Welcome to Everstage's ‘CC: Commission Chats’ – an interview series featuring the journey of world-class revenue leaders.
Jacqueline Zahniser is a true superstar.
With an impressive career spanning years, she has seen it all in the field of compensation. However, the story of how she landed her first job in compensation is an interesting one.
"My son was five months old, so it's probably like 17 years ago.” recalls Jacqueline.
She was working as a Reporting Analyst when the company she was employed at underwent a merger. Unfortunately, some of her colleagues were laid off and went on to join T-Mobile.
One fine day, her friend who was working at T-Mobile referred her to the commissions manager at the company.
“I had never done commissions. I went and I interviewed with her and she offered me a job as a commissions analyst and I took it.”
That was the beginning of a new chapter for Jacqueline!
As her career progressed, she took on positions of increasing responsibility at renowned companies such as AT&T, Quantum, Smartsheet, and Cohesity.
In the first interview of the CC: Commission Chats series, Adithya Krishnaswamy, the head of marketing at Everstage sits down with Jacqueline to talk about compensation management at scale, her compensation philosophy, trends to look out for in the next 5 years, and more.
At your scale today, how many sales reps are you supporting and how big is your sales compensation team?
Currently, we have 750 people on the system. I have a sales compensation team of four. There are five of us actually, but there's different layers and people doing different things. And I only have two analysts.
What would you say are the two major things that have changed over the last decade or so in Sales Compensation?
What has changed? Well, there's definitely a push to move a lot more towards paying people on bookings up front. Rather, this company actually pays on fulfillment. This is the first time in probably five years that I've worked for a company that doesn't pay on straight bookings.
There's pluses and minuses to paying on bookings. You're going to be doing a lot more clawbacks when you pay on bookings because if deals fall through and don't come to fruition, then you have to take that money back, which can be very challenging and painful with a lot of today's commission systems, they still haven't caught up to the point where they can easily show what was clawed back.
That's a huge hurdle in the commissions environment. How do I show you what I paid you last month? And now, how do I show you what I took away from that bucket this month? I think there's a lot of need to be able to forecast and project commissions. We still do a lot of that today on spreadsheets with little calculators and stuff that we build for the field. And I definitely think that the move at this point is to get that information in the system so we're not sending out a bunch of spreadsheets. Commissions teams are notoriously lean and small, and they get leaned on to do more and more, but they don't have many resources. So all that has to work in the system.
What's your general philosophy around structuring sales compensation? How do you balance between something like incentivizing for performance and ensuring fairness and compensation?
The number one thing is you need to keep the commission simple. Don't try to introduce too many components. All that does is confuse your sales team and drive tickets to the commissions team, which is small and can answer them all quickly. And it just creates a situation where the commissions team constantly need to prove to the sales team that all these different levers are working correctly, and it's very painful. So keeping it simple is a big one.
The second most important thing is to always keep the focus on hitting that quota. I've seen a lot of issues in several of the last few companies that I've worked for where they tried to take the focus like new logos. New logos have been a big buzzword for the last couple of years. Everything's new logos. But when you take the focus off that quota, it'll slip. I've actually worked for companies that didn't hit their number because they were paying bonuses and other things and pulling that focus away from the quota. So if you're going to be a publicly traded company, hitting your numbers is crucial. Your comp plan should primarily be focused on hitting those numbers.
Put the correct gating in for the bonuses. It doesn't have to be 100 %, but say 70 or 80%, whatever your model is. A lot of companies like to do 70% of the team at 70% of their quota. Some do 80%. Whatever the gate that you feel comfortable as a company should be set to any bonuses or accelerators in your comp plan.
How do you handle commission disputes? What processes do you set up to minimize them?
Disputes are fun. Definitely, as a manager, you need to be able to mine that data. You need it in some ticketing system, whatever that is. It can be as simple as a workflow spreadsheet, Jira, or Salesforce. The ticket system is irrelevant, but you need track those tickets and bucket them into common issues. This way, you can start to analyze and figure out what are the questions that keep getting asked over and over, and how to minimize those questions.
A lot of times, it's about training your reps on how to find things in the commission system or how to figure out what their quota or their rate is. Usually, you can provide some supplemental documentation that will help bring those questions down. Sometimes, it's something that's really confusing in the comp plan and you have to go back to leadership and say, “Hey, nobody's getting this. Maybe we shouldn't be commissioning this."
There are different things, but if you're analyzing the tickets and paying attention to what people are asking, then you can figure out how to solve each of those and try to reduce. My mission is to stop getting asked the same question every single week and enable them to figure the answers on their own.
Some solves are harder than others, but if you know what your number one issue is, and if you know what your top five issues are, then you can start picking away at those and reduce the quantity of questions that you're getting.
I know you guys are a commission system company. If you're building ticketing into your system, it's very important that you can build that bucketing in with that ticketing too, because I've used some newer system that didn't have any ability to group or categorize those tickets. They just all went into a big bucket. Then I have to take that data and suck it out of the commission system and create all those buckets myself, which is painful.
What do you anticipate as a trend in sales compensation over the next five years?
I definitely see a big push to simplify and move away from a lot of complicated calculations. That is definitely a trend that's happening right now. New logo is still hanging on. I think that'll be around for a while, but I think companies need to be a lot more thoughtful on how they're building their Salesforce implementations because that's primarily where the data is coming from. And a lot of these implementations were built before new logo was a big thing. So it's very challenging to commission on new logos. So there's definitely going to be a push to make sure you're thinking about how you're going to capture that new logo data in your data set, whatever it is. It doesn't have to be Salesforce. Most companies are using Salesforce, but that's a big thing.
Renewal teams, I've seen them go both ways. I've seen people build out renewal teams. I've seen people collapse them back in. I think it does make sense to separate renewals from the rest of the population. But renewal teams specifically are very difficult to compensate for. So I am not a huge fan of renewal teams.
There's a lot of simplification going on right now. And I think some of that has to do with the downsizing that we're seeing across everywhere. Everybody's downsizing. So as you do that, you have to simplify and just break it down to what are the basic things that we need to meet our goals as a company. And that's always going to come back to hitting your quota.
For someone starting their career in sales compensation today, how should they go about it? How should they view sales compensation as a growth path for them? What would you recommend?
Well, compensation is the lever that drives your sales. Salespeople are going to sell what they get paid to sell. So a well thought out comp plan is absolutely going to grow your company because it's going to incentivize your sales team to do the right thing. The challenge is that most commission systems are difficult to change.
Once you get that implementation bill, it's very difficult to go back and update that for whatever the new direction is. When designing your system, carefully consider the levers you incorporate and aim for maximum flexibility to accommodate future changes without the need for costly rebuilds. If your system isn’t flexible, you’d not be able to support changes faster, and eventually, you’d drift away from your original goals
This is the first interview in the ‘CC: Commission Chats’ Series. For more interviews, and other content related to RevOps, compensation, and sales, head over to the Everstage Blog now!