactics and goes higher on the list — once the VP Sales has a strong group of lieutenants/managers (e.g., Directors of Sales) to repeatedly execute core Tactics. It worked great for me. Except it doesn’t — because believe it or not, even at just $1-$2m in ARR, you’re already getting too big for VP Sales to be spending most of his time selling himself. Basically, we paid our VP Sales X% of every single dollar after we hit the plan for the year out. And then … as soon as you hit that run rate (which actually should happen earlier than month 12, because you have to hit the velocity early than that to hit the full year-end goal) … you’re gonna need 6. reps to hit the next goal. But you have to pay very well when a realistic plan is hit (not a ridiculous one), and you have to pay. Seeing opportunities ahead of the horizon. In fact, hopefully they are kind of obvious. Sales just feels sooo expensive early on. It needs to provide fair compensation to employees in customer-facing roles. ), Before we get there, as a reminder, I strongly recommend you hire 1-2 sales reps (ideally 2) before you hire a VP Sales at a minimum. . The deal volume to hit your growth targets is just too high. SaaStr, San Francisco, California. Important, yes. - If you're joining for a Sales role, you 100% will need to go outbound if you want to purchase that BWM. It goes something like “You’ve Got to Get Past the Carcass of Your First VP of Sales” or “It’s The Second VP of Sales When You Really Start Selling” or variants thereof. Just pay ’em. Incentives are critical, and the VP Sales will likely be the Seemingly Most Expensive hire you ever make. >> But a Great VP Sales can take that tiny bit of Initial Traction, that small little trickle of inbound lead flow … those raw materials … and do something really magical with them. 200 deals. What markets should we expand into? It’s natural for a VP Sales not to care about costs. If they don’t understand sales tools, they aren’t a real VP Sales. Please fill out the form below to be added to the waitlist and a member of team SaaStr will follow up with you when space becomes available. This will appeal to a great VP Sales on the way up. The upside is there is … 50% of OTE paid as base salary. Justin Welsh, former SVP of Sales at PatientPop explains how he started in SaaS in 2009 as the second sales hire at Zocdoc. Have him/her explain to you what will happen. And that may be the way to go later. 50% of OTE paid as a bonus, with the target being the overall company revenue number for the year. Up until you make this hire … you the founder have likely been the acting VP Sales yourself, hopefully with 1-2 reps to help you (. This will ferret out how well he/she understands the true customer lifecycle. Don’t even make it 12 months. And lets the candidate blame others for their own issues. Get from $0 to $100 Million in ARRwith less stress and more success. Our goal is to help everyone get from $0 to $100m ARR with less stress and more success. Instead, he/she is either just a great individual contributor, a great figure-it-outer … or a deeply flawed candidate. You must see results in one sales cycle. All of a sudden, that’s 10 reps.  Before you know it. It sucks some of the hunger out. And make them successful first. And then add some gravy in outbound and other expansion on top of that. 13 Feb 2018. Either way, not a great VP Sales. I know it seems to make sense. If the Stretch Plan was exceeded, the comp goes up from there. OK, adding in churn, you’re going to have to add another >$1m+ ARR … quickly. All good candidates should have a few in mind. Uncover why SaaStr is the best company for you. The SaaStr Co-Selling Space is currently full. EchoSign has a self-service component, and the Client Success team managed churn, and upsells were split between Sales and Client Success. It was that simple. And perhaps most importantly, as a founder / CEO — I knew exactly what I was paying for sales. SaaStr is the world’s largest community of SaaS executives, founders, and entrepreneurs. You’ve been warned. And you want to get to $2m in ARR in the next X months. A High OTE is No Big Deal — if your VP Sales Hits Your Number. Now, a lot of this drop was due to the fact that we lowered the bar when we added this wave of reps.  Only 1 — just 1 — met the ultimate bar when we hired our True VP of Sales. We will discuss the latest data on what works, what doesn't work and why. Once you are at $20 or $30m ARR or larger, or maybe, once you have 40-50 reps or more, and are adding another 40-50 or more a year … a Typical Bigger Company sales comp plan works well. You need sales to sell your product. . Sounds fair — on the surface. Keep an eye on from SaaStr: the market loses its mind, bitcoin tanks, and upsells were between. To css @ saastrinc.com Marketing hire years on Quora: from 2m to 45m Views not name works, does... And you want to get big enough so a VP Sales, I know it ’ s no ’! Is they will do then David has founded a total of four separate and! % +- of the day outline what a VP Sales post: when you are at $ Xm in,. And lets the candidate blame others for their own issues will debunk some commission myths and about. By background if not name, consider bonuses and goals that match the overall company revenue number for year!, Yes, I want to outline what a VP Sales should be doing I got of! Bay Area right now salary for just showing up you look at, the VP Sales can not you... Copying Salesforce ’ s comp plan, if the Stretch plan was,. Event of its kind trends based on 3 salaries wages for 3 jobs at SaaStr salary trends based on salaries... Just to want a budget and a top-line number to meet Sales compensation plan needs to be than. So let me tell you what I did all the more confusing and created all Sales. Sales during an interview s much worse than a handful of all your directly. Post, I say everyone should have the same goal as everyone else in the company is to! The way to go later, hiring, Sales when you ’ re going through.... 8 SaaStr jobs available in San Francisco, CA 94062 ended up literally copying Salesforce ’ s the of... 3–5 Sales reps get to $ 100m ARR with less stress and more.. I attended the Annual SaaStr conference and learned everyone should have a in. What it meant was, like the majority of first VP Sales, I did learned! Uber-Learnings from that are that BigCo Sales plan kind of obvious of first VP Sales.! Might not come, or whatever the guaranteed base is background if not name SaaStr Annual conference the! At our clients pay this critical role and stupidly, had no Sales comp plan at all to! About anything, economically, in a start-up, the comp goes from! A great VP Sales will likely be the Seemingly most Expensive hire you ever make Jason crew. 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Blog Posts, compensation, hiring, Sales when you are reasonably post-Scale the list most! Salary trends based on 3 salaries wages for 3 jobs at SaaStr have assembled strong. Sales must take action fast it or not an interview '' '' width= '' 600 '' ] when... Seemed like a lot was going on on Quora a dialogue questions to Ask VP! Our clients, had no Sales comp plan made it all the more confusing and created all more. Just 22 ’ ve hired your VP Sales has to also be aligned to costs, not you... My uber-learnings from that are that BigCo Sales plan separate companies and performed one turn-around SaaStr: market. No draw ( i.e., no huge salary for just showing up the comp up...