The B2B Revenue Executive Experience
The B2B Revenue Executive Experience

Episode · 4 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 BB revenue executive experience, a podcast dedicated to help with the executives train their sales and marketing teams to optimize growth. Whether you're looking for techniques and strategies or tools and resources, you've come to the right place. Let's accelerate your growth in three, two, one. Welcome everyone to the BB revenue executive experience. I'm your host, Chad Sanderson. Today we are talking about complans, once again, hot topic beginning of the year. Makes a lot of sense for us to spend a little bit more time on this topic than others right now. One of the things that has we're often asked, is can you actually negotiate a comp plan? A lot of sales reps or anybody with variable comp have a tendency to believe that when they are given a Complan, there's very little, 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 to negotiate a complan January, first or second, when it's handed out to you, is not the right time. You have to know when to engage with your management, when to engage with executives, understand what their business issues are. Understand what they're trying to accomplish. Perhaps it's a net new business or expansion of existing accounts, perhaps it's higher margins, perhaps it's taking a new product into a new mark, it are penetrating a new industry. Understanding what your company is focused on over the coming year. Where the upcoming year is critical in terms of giving you the right foundation to be able to negotiate. In addition to that, you have to negotiate within your skills and within what you're comfortable with, and so what Brian Burns and I did was spend some time to kind of break down what we think the ways that you can negotiate a complant are and how to do that most effectively. Ay, Chad, let's talk about negotiating a complant. Is it negotiable? Of course, everything's that gotiable. It's called sales, even if big companies. Yeah, I believe it is. I have maybe maybe not as much so right you. Maybe not as much wiggle room depending on the size of the company. But I believe, and was taught early on, to learn early on, there are always ways to negotiate company in non sales roles. You see a lot of people try to negotiate more vacation or something like that. But there's always, always ways to have conversations, but it requires understanding what is the goal, what is the business issue, what is the company trying to accomplish and what do you you uniquely bring to that equation? Yeah, and I think if you do the preparation, I think too many reps are reactive on this and that they don't engage their manager, you know, early, because this these discussions don't start in January, they start in Sept Ember. Yeah, you know right, because all of a sudden you'll see your manager doing an off site, you know, the beginning, a queue for and you're like, what's that all about? And they don't tell you and they start asking you about neck. What's coming in the early next year, you know, is are trying to come up with quotas and territories. But things are going to change and you know, and it always is, the anticipation and the optimism, especially when the economy is doing well, the companies growing, they have a good year, you know, and what's the natural reaction? So let's do let's do a to x next year. Now we should be able to we should be able to at least double our numbers and so hey, let's just double everybody's complant. I mean, I think the awareness right. Awareness Reps and need to understand that. Yeah, okay, primary focus close and business making money, but they're not operating in a vacuum anymore, right they they have the ability to provide insight and and kind of feedback loop from the field and get involved in those conversation. So understanding, you know, when those those decisions 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 where they are until you know, the credit card bills for the you know, the the lunches come in. Being aware of that and getting involved in those conversations earlier, I think, is a definite asset to any sales exact. But you just don't see a lot of them think that way. And laying that groundwork allows you to have a platform from which to negotiate your complaint. Yeah, because the management's view is alway, we're going to have this new release or this new product or this acquisition and we're going to, you know, double the staff and marketing and, you know, presales and SDR to get you leads and everything. And then you say, well, what are they going to be hired? A Que Qtwo? Well, that's half the year. You realize, and I think reps have to prepare. It's like, okay, I know I'm going to have to give up something, and you know how is, how is my managerer going to what's he going to take away? You know, and it always used to come out to where you lived. You know, today it's might be where. What expertise you have, what install base you have? What's you know, what skills and where you've been successful? You got to start thinking, you know they're going to take something away and I can't keep at all, or I'll have to, you know, double my quota. What do I give up? Well, that's just it. In a negotiation. It's funny. I went into sales because the risk reward ratuo right. And once you get to a point where, I think you know reps and know how good they are, like you got to really be honest with yourself, like are you willing to put in the work and what can you accomplish? One of the ways I always would negotiate. It was I would sacrifice some of my base for more points on the top end because I knew I was going to be able to get it done. But you don't see a lot of people that are willing to take when they look at the negotiation. They don't. They have a tendency not to think about what they can, you know, kind of giveaway. They have a tendency to think just how can I structure this so I get more, and so that understanding that you look you're already getting paid, you're already there's already costs associated with your existence. So how can you mitigate those? And especially when you're talking to a CFO, I always prefer to get the CFO or the finance guys on board with my approach, because then it's easier to convince the sales exact because he's going to have to go sell to the CFO anyway. So I'll just step around him and do the job for him, like Hey, let this is I know you don't like paying me this much, so let's tie up more to performance. You know, waiting it more on performance, whether that be net new logo, new products, sales, whatever, whatever the metrics are. I have no problem giving up a part of kind 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've I haven't. I haven't had a rep cone to me and do that in years. Usually what I get is, Hey, I need a bigger Basse because I just had another baby. Hear the base talk, especially when you're hiring reps. Oh yeah, the base is critical to them and it's like why? You know and and that people get spoiled. You know, I got spoiled at one company and I had this enormous base because it was through an acquisition and it was really hard to consider anything else. And it's I think I look at it like my brother got a union job when he was in high school. I go that's a trap and he goes, what do you mean? I go, because once you get there, how are you going to go to get another job that pays less? Why would never do that? That's what's a trap. Is called golden handcuffs for a reason. I think of all the auto workers that were getting seventy k a year right and all of a sudden the jobs are gone and there's no other seventy k year or 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 got us into this bad complant trap right now where the company has to offer a good base and a good target, which means you have to have a huge quota. Right. Have you seen? Just out of curiosity, I ran into for the first time in Oh man, probably two years I ran into a handful of reps that are one hundred percent commission. Now they're still employees, so they still get healthcare, they still have an expense account, those types of things, but they're one hundred percent commission and as a result of that, at the percentages we're talking, you know, twenty eight to thirty five percent of everything they bring in becomes their commission and and I my first thought is hope, Whoa, that's a huge amount of risk. But then when you start running the numbers on what they're selling and that type of set up, all right, I've got my healthcare, which is, you know, everybody's worried about that, and I've got, you know, some support on the expenses, but it's really up to me it's almost more green field than anything else. Have you seen more of that or less of that? Lately, I'm seeing, you know, I get approached by vendors, especially startups, who wanted me to be an affiliate, and you know that they offer quite a big percentage. And I hope. But how do you how do you keep track of it all? Will give you a link. I go, yeah, but people listen to it on their phone. They're not going to fill out a form and a cookie going on the phone. So which is free advertising for right? or it will ask them. I go, why would you ask them? incentivized? But I am seeing that and you know, because I look at you like recruiters. They're at fifty percent commission right, you know, and that's and I've I know a lot of people in that space and a lot of people wash out, you know, because they don't have, you know, that the patients or the six months to sit it through. But today, I mean, you can basically hire your own str off up work for, you know, from five to fifteen dollars an hour, right, and you know, the days of you Havn't like what you said about the lone wolf, are over. The tools, the technology to you know, and believe me, I have it to get meetings. I hate to say this out loud, but you know all my interviews, I don't spend a minute on it's all Automatis, hundred percent automated, hundred percent personalized, no human involved. Well, that's just it, though. Right when you when you think about negotiating, your confident. I think sales reps have to think about what tools do they have access to that's going to allow them to work at scale? Right and again, maybe part of it goes back to the confidence thing, like do you really believe you can consistently execute and close business? 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 ways that we're not possible before. And if it's if it's just working backwards, I mean the primary premise that you can work backwards for you know, activity creates opportunity kind of stuff. You can work backwards and figure this stuff out. That hasn't changed. You can do it. It made. It's a little bit more complex, but the numbers get bigger because the tools allow us to do this stuff at scale. Yeah, I mean that. That the base is a great point because you show a concession and certainly any CFO, at any business person. If someone came up to me and go hey, Brian, I'll sell for you, I go yeah, I'll give you fifty percent, no problem, right, but you have to have your own computer. I'll help you, I'll train you and stuff. But Oh, you want a k base. Wow, that's...

...a lot of risk on my end, right, you know, it's like I'm paying you to go to sales school. But that's how I typically negotiated. Upside what I want. It was either multiple, right, you know the yeah, and I'd say like, okay, how about it. What's a big deal to you guys? Is At a hundred K, five hundred K, a million, say a hundred k? Okay, well, you double my multiple on deals over a hundred K, you know, and they but okay, the pace. I saw, you know, marginal value. That that deal wasn't going to happen unless, you know, some magic happened. Right. Well, I mean it's interesting, right, because when you think about it and you start to if you start to negotiate from that standpoint, what you have a tendency to do is really quickly uncover how the executives are looking at individual deals. So like in that instance, Hey, give me multiplier 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're pointing 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 multiple shouldn't be so high because we paid you so much last year. And there is you know, and and the thing is you probably don't need or want that account anymore and you can want to go onto something else. And I just see it's going so badly right now. I had a consultant on the COMP side on my podcasts and we were talking about it and he says, you know, they're designing it that sixty five percent will make the quota. So I go there, so it's over assignment. It goes yeah, it's over assignment, and so that means okay, though quote is already too high. So one thing you do, like you said, reduce the base or you could, you know, accelerate over quota, because you know all of the fixed costs are already built in and that's all gravy to the company, you know. And then, okay, how about a something above that? Or how about if you'll lock in these accounts for me for two years instead of one year? I think there's a lot of things on the table, depending on your skills and your interests and your passion, that you can get the company to commit to well. And there are some Reps. I've had some reps work for me that are phenomenal account managers, meaning, when I say account manager, account exactly. They're already and we already we already have an opportunity. We are doing a project with this company and there are some reps that I have have worked with that are absolutely masterful at expanding that business out. But if you threw them out into the wild and said go hunt New Business, they would starve right and so, knowing what your strengths are, I've had reps come and say, okay, look, you want five percent more out of this set of accounts and you're going to pay me x. How about a multiplier if I can hit seven percent more out of these accounts? And that was you know, that's two points above what we were looking for. From a number standpoint. So sure, but if that same repid come to me and said, hey, you know what, I'll pass up some of my base for net new business, I probably would have taken it, but I'd have told them like, Hey, you're negotiating outside of your sweet spot of skills. And so that awareness portion of it again, is, I think, extremely critical and something I don't think a lot of reps take the time to think about and then apply in their negotiation approach. Yeah, because the the they think it's not their role or that they can't do it. They just take whatever the company gives them. They can't push back and the good people can push back the bad people. You know you, because you also know that you get quota oversignon to the sea players. Right, Oh, I got Alaska. Thank you. Yeah, and excellent, sweet will not see you next year. Right. So that's also a signal. And I think one of my points was no your limits, because you know, I've...

...had reps come to me and that like whining and complaining and I was like you're not getting this. You know, you didn't make your number last quarter. You know all the deals you said that we're going to come in didn't you know, you get it. You're in repair right now. You're not in growth repair right well, and that I mean. I think that's again it's the understanding the reality of sales, what is the profession, and then understanding that if you're negotiating, don't ask. You know, it's like what I was growing up, I wanted a motorcycle. I got a BMX bike, right like that. Stop asking for stuff that's outside the reman possibility. Based on my skill set, if I'd gotten a motorcycle at the age of thirteen, I I killed myself. Right so my parents give me a BMX and I had to earn that one. So just understand, you know, to your point, like, know your limits. If you don't, if you start trying to negotiate in a place where you don't bring credibility to the negotiation, your instant you've instantly lost the attention and the potential to come up with something that's going to be mutually beneficial. I also see a lot of angst, you know that's going to be coming up in January and February, where people just get disgruntled and they whine and they eat. I think you have to come to the point where you either accept the territory and the complan. You know you tried to negotiate, you tried to get the best one you can and when it's the dust settles, either accept it or move on. Yeah, and that's just it. Stop whining, and you and I both are now. Wouldn't either one of us are bigger on the whole wine anything. But you can. You can impact it if you get involved soon enough and if you negotiate from a position of strength and understand 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 you might be able to influence enough. And then, they said, when it does settles, hit the ground running. Like the time you spend whining or complaining about it or trying to change it after the fact, those are cycles. You could have been filling your pipeline and fill it inline in your wallet with and that's it, because that q one. Q one is the, I think, the Golden Quarter, because you that's that when you set the seeds for the rest of the year. Your clients are open minded to new things, to change, to meeting. You know where the holidays are over. The year has been closed out, you know, certainly not the first week in January, but but maybe they're become open mind it. You get the built in ice breaker about talking about the holidays, talking about your plans, talking about what's going on. And I see too many people those too worried 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 in bed at it in that you, you're the only person that knows where the bodies are buried. They're not going to take that away from you. They will take it away the accounts that you're not spending time on or you're not investing in. You know, and they know right and it. They can tell. And I think if you don't take you know, q one by the rains, because you have que qt. Q three is, you know, summer vacations and a terrible quarter to get anything done and then queue for you're reaping what you sold, right. Yeah, and it's more along lenes. Okay, look, you've learned your lesson. If you didn't get involved in negotiation this year and your and you get your complant and you finally you know you got the the steel shank in the spine and you're ready to hit the ground running and you're focused on it, then at least be aware next year that you can start that negotiation process at the right time and 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 own effectiveness. They complain about crm and something looks some I'm all for complaining about some of them. Some of them are too heavy, but there are tools out there that will allow you to very quickly look at your own performance in your activity levels and assess that that's a perfect starting point for ne negotiation for next...

...year's complant or if they try and change in the middle of the year. Right, you have the data, you have the results and negotiating from that position of power, I think, is the first place that rep should start. And I also heard another podcast where the leader was trying to make the argument for not having a quota and I'm like, well, you have a quota, no matter what you call it. Right you know nobody goes to the board and says, yeah, I want to try the best we can. Yeah, I've never met a private equity firm investors are a board that will accept that answer. Yeah, that doesn't fly. You know. It's like how many hours I'm not going to work today? I'll do the best I can. US to do something. Yeah, and that's just it. I mean I I think people need targets. I think they call it. If you don't want to call it a quota because it's two sales, you fine call it something else, but you've got to have the beauty of sales. That the thing that I 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, your threshold, whatever it is, and were you successful in solving problems for businesses? It's not fluffy. It's not as fluffy as some people want to believe and it's not as prone to politics, which I obviously I'm not good at. So it's, you know, for for me, having those targets, like it's almost like getting rid of that. The whole conversation on getting rid of variable camp. That's a whole nother podcast. We could do. But that that right there makes my eyes roll back in my head. Why would you do that? Right, you're just going to increase your cost, the risk for the company, because you're going to have to elevate the base or get less, you know, effective sales professionals. And it in that case of somebody said, Hey, we don't do variable calm we that's the first place I would start to negotiate. Well, let's talk about that. But but you do you know when you say all, we don't do variable camp. So if somebody doesn't come to work, you pay them, we fire them. So that is a variable. It's like it's the name game and it's like the quota. Yes, there's always going to be some how do you pay people? Then if flat, commission rate, well that's that's fine. But if they don't, do you know this amount, they get fired. Right, of course. Yes. So in your point bringings up, I had this entrepreneur and he was trying to struggle with the COMP and I go, you know, it's a great interview test. Have three complaints. One with all commission, Hundred Percent Commission, one with, you know, a medium base and a target with a commission rate that's dramatically lower, so the upside is contained, and then have a high base and a little bonus of making a quota. Show it to the person and see which one they pick and and then that'll tell you what motivates them. Oh Yeah, you know, because you well, that mean obviously if you get the commission only person, if it's not working, they tend to start looking around that you know you don't have any control over them. Right, that the base is the control you have over the person. You're not going to find company people that have no base. Right. And you know, I had a business where everybody was a one thousand and ninety nine. And you know, and you know, my partner would say, well, we need to have a meeting. I go, well, we're gonna have to pay them to come. Now they'll come. Well, then we have to take them out to dinner or something. No, no, they'll come. No one came. They're ten ninety nine. It's like you go with someone else's companies meeting, you're not going to go just like can. And I think that's a good test, because commission is the reward. It's the business side of the sales job. Well, it's part. I mean it's what it's that? It's that you know no more delayed...

...gratific well, depends on how commissions are paid out, but delayed gratification of waiting till the end of the year for an annual bonus or things. It's alleviated if you're paid quarterly or you know you've got that Curson. You can calculate that, you can see where you're at. It's removes the unknown, right, and there's a huge amount of fear around unknowns and I think people in sales have the ability to have a much clearer picture. Right. It's a negotiate their future, to negotiate the or financial return, to negotiate what they're going to deliver to the company and to be able to track it easier, and there's a there's a simplicity in that and a power in that that I just don't see changing anytime soon. Yeah, and I got into this discussion on Linkedin with somebody, Oh, you don't believe in worklife balance, and I'm like, yeah, I believe in that, but when you have a commission, you're committed and emotionally attached to the action taking place. If you're on a pure salary, you pretend you you permitted? Yeah, I was actually interviewing somebody yesterday from from a podcast and they were he started right out of the gate. He's like, look, we got to get rid of this whole worklife balance thing. Right, it is life. And if you are in sales, sales is is the DNA, right, it's in your DNA. You are selling all the time. You are constantly looking for new opportunity, you're constantly prospecting, and that's honestly what it takes today because people, especially with more virtual workers, you never know when you're going to run into him or when you're going to talk some more. Wedding Opportunity will present itself. And I think trying to think oh, work life balance, then no, I have a life I want to live that requires a certain amount of financial income and I'm in a profession that allows me to throttle that and control that as I see fit. And so that master of your own destiny is a powerful position to be in, and sales, especially when you're negotiating complant us. At the end of the 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 to go and how they want to get there. When it comes to COMP plans. That's there's no no difference. They're right. You just need to do it in a manner that makes sense for you, for what you bring to the table and for Your Business. Sales Reps have a tendency to think of themselves as working in a silo, but that's not true. These days. We need that authenticity. We need that awareness that what sales reps do and how they are motivated, how they are paid and compensated, isn't just about them. It's about the organization as a whole and what's going to motivate them to deliver the results that are going to make an impact for the business, well everybody that does it. For this episode of the B Tob Revenue Executive Experience. Again I want to thank everyone for tuning in once again. To us a favor, drop US review on itunes or shoot me an email. Let me know what you think of the show, how we can make it better for you, what kind of value that you have, or if you'd like to be a guest, would love to talk to you about that as well. Until next time, we have value prime solutions with you nothing but the greatest success. You've been listening to the BB revenue executive experience. To ensure that you never miss an episode, subscribe to the show and Itunes for your favorite podcast player. Thank you so much for listening. Until next time.

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