If they don’t understand sales tools, they aren’t a real VP Sales. VentureBeat. SaaStr, Inc. Office: Heart of SOMA San Francisco, CA . 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. And please don’t cap the upside, . 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. And recruiting great reps and making them successful is the #1 most important thing your VP Sales will do. | 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. Here’s what I learned and knew before I figured out the 50/50/25+ plan: No best efforts cr*p.  Even if you hire a VP Sales very early, there has to be a clear quota and plan for him or her to hit. A draw actually can be an excuse for laziness. Your VP Sales needs to be smarter than you in sales, sales processes, and building and scaling a sales team. Either way, not a great VP Sales. So here’s what I figured out, for us, and it worked well. It’s #5 I think that is the root of half of the problems hiring your VP Sales. 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. You could make an argument the VP Sales should only be responsible for net new revenue from sales. If any of the answers are terrible, pass. M8 convertible money, not Panerai watch money. 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. 25% or more upside for exceeding that plan. But it costs the company almost twice that typically. One overall revenue goal for the founders and VPs and everyone. Here's what I heard. Instead of a cost center. And totally screw things up as they fail. 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. I know it seems to make sense. 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. Let me give you a partial interview script that may help a bit. Don’t make your VP worry her quarterly bonus might not come, or be subject to vagaries. SaaStr is the world’s largest community of SaaS executives, founders, and entrepreneurs. 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). But on any given day, the sales and product team play by different rules. In my first start-up, yes, I sold to the enterprise. You need sales to sell your product. | 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. {Yes, I know some will disagree and this is controversial. None of them are particularly insightful or profound in isolation. But sales is sales. Justin Welsh, former SVP of Sales at PatientPop explains how he started in SaaS in 2009 as the second sales hire at Zocdoc. Because I think this is 50% of the problem – founder/CEOs are looking for the wrong things out of their VP Sales. If not, red flag; VP Sales must take action fast. A great sales compensation plan needs to accomplish quite a lot. 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. So I guess that’s the real story. This will ferret out if he understands lead generation and how to work a lead funnel. It becomes mathematically impossible without them. My uber-learnings from that are that BigCo sales comps plans are great tools — once you are reasonably post-Scale. This is the flip side of the no guaranteed draw. And this is perhaps the unobvious part. Revenue per lead fell by over 50% with the BigCo sales plan. By Amelia Ibarra | January 8, 2021. No draw, no huge salary for just showing up. 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. SaaStr & SaaStr Fund; ceo/co-founder @ Adobe Sign / EchoSign. 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. 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). Mailing Address: PO Box 620733 2995 Woodside Rd Woodside, CA 94062. The 50/50/25+ plan. You’ve been warned. But do pay well when they kill it — against a sane plan. 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. In fact, hopefully they are kind of obvious. Why? No cap. Not a lot different, but meaningfully so. to see if you have a real VP, Sales candidate in hand — or not. 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. Makes sense. How can the VP Sales not be a “tax”, at least from a financial plan perspective? At first, I just made up a plan. Ideally, don’t do a guaranteed draw. And the great VP of Sales all know this. No draw (i.e., no guaranteed bonus for X months until you scale). If he/she can’t describe how they built a team — pass. And you want to get to $2m in ARR in the next X months. But it will basically work for all SaaS companies from say $200k in ARR to $10m in ARR or so — a wide range. It’s tough. 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! Pay bonuses out monthly, even if the goals are quarterly. A draw actually can be an excuse for laziness. Really just the CEO needs to be great at one important thing that creates amazing start-ups. Ouch. Have too many of them, and your economics are wrecked. That’s stressful. The Process for Creating a Sales Compensation Plan. well when you exceed it. That was our Year of Hell. We can talk more about field sales later. If the Stretch Plan was exceeded, the comp goes up from there. but because thousands of SaaS leaders and investors are about to descend on San Jose for SaaStr Annual ‘19.. 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. 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. Just my view.} - If you're joining for a Sales role, you 100% will need to go outbound if you want to purchase that BWM. And you want to accelerate, do better … so you want to hire a VP Sales to … sell better than you. Don’t make your VP worry her quarterly bonus might not come, or be subject to vagaries. So let me tell you what I did and learned. SaaStr began in 2012 as a simple attempt via a WordPress blog, together with a few answers on Quora, to help share back Jason M. Lemkin’s learnings of going from $0 to $100m ARR with the next generation of great SaaS and B2B entrepreneurs. 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. The 50/50/25+ plan. It rewarded the hungry. Sales just feels sooo expensive early on. This seems almost impossible, unless you give her a big quota, which as we’ve discussed, doesn’t scale. And to do that, if your ACV is say $5k … you’re gonna need to close 200 deals in the next 12 months. It’s #5 I think that is the root of half of the problems hiring your VP Sales. And if he didn’t, it didn’t, and the cost wasn’t that stressful. If it’s not a similar fit to you, pass. 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. 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 (. But there are many wrong answers. 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. So now that you’ve hired your VP Sales, it’s important to know how to pay this critical role. But costs are critical when you’re adding sales reps and then a VP Sales ahead of profitability. . . You’ll have to vary it for different types of SaaS businesses — a bit. I know it’s teamwork in a start-up. More here in our prior VP Sales post: When You Hire Your First Sales Rep — Just Make Sure You Hire Two, Now if you are ready, but haven’t done it before in SaaS, here are. Important, yes. SaaStr, San Francisco, California. 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. It won’t appeal to a mediocre one or one on the way down. Sales needs you to make a product they can sell. ). Get from $0 to $100 Million in ARRwith less stress and more success. The team at SaaStr have assembled a strong, diverse line-up of speakers to provide what should be another simply amazing program. And this is really, really painful. {Yes, I know some will disagree and this is controversial. . But incentives are critical, and the VP Sales will likely be the Seemingly Most Expensive hire you ever make. Basically, we paid our VP Sales X% of every single dollar after we hit the plan for the year out. The deal volume to hit your growth targets is just too high. Find out what works well at SaaStr from the people who know best. Because in SaaS start-ups, it seems like the. 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. 10 Great Questions to Ask a VP Sales During an Interview. They’re leaving something good for something risky. 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. We put together a basic 50/50/25 VP of Sales comp plan early on at SaaStr, and it seemed time for an update. OK, so with that, here’s what I came up with. 5 years ago today, it seemed like a lot was going on on Quora. So how can this big salary not just be a big drain on limited capital? In a start-up, the VP Sales has to also be aligned to costs, not just revenue. Then, as we first scaled up a sales team, we ended up literally copying Salesforce’s comp plan. It’s much worse than a bad VP Marketing hire. SaaStr is the world’s largest community of SaaS executives, founders, and entrepreneurs. A number that’s hard to hit, but that you have say 50-60% confidence you can hit. . So now that you’ve hired your VP Sales, it’s important to know how to pay this critical role. OK, adding in churn, you’re going to have to add another >$1m+ ARR … quickly. It’s natural for a VP Sales not to care about costs. Stream SaaStr 153: How To Build and Scale Sales Teams As A Technical Founder, How To Scale The Sales Learning Curve & Why No One Actually Cares About Your Product with Spenser Skates, Founder & CEO @ Amplitude by SaaStr from desktop or your mobile device 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. Pitch scripts. They all either have in their back pocket, and/or are constantly on the prowl for the next 2-3 great reps.  Because sales is a lead-driven but headcount-closed business. Once it does — pay now. 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. 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. You must see results in one sales cycle. And as you can see if you look at, the Boston Strategy Group chart at the right. 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. We will debunk some commission myths and talk about how your company can most effectively use incentive compensation. Not a lot different, but meaningfully so. 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 more reps to hit the next goal. Once it does — pay now. 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. Many candidates will tell you they want a guaranteed draw for 6+ months. SaaS Enterprise Sales Compensation Plan Well, a typical BigCo Sales Comp Plan for an experienced inside sales rep works this way: Guaranteed, Competitive Base Salary. 8 Saastr jobs available in San Francisco, CA on Indeed.com. Helping his/her sales team close deals. Let’s say you hire your VP, Sales when you are at $1m in ARR. 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. We still had quotas, of course. And I got most of this wrong before I got it right. We will discuss the latest data on what works, what doesn't work and why. And please don’t cap the upside. My VP Sales and I both worked toward the same goal as everyone else in the company — the end-of-the-year revenue goal. So guarantee me my full bonus for 6+ months until I’ve built up a big enough pipeline to close enough revenue to hit my number. This will appeal to a great VP Sales on the way up. Since then David has founded a total of four separate companies and performed one turn-around. Last week I attended the annual SaaStr conference and learned about the most exciting software companies in the world. 200 deals. And make them successful first. The SaaStr Co-Selling Space is currently full. And then add some gravy in outbound and other expansion on top of that. What markets should we expand into? And make them successful first. There were automatic accelerators. 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. And 400-500 deals a year. David Skok is a General Partner @ Matrix Partners, the firm with a portfolio including the likes of Hubspot, ZenDesk, Quora, CloudBees and more incredible companies. So what happened? So yes, your VP Sales should be out there closing the big ones, the huge deals, on a plane, on a jet, of course. 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. That’s the trade-off. These questions aren’t magic. By Amelia Ibarra | January 8, 2021. 10 Feb 2017. How to compete. 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. Create a real machine to monetize the prospects and leads that find their way to you. . But haven’t done it before? 4 sales trends to keep an eye on from SaaStr this year, including AI Technology Apps & Services Earnings. The deal volume to hit your growth targets is just too high. It’s an exciting time in the Bay Area right now. And you want to get to $2m in ARR in the next X months. No cap. The upside is there is … Create a real machine to monetize the prospects and leads that find their way to you. Important, yes. In the beginning, consider bonuses and goals that match the overall company ARR goals — not just new new bookings. As for David, he started his first company in 1977 aged just 22. . A number that’s hard to hit, but that you have say 50-60% confidence you can hit. This year the conference boasts more than 200 sessions for attendees to choose from — enough to make any sane SaaS founder’s head explode. So this year’s event has been rechristened SaaStr Annual @ Home and is being held in virtual, online format on September 2nd and 3rd. This seems almost impossible, unless you give her a big quota, which as we’ve discussed, doesn’t scale. Read that article here. Either way, not a great VP Sales. And what it meant was, like the sales rep comp plan, if the VP Sales killed it — the money would follow. If you do end doing a draw, keep it short (e.g., one quarter) and make sure the VP Sales have to “make it up” in sales quota payments by the year-end. Be better than that, and build trust and loyalty back. Your VP Sales cannot rescue you from “Great Product. Many candidates will tell you they want a guaranteed draw for 6+ months. But until you are at $Xm in sales, I say everyone should have the same revenue goal where practical. And 400-500 deals a year. The sky was the limit for the A+ reps. SaaStr. And you want to accelerate, do better … so you want to hire a VP Sales to … sell better than you. VP of Sales Compensation Plan. But until you are at $Xm in sales, I say everyone should have the same revenue goal where practical. And perhaps most importantly, as a founder / CEO — I knew exactly what I was paying for sales. The same number you and everyone else in the company is trying to hit. Join us at SaaStr Annual 2020. But what they will do, is they will create a dialogue. It’s hard enough to come into something new as VP Sales and make magic happen. of first VP Sales fail. Three of these companies went public. And any VP of Sales that doesn’t see this — probably isn’t a great VP of Sales for you. The world's largest community for business software. You’ve been warned. TechCrunch. Then at Adobe Sign / EchoSign I had some good — and painful — learnings. Working and closing key deals with them. The Good VP Sales have large OTE (On-Target Earnings) Expectations. Segmenting customers. Even if you hire a VP Sales very early, there has to be a clear quota and plan for him or her to hit. It also incents the VP Sales to work with the other functional areas around post-signature revenue (support, product, client success, etc.). The losers suck up a ton of cash. Creating and Selling Deals Him/Herself. 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. No delayed gratification here. I didn’t have worry about anything, economically, in sales anymore. 50% of OTE paid as a bonus, with the target being the overall company revenue number for the year. It’s hard enough to come into something new as VP Sales and make magic happen. No best efforts stuff. Many sales leaders have some scar tissue about not being paid a bonus or two. Backfilling and Helping His/Her Sales Team, 5. It needs to provide fair compensation to employees in customer-facing roles. None of them are particularly insightful or profound in isolation. It’s just one way to go: So don’t sweat it. And this is perhaps the unobvious part. Apply to Head of Event & Industry Content, Full Stack Developer, Account Executive and more! No Revenues”. 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). All good candidates should have a few in mind. And I’ll even give you a script to help you make the right hire. Don’t even make it 12 months. Unlike traditional software sales, the job of sales doesn’t end when a new customer signs a contract. So let me tell you what I did and learned. And any VP of Sales that doesn’t see this — probably isn’t a great VP of Sales for you. If you have any questions, don't hesitate to reach out to css@saastrinc.com. No best efforts stuff. Because you’re going to need a team to sell. But costs are critical when you’re adding sales reps and then a VP Sales ahead of profitability. In general, making sure his/her 3 reports, then 10 reports, then 30 direct and indirect reports — work as effectively and efficiently as they can. In fact, there’s a VC saying that I used to really hate. This will ferret out if they know how to compete — or not. Compare pay for popular roles and read about the team’s work-life balance. How can the VP Sales not be a “tax”, at least from a financial plan perspective? My VP Sales and I both worked toward the same goal as everyone else in the company — the end-of-the-year revenue goal. Not later. A free inside look at SaaStr salary trends based on 3 salaries wages for 3 jobs at SaaStr. of the Top 5. No draw, no huge salary for just showing up. However, Anna has written a fantastic guide to creating a SaaS sales compensation plan that covers just about every aspect of this topic beautifully. It sucks some of the hunger out. What’s going to be key in our space about winning vs. competitors? And also to get big enough so a VP Sales can actually help, not hinder you. And it’s great when they even take a quota at first, to do it themselves. There was no need to “ratchet up” the plan. Let’s say you hire your VP, Sales when you are at $1m in ARR. Top-line revenue, inclusive of churn, inclusive of upsells and self-service, net of everything. That’s stressful. In the beginning, consider bonuses and goals that match the overall company ARR goals — not just new new bookings. You can get a crummy one, however. SaaStr Pro's 52 lessons are cross functionally relevant. So I want to try to help you if you’re going through this. Our goal is to help everyone get from $0 to $100m ARR with less stress and more … Held every year since 2015, the SaaStr Annual Conference is the single largest event of its kind. With permission from the SaaStr Blog – Written by the founder of SaaStr, Jason Lemkin. 25% of ACV, all-in. But the Mismatched Comp Plan made it all the more confusing and created all the wrong incentives. Optimizing how best to work with Demand Gen and marketing. Top-line revenue, inclusive of churn, inclusive of upsells and self-service, net of everything. 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