Core Concepts
In creating the content, the author emphasizes the importance of balancing sales incentives with a compliance regime to avoid unintended consequences and foster healthy growth in startups.
Abstract
The content delves into the intricate world of sales incentives and compliance within startups. It highlights how aggressive sales teams can either be an asset or a liability, emphasizing the need for a balance between motivating salespeople and controlling their behaviors. The author outlines ten common problems that arise from sales incentive plans, such as over-selling, poor customer handoffs, conditional revenue, and toxic sales culture. Additionally, solutions are provided to correct these issues through a structured "sales compliance regime," focusing on leadership, culture, training, qualification, equity compensation, customer success feedback loop, product feedback synthesis, checks and balances, auditing and inspection, and repeatability in sales processes. By establishing an effective compliance regime alongside incentive plans, startups can ensure healthy growth while avoiding undesirable behaviors.
Stats
"A dramatic example of this occurred at my company Yammer when a new sales rep closed a million dollar deal out of the Middle East his second month on the job."
"Statements of Work (or SOWs) are an offshoot of the conditional revenue problem that are pernicious enough to warrant their own category."
"If you allow Sales reps to redline contracts... it becomes too tempting for them to agree to changes."
"Some startups will claw back commissions if a customer churns in the first three to six months."
"Sales leaders should constantly inspect the sales pipeline."
Quotes
"Show me the incentive, and I will show you the outcome." - Charlie Munger
"Incentives work powerfully well... If you don’t inspect and supervise your sales practices carefully..." - David Sacks