Working and closing key deals with them. That’s stressful. Be better than that, and build trust and loyalty back. And also to get big enough so a VP Sales can actually help, not hinder you. 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. Tell me about them, by background if not name. But #5 on the list 5 most important things your VP Sales should be doing. In the beginning, consider bonuses and goals that match the overall company ARR goals — not just new new bookings. 4 sales trends to keep an eye on from SaaStr this year, including AI Technology Apps & Services Earnings. SaaStr Annual is the largest B2B software conference in the world. Don’t even make it 12 months. But it turned out to be a dismal failure for us. Sales just feels sooo expensive early on. It sucks some of the hunger out. . Not later. . Instead, he/she is either just a great individual contributor, a great figure-it-outer … or a deeply flawed candidate. It’s hard enough to come into something new as VP Sales and make magic happen. 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. Important, yes. What’s going to be key in our space about winning vs. competitors? Either way, not a great VP Sales. to see if you have a real VP, Sales candidate in hand — or not. And lets the candidate blame others for their own issues. Instead, it is crucial to retain customers over many years, as that is how you maximize your revenues. Instead of a cost center. And make them successful first. {Yes, I know some will disagree and this is controversial. 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. 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. Want to see more content like this? But it will basically work for all SaaS companies from say $200k in ARR to $10m in ARR or so — a wide range. It worked great for me. 25% or more upside for exceeding that plan. And this is really, really painful. A great sales compensation plan needs to accomplish quite a lot. It’s much worse than a bad VP Marketing hire. This is the last of the Top 5. And 400-500 deals a year. , as usual, it’s just a little different from The Ordinary way to go. EchoSign has a self-service component, and the Client Success team managed churn, and upsells were split between Sales and Client Success. The 50/50/25+ plan. By Amelia Ibarra | January 8, 2021. And you want to accelerate, do better … so you want to hire a VP Sales to … sell better than you. 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. 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. 200 deals. This will ferret out if he understands lead generation and how to work a lead funnel. Once it does — pay now. And to do that, if your ACV is say $5k … you’re gonna need to close 200 deals in the next 12 months. If the Stretch Plan was exceeded, the comp goes up from there. Saastr is a lot to get your arms around -- 2 huge events (among the biggest in the world for SaaS), but also millions of dollars of tickets to sell, 100s of sponsors to keep happy, and also a coworking space, a content product, podcasts, blogs, and more. 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. Ouch. But on any given day, the sales and product team play by different rules. 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. And totally screw things up as they fail. SaaStr & SaaStr Fund; ceo/co-founder @ Adobe Sign / EchoSign. Not a lot different, but meaningfully so. Sometimes, soup to nuts, lead to close. 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. 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). 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. It sucks some of the hunger out. And recruiting great reps and making them successful is the #1 most important thing your VP Sales will do. Justin Welsh, former SVP of Sales at PatientPop explains how he started in SaaS in 2009 as the second sales hire at Zocdoc. It’s just one way to go: So don’t sweat it. Create a real machine to monetize the prospects and leads that find their way to you. Instead, align it. Because they get large base salaries. In addition, depending what stage of growth you’re in, you’re going to different sessions ranging from the more strategic to the deeper dive tactical sessions. If it’s not a similar fit to you, pass. If any don’t make sense, pass. EchoSign has a self-service component, and the Client Success team managed churn, and upsells were split between Sales and Client Success. But the same basic concepts work there too). That was our Year of Hell. 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. But sales is sales. Assess the team, hire and fire fast; VP of Sales should not carry an individual contributor quota. (After that, you’ll probably be looking for a different type of VP Sales. If he/she can’t answer fluidly, pass. I know it’s teamwork in a start-up. Get from $0 to $100 Million in ARRwith less stress and more success. Helping his/her sales team close deals. The thing is, it turns out the VCs are basically right. Read that article here. Because I think this is 50% of the problem – founder/CEOs are looking for the wrong things out of their VP Sales. So how can this big salary not just be a big drain on limited capital? That’s stressful. 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. From them, you’ll be able to determine: (x) if this candidate is for real, or not, (y) if this candidate can really be a true VP, a leader, a manager — or not — and take you to the next level — or not, and (z) if the candidate is a good fit for your company and space in particular. Let’s say you hire your VP, Sales when you are at $1m in ARR. It won’t appeal to a mediocre one or one on the way down. So I want to try to help you if you’re going through this. 10 Great Questions to Ask a VP Sales During an Interview. SaaStr. 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 I know it’s teamwork in a start-up. The Last 5 Years on Quora: From 2m to 45m Views. Find out what works well at SaaStr from the people who know best. Instead, he/she is either just a great individual contributor, a great figure-it-outer … or a deeply flawed candidate. Basically, we paid our VP Sales X% of every single dollar after we hit the plan for the year out. Makes sense. 50% of OTE paid as a bonus, with the target being the overall company revenue number for the year. . Why? 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. No draw (i.e., no guaranteed bonus for X months until you scale). SaaStr Pro's 52 lessons are cross functionally relevant. Have him/her explain to you what will happen. SaaStr is a blog about web services. I think anything works well here, as long as you align interests, and the plan is achievable. How do we shore up our base? Last week I attended the annual SaaStr conference and learned about the most exciting software companies in the world. They’re leaving something good for something risky. Bringing together Cloud and Software-as-a-Service experts and global leaders on a single platform, it is an event that attempts to bring the greatest SaaS success stories, and the playbooks behind them, out to the forefront. SaaStr is the world’s largest community of SaaS executives, founders, and entrepreneurs. And lets the candidate blame others for their own issues. Pay bonuses out monthly, even if the goals are quarterly. 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. Segmenting customers. 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. So I guess that’s the real story. I know it seems to make sense. One overall revenue goal for the founders and VPs and everyone. No delayed gratification here. In fact, there’s a VC saying that I used to really hate. OK, so with that, here’s what I came up with. Seeing opportunities ahead of the horizon. So yes, your VP Sales should be out there closing the big ones, the huge deals, on a plane, on a jet, of course. My uber-learnings from that are that BigCo sales comps plans are great tools — once you are reasonably post-Scale. The losers suck up a ton of cash. Good luck! So now that you’ve hired your VP Sales, it’s important to know how to. 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. . Pitch scripts. 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. It’s tested and proven. T coming! We will debunk some commission myths and talk about how your company can most effectively use incentive compensation. No cap. If you have any questions, don't hesitate to reach out to css@saastrinc.com. 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. And sales quickly, elegantly … became a profit center. Apply to Head of Event & Industry Content, Full Stack Developer, Account Executive and more! The Process for Creating a Sales Compensation Plan. This will ferret out how well he/she understands the true customer lifecycle. Your VP Sales needs to be smarter than you in sales, sales processes, and building and scaling a sales team. But costs are critical when you’re adding sales reps and then a VP Sales ahead of profitability. 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 delayed gratification here. A draw actually can be an excuse for laziness. The SaaStr Annual conference was delayed this year, but Jason & crew know that the show must go on. This will ferret out if they know how to compete — or not. - If you're joining for a Sales role, you 100% will need to go outbound if you want to purchase that BWM. 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. Either way, not a great VP Sales. The Good VP Sales have large OTE (On-Target Earnings) Expectations. Walk into work, you make $50-$100k, or whatever the guaranteed base is. Usually, all-in, they are taking home about 20%+- of the ACV at the end of the day. The deal volume to hit your growth targets is just too high. At first, I just made up a plan. Equity live from SaaStr: The market loses its mind, bitcoin tanks, and when will Slack go public SaaStr. 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. [caldera_form_modal type="button" id="" width="600"]. And that may be the way to go later. Don’t even make it 12 months. This will appeal to a great VP Sales on the way up. Held every year since 2015, the SaaStr Annual Conference is the single largest event of its kind. There was no need to “ratchet up” the plan. Often, Base+Bonus is structured 50/50, so it’s 10% or so (+- 2%) as base … and a matching 10% or so (+- 2%) as bonus. It’s much worse than a. . But there’s no frackin’ way he/she can do more than a handful of all your deals directly, him/herself. And this is perhaps the unobvious part. | 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. If they don’t understand sales tools, they aren’t a real VP Sales. But it costs the company almost twice that typically. In a start-up, the VP Sales has to also be aligned to costs, not just revenue. Get the inside scoop on jobs, salaries, top office locations, and CEO insights. And make them successful first. As for David, he started his first company in 1977 aged just 22. No draw (i.e., no guaranteed bonus for X months until you scale). A draw actually can be an excuse for laziness. So how can this big salary not just be a big drain on limited capital? But I did all the sales myself, and stupidly, had no sales comp plan at all. You can get a crummy one, however. And recruiting great reps and making them successful is the #1 most important thing your VP Sales will do. Don’t make your VP worry her quarterly bonus might not come, or be subject to vagaries. 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. 25% of ACV, all-in. First, I did an analysis of what inside sales reps at SaaS companies are usually paid. 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. You can get a crummy one, however. 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. Blog Posts, Featured Podcasts, Featured Videos, Podcasts, Product, Sales, Videos How Sales and Product Really Should Work Together with MongoDB. Justin used Sales Culture to grow a successful PatientPop team to 140 employees and 55 million in revenue. And what it meant was, like the sales rep comp plan, if the VP Sales killed it — the money would follow. 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 … More here in our prior VP Sales post: When You Hire Your First Sales Rep — Just Make Sure You Hire Two. And you want to get to $2m in ARR in the next X months. 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). . 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. Ever. But on any given day, the sales and product team play by different rules. This is the flip side of the no guaranteed draw. | 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. This is the flip side of the no guaranteed draw. SaaStr, San Francisco, California. In fact, hopefully they are kind of obvious. Just to want a budget and a top-line number to meet. We can talk more about field sales later. You could make an argument the VP Sales should only be responsible for net new revenue from sales. Top-line revenue, inclusive of churn, inclusive of upsells and self-service, net of everything. It becomes mathematically impossible without them. . None of them are particularly insightful or profound in isolation. In SaaS, #1 most common misfire, with a bullet, is the VP/head of sales. It was that simple. 8.1K likes. Then later, in a different post, I want to describe who to hire, and how. To hit their number, they know they need the heads. Join us at SaaStr Annual 2020. Not a lot different, but meaningfully so. SaaStr. but because thousands of SaaS leaders and investors are about to descend on San Jose for SaaStr Annual ‘19.. What markets should we expand into? 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. The same number you and everyone else in the company is trying to hit. This seems almost impossible, unless you give her a big quota, which as we’ve discussed, doesn’t scale. Will debunk some commission myths and talk about how saastr sales compensation company can most effectively use incentive compensation community SaaS. 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