Transcript excerpt from a YouTube discussion (Jason M. Lemkin) about misaligned sales incentives. Speakers describe examples where SMB sales were rewarded for logos rather than revenue and where incentives emphasized upfront commits, leading to over-forecasting, over-promising, and under-delivering.
I'd love to understand what were. What was something that you discovered where incentives were misaligned?
Yeah, there's several. I talked about the SMB team and they were incented on logos versus revenue. Another one was for the majority of our sales team. We had a pretty large incentive on closing an upfront commit.
And when you described this delta, what comes to mind to me is we were over forecasting. We were like over promising and under delivering when we closed a deal.
And what this was doing was incenting reps to heavily discount to get this commit. And what we started seeing was either they were, you know, overbooking the deal or our retention rates are incredibly strong at checker. And it the product's fantastic. Our GRR is high 90s max. You can get GRR is 100%. What amount of your revenue are you retaining? And they were unnecessarily giving these major discounts to get this committed contract with a customer because we were incenting it because there was a huge upfront commission component. And so the reps were doing exactly the right thing, but we were over incenting it. So we, we took that, we took that specific component out and we're spiffing on different things that we do want to see more of. And we're tying the actual bulk of the compensation more to revenue realization, which is better for the customer. Align with checker. What I love to do is like how do we align the reps incentives to the success of the company and then make them as successful as possible?
