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A Summary of

Simple Math to Set Up a Sales Team

by
David Sacks
Bottom Up
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It is important to effectively structure incentives to manage sales reps.

Key incentives for a sales rep

  • Base Salary, Quota, Commission Rate, Variable Pay, On-Target Earnings
  • Incentivize sales reps to continue doing better after hitting expectations.

Managers

  • Because average team attains 70% of total team quota, managers need to have a quota set at 80% of team quota.
    • This enables sales managers to work harder.

Territories

To prevent conflict, specialize sales reps to particular territories. Ways to divide up the world: 1. Geographical territories 2. Industry verticals 3. Round-robin (useful for small teams)

Dealing with Expansion and Renewals

  1. Original Owner
    1. Let account renewals stay with original owner
  2. Territories
    1. Give reps ownership to particular geographic territories
  3. Specialists
  4. Customer Success Manager Full cost of sales team can be close to 50% of sales. Thus, it is important to be aware of various variables to ensure everyone in sales is given proper incentives to succeed.
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