An Account Executive compensation plan that pays different sales commission rates based on quota attainment.
Use this tiered commission structure to motivate and reward your team to sell beyond their quota attainment. Once they hit quota, they will earn a higher commission rate on all new deals within the quota term. Unlike plans that feature decelerators, this plan pays a flat commission rate until the rep hits their quota. This is good for situations when you want your sales team to feel rewarded even if they fall short of their quota.
A Quota to OTE Ratio of 4 - 8 is best.
This plan only has one path: Commission with Accelerators. Within this path, the rep earns the same base commission rate on all deals until hitting 100% quota. Then, once a rep passes quota, they begin earning 1.5x the base rate on all new deals for the remainder of the quota term.
So for an early stage company, $1 to 10 million in revenue, I love just a flat rate commission with an accelerator. Also, I think accelerators should not get paid out until you hit your annual number.
100% and above:
100% and above:
Monthly resale quota:
100% and above:
As with most compensation plans, the two major components that will vary across sales teams are:
To set the quota for your sales team, you must first decide on the quota period or length. This determines how frequently the quota resets for your reps.
Half of companies implement quarterly quotas, while the others split between annual and monthly quotas. Weekly and semi-annual quotas all exist, but we rarely see those.
Once you’ve chosen a quota length, use our Quota:OTE Ratio calculator to define your quota amount.
Next up is determining your base commission rate.
Finding the ‘base rate’ is relatively easy: divide a rep’s on-target variable pay by their annualized quota. After that, you’ll need to determine a ‘multiplier’ on that base rate for this plan.
For quota attainment accelerators, you’ll want anywhere from 1.1x to 2x the base rate.
This plan features a 1.5x multiplier rate, meaning that the commission rate above quota is 1.5 times the base rate below quota. The multiplier depends on how much you want to incentivize your reps overachieving. An overly generous multiplier (ex. 3x) can create lumpiness in attainment, meaning one quarter a rep hits 200%, then the following they hit 50%. If you’re hoping for more consistency across quota periods, a lower multiplier (ex. 1.25x) might be right for you.
This plan features accelerators that do not apply to the previous tiers. There are two different types of accelerators: those that apply to previous tiers and those that do not apply to previous tiers. If an accelerator applies to previous tiers that means that all revenue closed within the quota period will earn that higher commission rate once that rate is achieved. On the other hand, if an accelerator does not apply to previous tiers that means only the revenue beyond the accelerator threshold earn the higher commission rate.
This plan features only 2 tiers: the base rate until quota is achieved and an accelerated rate. Most plans that have accelerators feature 2 to 4 tiers. Any more than 4 tiers can become difficult for reps to remember which starts to lose the effect they were designed to have.
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. You may also hear accelerators referred to as multiple rate commissions.
We think so! Accelerators (and decelerators) are designed to reward overachievement of quota and motivate sales reps. This comp plan mechanic is one of the most common (80% of comp plans use accelerators), and they’re very well understood by sales reps. If you’re hoping to see a lot of reps overachieve, it’s recommended to include accelerators.
It’s more complex than the Single Rate Commission plan but the payoff is worth it when you have reps continuously striving for above quota. Plus, using a compensation management software like QuotaPath makes it easier to automatically track and calculate accelerators and gives reps visibility into how close they are to hitting it.
Make sure you have your business objectives solidified prior to designing or adjusting the commission plan. Then you can build the sales commission structure to steer selling behavior that aligns with those business goals. Other tips include setting fair and realistic quotes (you can use our free Quota:OTE Ratio Calculator to help), communicate plans in a timely manner, and aim for simplicity.
An Account Executive compensation plan that pays different sales commission rates based on the rep’s quota attainment, including a decelerator if the rep is below 50% quota.
An Account Executive compensation plan that includes two bonus tiers that pay per quota attainment point