Sales compensation comparison between 1

Software and Hardware

Issues which may arise Issues which may

arise
 Why low basic pay in
 Managing two sales force with Software?
different compensation plan
 Why accelerators in
 Issues of Equity Software?
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Sales compensation comparison
between Software and Hardware

 Issues which may arise

 Discontentment in the existing workforce
 Why low basic pay in Software?
 Why accelerators in Software?
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Reasons for having different plans?

 If we are not changing the plan what will be the outcome?

 If we are changing the plan what will be the outcome?
 Should we change the plan?
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Differences in two companies

Industry Economics
Software: Gross margin
Hardware: Margins are less
is double than the hardware

Type of Sale (Which sale is difficult?)

Based on softer metrics
Based on measurable technical specification
1. Hypothesized ROI calculation, 2. Changing business practice

Types of Salesperson
1. Relation Based 1. Technical People
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Building Software Sales Force (Jeff Nolan)

Never Hire a sales executive who does not talk about the
compensation plan in 1st five minutes of the interview...
All they care is about money and that’s exactly how you
want them

“If you are going to ask a CFO for a million bucks,

you’d better look the part. I don’t like seeing them
walking around in Khakis and golf Tshirts. I want them
wearing Armani and Prada.

You want your salespeople to be highly leveraged. Big

mortgages, expensive cars, private schools and Big life
styles and all good things…(this gives them) and fear of
losing big lifestyle keeps them running
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Building Software Sales Force (Jeff Nolan)

Never mess with the compensation plan,

particularly with the high end guys. Commission
checks are easiest checks in the world to write. Just
because some guy on your team is making an
obscene amount of money doesn’t make he did
not earn it.

Beware of seasonal sales executives that

know how to game your compensation plan
by sandbagging into the next quarter so that
their accelerators kick in. You actually WANT
people smart enough to do this, but you also
don’t want to make it easy for them to do it.
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Decision

 Continue the different types of compensation plan

 Analyze the pattern of average salary of both the company
 How many top performers in both the companies?
 Compare
 Remember only 20% of sales people bring 80% of sales
 Software sales is purely on relationship based
 Only few people are good in that
 You cannot loose them
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First Prize: Cadillac Eldorado
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Different Compensation Plans