The B2B Revenue Executive Experience
The B2B Revenue Executive Experience

Episode · 3 years ago

Brian Burns on 5 Tips on Negotiating a Comp Plan

ABOUT THIS EPISODE

A few weeks ago we discussed five things that make a great comp plan. It’s still early in the year and comp plans are a hot topic. Many sales reps don’t believe they can negotiate their comp plans, but that’s not always true. 

We sat down with Brian Burns, host of The Brutal Truth About Sales & Selling, to discuss five things to consider when negotiating your comp plan.

You're listening to the BTB revenueexecutive experience, a podcast, dedicated ELPA executives, train theirsales and marketing teams to optimize growth, whether you're looking fortechniques and strategies wore tools and resources, you've come to the rightplace. Let's accelerate your growth in three to one: welcome everyone to the Bto b revenue executive experience. I'm your host Chad Sanderson today we aretalking about complans once again, hot topic, beginning of the year, makes alot of sense for us to spend a little bit more time on this topic than othersright now. One of the things that we're often asked is: can you actuallynegotiate a comp plan? A lot of sales reps or anybody with variable Calb,have a tendency to believe that when they are given a Complan, there's veryrittle little room for negotiation, and we find that not to be true. However,there are things that you have to keep in mind, first and foremost, trying tonegotiate a complan January first wor. Second, when it's handed out to you isnot the right time. You have to know when to gage with your management whendo engage with executives. Understand what their business issues areunderstand what they're trying to accomplish? Perhaps it's net newbusiness or expansion of existing accounts? Perhaps it's higher margins,perhaps it's taking a new product into a new market or penetrating a newindustry understanding what your company is focused on over the comingyear, where the opcoming year is critical in terms of giving you theright founation to be able to negotiate. In addition to that, you have tonegotiate within your skills and within what you're comfortable with, and sowhat Brian Burns Ond I did was spend some time to kind of break down what wethink the ways that you can negotiate a Complan r and how to do that mosteffectively, Hey chadlet's! Let's talk about negotiating a complan. Is itnegotiable, of course, everything's that gotiable, it's called sales, evena big companies yeah, I believe it is. I have maybe maybe not as much so right youmaybe not as much wiggle room depending on the size of the company, but Ibelieve and was taught early on a learn early on. There are always ways tonegotiate comp in nonsales roles. You see a lot of people trying, negotiatemore vacation or something like that, but there's always always ways to haveconversations, but it requires understanding. What is the goal? Whatis the business issue? What is the company trying to accomplish and whatdo you you uniquely bring to that equation? Yeah, and I think, if you do thepreparation, I think too many reps are reactive on this and that they don'tengage their manager. You know early because this these discussions don'tstart in January. They start in September yeah. You know right becauseall of a sudden you'll see your manager doing an offsite. You know the beginning of Q for andyou'r like. What's that, all about a they don't tell you and, and they starte asking you about NEC,what's coming in the early next year, you know Paus ire trying to come upwith quotas and territories. ECAUSE things are going to change and you know- and it always is he thanticipation and the optimism, especially when the economyis doingwell the company's growing. They have a good year. You know and what's the thenatural reactions, so let's do et's. Do a two x next year, yeah, we should be able we should beable to at least double our numbers and so hey, let's just double everybody'scomplant. I mean, I think, the awareness right awareness reps need tounderstand that yes, okay, primary focus, closein business, making moneybut they're not operating in a vacuum anymore right. They have the ability toprovide insight and and kind of feedback loop from the field and getinvolved in those conversations. So understanding you know when those thosedecisions start to get made,...

...understanding that when all of a sudden,all the exacts are out of the office for three days and nobody knows wherethey are until you know the credit card bills for the you know, the the lunchescome in being aware of that and gettinginvolved in those conversations earlier, I think, is a definite asset to anysales exact. But you just don't see a lot of them. Think that way and layingthat ground work allows you to have a platform from which to negotiate yourcomplan yeah, because the management view is all were going to have this newrelease or this new product or this acquisition and we're going to you knowdouble the the the staff and marketing and you know presales and Sdr to getyou leads and everything and then you say well, Whan: Are they going to behired? Oh Qon, CTUB? Well, that's half the year you realize Andand. I think reps have to prepareit's like okay. I know I'm going to have to give up something, and you knowhow's Howis, my manager good at. What's he going to take away, you know and italways used to come up to where you lived. You know today it might be wherewhat expertise you have what install based you have. What's you know whatskills and where you've been successful, you kind tof, start thinking, youkwthey're going to take something away and I can't keep it all or I'll have toyou know double my quota. What do I give up? Well, not just in anegotiation. It's funny. I went into sales because f the riskreward ratio right and once you get to a point where I think you know repsknow how good they are like. You got toreally be honest with yourself. Like. Are you willing to put in the work, andwhat can you accomplish? One of the ways I always would negotiate was. Iwould sacrifice some of my base for more points on thetop end, because I knew I was going to be able to get it done, but you don't see a lot of people thatare willing to take when they look at the negotiation they don't they have atendency not to think about what they can. You know kind of give away. Theyhave a tendency to think just. How can I structure this so I get more and sothat understanding that you look you're already getting paid you're already,there's already cost associated with your existence. So how can you mitigatethose and especially when you're talking to a CFO, I always prefer toget the CFO or the finance guys on board. With my approach, because thenit's easier to convince the sales exact because he's going no have to go seltto the CFO anyway, so I'll just step around him and do the job for him likeHey, let this is H. I know you don't like paying me this much. So, let's tieup more to performance, you know waiting it more on performance, whetherthat be net new logo, new products, sales, whatever whatever the metricsare. I have no problem giving up a part ofkind of that standard base in order to get a higher win on the backside and-and I don't see a lot of reps being willing to do that fact- I haven't- Ihaven't- had a rep come to me and do that in years. Usually what I get ishey. I need a bigger base because I just had another baby yh base top,especially when you're hiring raps h the base is critical to them, and it'slike why you know and and that people get spoiled. You know I got spoiled atone company and I had this enormous base because it was through anacquisition and it was really hard to consider anything else and it's, I think I look at it likewhen my brother got a union job when he was in high school. I go that's a trap,because what do you mean Igo, because once you get there, how are you goingto go? Get another job that pays less? Why would never do that? That's whatthe trap is called t golden handcuffs for a reason: Yeah, I think think ofall the autoo workers that were getting seven dk a year right and all of asudden. The jobs are gone and there's no other seventy K year job. You have to start over again and it's,I think, the base. I think your head on...

...right there and I think that's what gotus into this bad complan trap right now where thecompany has to offer a good base and a good target, which means you have tohave a huge quota right. Have you seen just at of curiosity? I ran into forthe first time in Oh man, probably two years I ran into a handful of raps thatare one hundred percent commission now they're still employees, so they stillget healthcare. They still have an expense account, those types of things but theyre, onehundred percent commission, and as a result of that, the percentages weretalking. You Know Twenty eight to thirty five percent of everything theybring in becomes er, commission and- and I my first thought is Opwhoa- that's ahuge amount of risk, but then, when you start running the numbers on whatthey're selling and that type of setup all right, I've got my health care,which is you know, everybody's worried about that, and I've got. You know somesupport on the expenses. But it's really up to me. It's almost more greenfield thananything else. Have you seen more of that or less of that lately, I'm seeing you know I get approached byvendors, especially startups, who wanted me to be an affiliate, and youknow that they offer quite a big percentage and I go. But how do you?How do you keep track of it? Al Will Give you a link. I go yeah, but peoplelisten to it on their phone they're not going to fill out a form and a cookiegoing on the phone so which is free advertising for right or well. Ask ThemI go. Why would you ask them Ou, no incentevized but yeah? I amseeing that and you know, because I look at you know like recruitersthey're at fifty percent. Commission right. You know and that's and I know a lot ofpeople in that space and a lot of people wash out. You know because theydon't have you know the patients or the six months to sit it through, but todayI mean you can basically hire your own SDR off of upwork, for you know fromfive to fifteendollars an hour right, and you know the days of you haven'tlike what you said about the lone wolf that are over the tools, the technologyyou know believe me. I have it to get meetings, I hate to say this out low, but youknow all my interviews. I don't spend a minute on it's all automativs thoehundred percent, automated hundred percent personalized no human involved. Well, that's just it, though right whenyou, when you think about negotiating your complent, I think sales raps haveto think about what tools do they have access to that's going to allow them towork at scale right and again, maybe part of it goes back to the confidencething like. Do you really believe you can consistently execute and closebusiness? But if you look at the tool sets that are out there today I mean I would I want more upside,because I know with the tools I can scale myself and my efforts in waysthat were not possible before and if it's, if it's just working backwards, Imean the primary premise that you can workbackwards. For you know, activity creates opportunity kind of stuff. Youcan work backwards and figure this stuff out that hasn't changed. You cando it it. Maybe it's a little bit more complex, but the numbers get biggerbecause the tools allow us to do this stuff at scale. Yoa. I mean that thatthe base is a great point, because you show a concession and certainly anycfoany business person. If someone came up to me and go hey, Bryan I'll sell foryou, I'd go yeahi'll. Give you fifty percent, no problem right, but you haveto have your own computer I'll help you ill train you and stuff. But Oh youwant a FFTK base. We that's a lot of...

...risk on my end right. You know it'slike I'm paying you to go to sales school, but that's how I I typically negotiatedupside. What I wanted was the multiple right. You know the yeah and I I'd saylike okay, how about it? What's a big deal to you guys? Is it a Hundredk,five hundred KA million they ar say a Hundrek? Okay? Well, you double mymultiple on deals over Hundrek, you know and they wik okay. The base thiysaw. You know marginal value that that deal wasn't going to happen. Unless youknow some magic happened right. Well, I mean it's interesting right becausewhen you think about it- and you start if you start to negotiate from thatstandpoint, what you have a tendency to do is really quickly uncover how theexecutives are looking at individual deals so like, in that instance, Ey.Give me multipler over anything over a hundred thousand, because okay they're,not thinking they're, going to be a lot of those. But if that's where you'repointing me and that's where the money's going to be the next year,we're going to have a conversation around well, maybe your multipleshouldn't be so high because we paid you so much last year and there is you kno and and the thingis you probably don't need or want that account anymore it, and you can want togo into something else, and I just see it's going so badlyright now. I had a consultant on the COMP side on my podcast and we weretalking about B it, and he says you know t they're designing it that sixtyfive percent will make the quota. So I go there so thits over assignmentbegoes yeah it's over assignment, and so that means okay. The quot is alreadytoo high. So one thing you do, like you said, reduce the base or you could. Youknow, accelerate oryour quota because you know all of the fixed costs arealready built in and that's all gravy to the company. You know and then okay,how Abouta something above that or how about, if you'll, lock in theseaccounts. For me for two years instead of one year, I think there's a lot of things on thetable depending on your skills and your interests and your passion that you canget the company to commit to well, and there are some raps I've had some repswork for me that are phenomenal account managers, meaning when I say count,manager, Acount, exactumet they're. Already we already. We already have anopportunity where doing a project with this company- and there are some wrapsthat I have have worked with that are absolutely masterful at expanding thatbusiness out. But if you threw them out into the wild and said go ont newbusiness they would starve, and so knowing what your strengths are, I'vehad reps come to say: Okay, look. You want five percent more out of this setof accounts and you're going to pay me ax how about a multiplier? If I can hitseven percent more out of these accounts, and that was you know, that'stwo points above what we were looking for from a number standpoint so sure.But if that same rapid come to me and said, Hey, you know what I'll pass upsome of my base for net new business. I probably would have taken it, but I'dhave told them like hey you're, negotiating outside of your sweet spotof skills, and so that awareness portion of it again is, I think,extremely critical and something I don't think a lot of raps take the timeto think about and then apply in their negotiation approach, yeah because theeither they think it's not their role or that they can't do it. They justtake whatever the company gives them. They can't push back and the goodpeople can push back the bad people. You know you cause. You also know thatyou get quoto overassignment to the SEAPLAYER Rit. Oh, I got Alaska. Thank you, yeahexcellent sweet will not see you next year right. So that's also a signal, and Ithink one of my points was no your...

...limits, because you know I've had rapscome to me and they like, whining and complaining, and I was like you're notgetting this. You know you didn't make your number last quarter. You know allthe deals you said that were going to come in didn't you know you got you're in repair right now,you're not in growth, prepare right well, and that I mean I think, that'sagain, it's the understanding, the reality of sales.What is the profession and then understanding that if you Negotiang,don't ask you know it's like when I was growing up. I wanted a motorcycle. Igot a BMX bike right like he stop asking for stuff, that's outside theRoman possibility, based on my skill set if I'd gotten a motorcycle at theage. F, thirteen out of killed myself yeah right, so my parents gave Mi BMXand I had to earn that one so just understand. You know to your point likeknow your limits, if you don't, if you start trying to negotiate in a placewhere you don't bring credibility to the negotiation, you'r instant, you've,inctantly lost the attention and the potential to come up with somethingthat's going to be mutually beneficial. I also see a lot of ankst. You knowthat's going to be coming up in January and February where people just getdisgruntled and they wine and they at. I think you have to come to the pointwhere you either accept the territory in the complan. You know you' try tonegotiate, you try to get the best one you can and what it's you know the dustsettles either accept it or move on yeah and that's just it stop whiningand you and I both are no woeren't. Neither one of us are big on the wholeline. Anthing, but you can you can impact it if you get involved soonenough and if you negotiate from a powero position of strength andunderstand, there's a gift to get, and you do it in a way that is, you know,supported by your credibility and the results that you bring to the table.That's great now, are you going to get everything? No, probably not, but youmight be able to influence enough and then, like said when it does settleshit the ground running like the time you spend whining or complaining aboutit, we're trying to change it after the fact those are cycles, you could havebeen fillen your pipeline and fill in line in your wallet with, and that's itbecause that Q, One t one is the, I think the Golden Quarter, because, Uthat's the when you set the seeds for the rest of the year, your clients areopen minded to new things to change to meeting. You know where the holidaysare over. The years been closed out. You know, certainly not the first weekin January, butbut maby theyre become open minded you get the built in ice.Breaker about talking about the holidays, talking about your planstalking about what's going on, and I see too many people those twoworried about my territory, don't know if I'm going to have that account. Well,you managers not going to take away an account that you're embedded in that yyou're, the only person that knows where the bodies are buried, they're not going to take that awayfrom you. They will take it away. The accounts that you're not spending timeon or you're, not investing in you know, and they know right and they can tell-and I think if you don't take, you know: q one by the rains, because you Q, Onet to q three is you know summer vacations and a terrible quarter to getanything done and then q for you're reaping what you sewed right yeah andit's more along lines? Okay, look you've learned your lesson if youdidn't get involved in negotiation this year and you'R and you get your complanand you. Finally, you know you got the the steelshank in the spone and you'reready to hit the ground running and you're focused on it. Then at least beaware next year that you can start that negotiation process at the right timeand keep track of what you know, what you're being effective at keep track.It's amazing to me how many reps don't pay attention to their owneffectiveness. They complain about crm and set look some of I'm all forcomplaining about some of them. Some of them are too heavy, but there are toolsout there that will allow you to very quickly look at your own performance inyour activity levels and assess that that's a perfect starting point fornegotiation for next year's complant or...

...if they try and change it in the middleof the year. Right. You have the data, you have the results and negotiatingfrom that position of power, I think, is the first place that rep shouldstart, and I also heard another podcast where the leader was trying to make theargument for not having a quota and I'm like. Well, you have a quoteor,no matter what you call it right. You know nobody goes to the board and saysWeah. I want to try the best we can yeah I've. Never met a private equity.Firm investors are aboard that will accept that answer, yeah that thatdoesn't fly. You know it's like how many hours a'mNi going to work today I'll do the best. I can o Easo do something yeah andthat's just it. I mean I think people need targets. I think they call it. Ifyou don't want to call it a quota, because that's two sales, you find callit something else, but youv got to have the beauty of sales that the thing thatI still love about it to this day is that success is almost black and white.Like did you achieve your targets? Did you beat your quota? Your target, yourthreshold, whatever it is, and were you successful in solving problems forbusinesses? It's not fluffy, it's not as fluffy as some people want tobelieve, and it's not as prone to politics, which I obviously am not goodat. So it's you know for for me having those targets like it's almost likegetting rid of that the whole conversation on getting rid of variablecomp, that's a whole nother podcast we could do, but that that right theremakes my eyes roll back in my head like. Why would you do that right, you're,just going to increase your cost, the risk for the company ecause you're,going to have to elevate the base or get less? You know effective salesprofessionals, and in that case, if somebody said Hey, we don't do verywllcalm. We that's the first place. I would start to negotiate. Well, let'stalk about that. But but you do you know when you say Yoal: We don't do variable comp. So if somebody doesn't come to work, you paythem Kno, we fire them. So that is variable yeahit's like it's the Naingame, IAND, it's like the quota. Yes, there's always going to be some. How doyou pay people, then, if flat, commission right? Well, that's that'sfine, but if they don't do you know this amount, they get fired right. Ofcourse you. So your point Britens Up Ihead D, thisentrepreneur and he was trying to struggle with the COMP and I go. Youknow it's. A great interview test have three complans one with all commissionhundred percent commission. One with you know a medium base and a targetwith a commission rate. That's dramatically lower, so the upside iscontained and then have a high base and a little bonus of making a quota showit to the person and see which one they pick and and then that'll tell you whatmotivates them? Oh Yeah, you know because you wal that me.Obviously, if you get the commission only person, if it's not working, theytend to start looking around a you know, you don't have any control over themright that the base is the control you have over the person you're not goingto find company people that have no base right and you KDOW. I had abusiness where everybody was a Hune. Ninety nine and you know- and you knowmy partner would say: Well, we need to have a meeting e go well, we're GOIN TAhave to pay them to come now. No they'll come well, then we have to takehem out to dinner or something no, no they'll come. No. One came Theyre, N N. Ninety Nineso, it's likeyou go with someone else's company's meeting you're not going to go us. Igetting paid butand. I think that's a good test,because commission is the reward, it's thebusiness side of the sales job. Well, and it's I mean it's. What it's that?It's that you know no more delayed...

Gradif well depends on how commissionsare paid out, but delayed gratification of waiting till the end of the year foran annual bonus or things it's alleviated. If you're paid quarterly-or you know you get that costion, you can calculate that you can see whereyou're at it's removes the unknown right and there's a huge amount of feararound unknown, and I think people in sales have the ability to have a muchclear picture right to negotiate their future to egotiate their financialreturn, to negotiate what they're going to deliver to that company and to beable to track it easier and there's a there's, a simplicity in that and apower in that that I just don't see changing anytime soon. Yeah and I gotinto this discussion on Linkedon with somebody. Oh you don't believe in work,life balance and I'm like yeah. I believe in that. But when you have acommission, you're committed and emotionally attached to the actiontaking place, if you're on a pure salary, you pretend your youemititAahayeah. I was actually interviewing somebody yesterday f o from podcast,and they were. He started right out of the gate's like look. Wewe got to getrid of this whole worklife balance thing right, it is life and if you arein sales, sales is, is the DNA right? It's in your DNA. You are selling allthe time. You are constantly looking for new opportuniio, constantlyprospecting and that's honestly what it takes today, because people, especiallywith more O, k, virtual workers, you never know when you're going to runinto him or when you're going to talk, somewere Wedan opportunity will presentitself and I think, trying to think oh work, life balance. Then no, I have alife I want to live. That requires a certain amount of financial income andI'm in a profession that allows me to throttle that and control that as icyfit, and so that master of your own Destinye is is a powerful position tobe in in sales, especially when you're negotiating complents. At the end ofthe day, everyone has to realize that they are in control of their destiny,that they have a locust of control that allows them to chart where they want togo and how they want to get there. When it comes to complans. That's there's no,no difference there right. You just need to do it in a manner that makessense for you, for what you bring to the table and for Your Business SalesReps have a tendency o think of themselves as working in Asilo, butthat's not true these days. We need that authenticity. We need thatawareness that what saleshave to do and how they are motivated, how they arepaid and compensated, isn't just about them. It's about the organization as awhole and what's going to motivate them to deliver the results so that aregoing to make an impact for the business. Well, everybody that does itfor this episode of the B Tob Revenue Executive experience again, I want tothank everyone for tuning in once again. Do us a favor drop? U Review on itunesor shoot me an email. Let me know what you think of the show how we can makeit better for you, what kind of value that you have or if you'd like to be aguest, would love to talk to you about that as well. Until next time, we havevalue prime solutions with you, nothing, but the greatest success you've been listening to the BTBrevenue executive experience to ensure that you never miss an episodesubscribe to the show, an itunes or your favorite podcast player. Thank youso much for listening until next time.

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