Sales Commissions for Subscription Services

I was talking to a very successful entrepreneur a few days ago about sales rep compensation plans. In his model, they sell an annual subscription for several thousand dollars to their service. What I really liked about it was that quota was done on a monthly basis whereby no commission was paid at all until 60% of quota was reached for that month.

After 60% was reached, commission was paid on all previous deals and more sweetners were added when additional percentages of quota were reached. The result was that sales reps worked hard and that there was a spike in deals at the end of each month, when the reps could make the most money.

Don’t Add Too Many Features Before Customer Input

This has come up two times in the past couple weeks making it worthy of a blog post: don’t add too many features to your produt before soliciting customer input. In fact, in some cases, you should sell your prospects on the idea of a new feature and/or product just to get their feedback to see if it is the right direction to go. 

As a rule of thumb, you should be able to build and launch your web application in three months tops. If it takes longer than that, you’re making it too complicated. We made that mistake with one of our products and are now spending hundreds of hours refactoring the back-end and actually removing some features from the product. Don’t let it happen to you.