What should the compensation % be for sales teams selling services?

A good few years back our sales team was compensated more on selling services and also the services aspect counted towards their target revenue. This was changed to having services excluded from revenue targets and instead being just additional bonus at 2%. Because of this we saw a decline in sales selling services with comments like "it's not worth our while selling it". As much as we try to educate on the benefits around expansion it all falls on deaf ears.

So it would be interesting to know what % people are bonusing sales on, or what other methods they are using to keep sales interested in selling services with license subscriptions.

Answers

  • Edly Villanueva
    Edly Villanueva Moderator | mod

    Hello David,

    Thank you for your discussion topic and sharing your challenges with the current bonus incentive for Services. Many companies deploy a wide variety way of approaching sales compensation for services to create a smarter sales compensation to motivate performance, retain sales reps and align sales behavior to the company objectives to ensure end-to-end compliance with revenue recognition standards. To get the conversation started I'm tagging the following:

    Hi @Elise Lostutter, @Alex Gershman , @AlexanderZiegler , @Lynn Fraser m @Saurabh Sharma as leaders in sales and revenue growth at your respective organizations, your thoughts on this challenge.

    In addition, I’m pulling in @Jack Johnson – VP Customer Growth and Renewal Research  and @Steve Frost – VP & Managing Director, Revenue Research and Advisory TSIA’s research executives for industry and data insights on this discussion topic.

    In the interim here are links to two TSIA blog articles from our research executives on: Why Changing Your Sales Compensation Plan Isn't Enough to Drive Real Change and Is Your Sales Organization Ready to Sell Technology Subscriptions?

    Best regards,

    Edly

  • Alexander Ziegler
    Alexander Ziegler Founding Member | Expert ✭✭✭

    Thans @Edly Villanueva for distributing to a group of people. I can speak about Training, and I agree to @David Dixon that this is an interesting question and it is not easy to sell Training. I have recently been in a discussion with a company that had the same problem of using 5%, and this did not create any interest. THey decided to go up to 20% now starting this year, that means I have no results, but the sales reps at least were surprised and started internal discussions. So, I assume making 20% of the sales rep bonus dependent on Training seems to change the attitude. I have in the past also seen sales reps with 4-5 targets (meaning each was 20-25% of their bonus), and once you put 1-2 of those targets on Services there is suddenly a big interest.