Compensation and Territory Design
Aligning incentives with outcomes
Compensation plans and territory design are the most powerful levers for translating strategy into behavior. Sales reps do what they are paid to do. If your comp plan rewards the wrong behaviors, you will get the wrong outcomes -- no matter what your strategy deck says.
The Compensation Structure
is the total expected compensation when a rep achieves 100% of quota. It includes base salary and variable pay, typically split 50/50 or 60/40 depending on role and risk tolerance.
The defines the complete structure: base salary, variable components, accelerators for overperformance, and any bonuses or SPIFs. The best plans are simple enough to understand but sophisticated enough to drive the right behaviors.
Setting Quotas
is the target assigned to each rep. The measures quota difficulty relative to compensation. A 5:1 ratio means the rep needs to close 5x their OTE in revenue to hit target. Industry norms vary, but most SaaS companies target 4:1 to 6:1.
measures what percentage of reps hit their number. If attainment is too low, quotas are set unrealistically. If too high, you are leaving money on the table. Target 60-70% of reps at or above quota.
Territory Design
is the set of accounts assigned to each rep. Good territory design balances opportunity across reps while minimizing conflict and coverage gaps. provides the data to evaluate territory potential objectively.
Territory design is a zero-sum game. Every account assigned to one rep is an account not assigned to another. RevOps must balance fairness, coverage, and strategic priorities.
Capacity and Productivity
determines how many reps are needed to hit revenue targets. It requires assumptions about and for new hires.
Ramp time is often underestimated. A rep hired in January is not fully productive until Q2 or Q3. Capacity models must account for this delay, or you will consistently miss targets while waiting for new reps to spin up.
The Alignment Test
The ultimate test of compensation and territory design: are reps naturally incented to do what is best for the company? If not, something is broken. RevOps owns this alignment, continuously monitoring for perverse incentives and unintended consequences.