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.
Use this 3-tiered commission structure for sales to motivate your team to race toward quota and reward them with a higher commission rate on all deals after passing quota. The addition of a decelerator pushes reps to get halfway to their quota goal in order to begin earning their full base commission rate. Prior to reaching 50 percent of their target, the rep would earn half of their base commission rate. Reps then unlock the full commission base rate after passing 50% quota, which is retroactively applied to previous deals. The accelerator, a rate that is 1.5x the base rate, then applies to all deals closed within the quota term after the rep reaches 100% quota and doesn’t apply to previous tiers. Note: With the addition of accelerators and decelerators, this plan’s complexity increases. However, it’s just one path and encourages reps to have a consistent flow of won deals throughout the quota period. If you’re looking for a plan that includes accelerators but does not feature a decelerator, try the Account Executive: Commission with Accelerators plan.
A Quota to OTE Ratio of 4 - 8 is best.
This plan only has one path: Commission with Accelerators & Decelerators. Within this path, the rep earns half of the commission base rate on all deals between 0% and 50% of their quota. Once a rep reaches 50% quota, the rep begins earning their full base rate which can be retroactively applied to past deals. Upon passing quota, the rep unlocks the accelerator, which is 1.5x the base rate on all new deals for the remainder of the quota cycle.
It’s simple. It’s clear. Dollar in equals dollar out. For every dollar that I sell, I’m making more money. I love how this plan ties to revenue. You know what you need to do, so go get it done.
Winning by Design
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 should first decide on the quota period or length. This determines when, and how frequently, the quota resets for your reps.
About half of the companies we partner with implement quarterly quotas. The other half split between annual and monthly quotas. We also see the occasional weekly and semi-annual quotas.
Once you’ve chosen a quota length, use our Quota:OTE Ratio calculator to define your quota amount.
Next, determine your base commission rate.
To find the ‘base rate,’ 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. As for quota attainment decelerators, a multiplier of .5x to .9x is standard.
This plan features a 1.5x multiplier rate, meaning that the commission rate above quota is 1.5 times the base commission rate. The multiplier depends on how much you want to incentivize your reps to overachieve. 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 earns the higher commission rate.
By including a decelerator, you open the door to more aggressive accelerators. If you have evenly distributed performance on your sales team, you’re likely to have some people who don’t hit the minimum bar for the decelerator. Therefore those commissions can “pay for” your more aggressive accelerators.
It’s our belief in sales compensation that if your comp plan has a decelerator, you should have an accelerator in your comp plan, as well. This is because, as mentioned, the decelerators “pay for” accelerators. If you don’t have the accelerators, then it’s there for nothing. Additionally, reps can see a plan with only decelerators as unfair – something you want to avoid!
This plan features 3 tiers: the rate until 50% of quota is achieved, the base rate for 50% 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 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.
Unlike accelerators, which pay a higher commission rate to performing reps, sales decelerators pay a lower percentage of the base commission rate for under-performing reps. In this plan, the decelerator rate is in play until the rep achieves 50% of quota.
Accelerators (and decelerators) reward overachievement of quota and motivate sales reps. They are the most common comp plan mechanic (80% of comp plans use accelerators), and they’re well understood by sales reps. If you’re hoping to see a lot of reps overachieve, it’s recommended to include accelerators.
This commission plan is more complex than the Single Rate Commission plan, as well as the Commissions with Accelerators. But the combination of an accelerator and a decelerator motivates your reps to keep striving toward the next tier to achieve the highest payouts. Plus, using a commission tracker like QuotaPath gives full visibility for reps to check on their status and see how close they are to unlocking the next commission tier. (It also automates commissions calculations for your finance team.)
Build out your business objectives first, then use your commission plan to direct the selling behaviors that will help your company reach those objectives. 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 quota attainment.
An Account Executive compensation plan that includes two bonus tiers that pay per quota attainment point