Commission with Accelerators & Cliff

In sales compensation, a cliff (also sometimes called a commission threshold or commission floor) is a rule that prohibits the rep from earning any commissions until achieving a set percentage of their total quota. For instance, in this plan, the cliff dissolves once the rep hits 60 percent of their quota. Upon doing so, the rep then earns their base commission rate on all deals sold during their quota period.

Probably not! There are two reasons why we discourage commission thresholds like this. First, it can be incredibly demotivating for a salesperson to sell all quarter only to miss their floor and not get paid anything on those deals. Secondly, if a sales rep knows they aren’t going to hit the minimum quota attainment to be paid, they might sandbag deals until the following month/quarter. This is dangerous behavior because you want to close deals as quickly as possible!

There are, of course, situations where a cliff makes sense. If your reps are more “order takers” and less value sellers, it might make sense to include a cliff in order to ensure that reps are doing the bare minimum. Cliffs are also fairly common in account management/customer success plans that use retention as their compensation mechanic.

Instead of a cliff, you might want to use a decelerator. While technically a cliff is a decelerator – one that reduces the commission rate to 0% – here’s a plan that might work better for you: Account Executive: Commission with Accelerators & Decelerators plan.

This plan features a 1.5x multiplier rate. That means that the commission rate above quota is 1.5 times the base rate below quota. Set your multiplier based on how much you want to incentivize your reps overachievement. An overly generous multiplier (ex. 3x) can create lumpiness in attainment. For example, a rep may hit 200% quota one quarter, then hit 50% of their goal the next quarter. For more consistency across quota periods, consider a lower multiplier, such as 1.25x the base rate.

This plan features 3 tiers: a 0% rate until 60 percent of quota is achieved, the base rate for deals that fall within 60% to 100% of quota, and the accelerated rate for all deals over 100% quota. Most plans that have accelerators feature 2 to 4 tiers. Any more than 4 tiers can become difficult for reps to remember which detracts from the purpose of the accelerator.

An accelerator rewards reps with a higher commission rate once they’ve passed a percentage toward quota attainment, deal size, or total amount of sales in a month or quarter. We also refer to accelerators as multiple rate commissions.

This commission plan is definitely more complex than the Single Rate Commission plan, as well as the Commissions with Accelerators. It’s also one we recommend avoiding as cliffs act more of a punishment than a motivator. If you are going to include a cliff in your commission plan, make sure to give your reps full visibility into their earnings, forecasted earnings, attainment, and projected attainment. You can use QuotaPath’s sales commission software to automate commissions calculations and provide that real-time transparency and forecasting toward attainment for your team.