{"id":"8eff9476-ffa6-4135-9731-7faa2b82e75e","shortId":"JZQcwZ","kind":"skill","title":"sales-compensation","tagline":"Design a sales compensation plan: OTE, quotas, commission mechanics, retention incentives.","description":"# Sales Compensation\n\n## Scope\n\n**Covers**\n- Designing compensation plans for revenue roles (typically SDR/BDR, AE, AM/CSM with expansion)\n- Setting **OTE**, **base/variable mix**, **quota**, and **ramp**\n- Defining commission mechanics (crediting rules, accelerators, clawbacks, payout timing)\n- Aligning incentives with **long-term customer value** (retention / NRR), not just bookings\n- Producing rep-facing plan docs + admin rules so payouts are actually operable\n\n**When to use**\n- “Design a comp plan for our first AEs/SDRs.”\n- “What should our OTE and base/variable split be?”\n- “Set quotas and a ramp plan for new reps.”\n- “Create accelerators + rules so reps don’t game discounting.”\n- “Our reps close bad-fit deals that churn—align comp with retention/NRR.”\n\n**When NOT to use**\n- You need to hire, structure, or onboard an early sales team (use `building-sales-team` for org design, scorecards, and ramp plans)\n- You need to improve pipeline quality, lead scoring, or qualification criteria (use `sales-qualification`)\n- You need to negotiate a specific offer with an individual candidate (use `negotiating-offers`)\n- You need legal/tax/HR advice, employment compliance guidance, or jurisdiction-specific plan language (use qualified professionals)\n- You’re designing **executive compensation** or equity plans (different problem)\n- You don’t yet have basic GTM foundations (ICP, pricing, what counts as a closed-won) — do that first, then return\n- You want an overly complex “formula soup” plan that can’t be explained in one page or administered reliably\n\n## Inputs\n\n**Minimum required**\n- Company stage + GTM motion (inbound/outbound/PLG/enterprise) and primary sales roles\n- What you sell + pricing model + typical ACV/ARR and sales cycle length\n- Your economic constraints: gross margin, CAC payback target (or runway), budget for sales comp\n- Target outcomes for the period (bookings/revenue/NRR) and the time horizon you care about (e.g., 90-day retention, annual renewals)\n- Current baseline (if any): pipeline conversion, win rate, ramp time, churn/NRR\n- Constraints: simplicity tolerance, payout timing preference, risk tolerance (for the company and for reps)\n\n**Missing-info strategy**\n- Ask up to 5 questions from [references/INTAKE.md](references/INTAKE.md), then proceed.\n- If key data is missing, make explicit assumptions and include:\n  - **Assumptions & unknowns**\n  - **Sensitivity ranges** (e.g., quota/rates under low/base/high scenarios)\n  - **Validation plan** (what to measure in the next 30–90 days)\n\n## Outputs (deliverables)\n\nProduce a **Sales Comp Plan Pack** in Markdown (in-chat; or as files if requested), in this order:\n\n1) **Context snapshot** (roles, stage, goals, constraints, time horizon)\n2) **Comp philosophy** (what behaviors you want; what you want to prevent)\n3) **Role → metric mapping** (what gets paid on, and why it’s controllable)\n4) **OTE + pay mix table** (base/variable split by role + rationale)\n5) **Quota + ramp model** (quota by period + ramp schedule + any draw/guarantee)\n6) **Commission mechanics spec** (crediting, rates, accelerators, splits, discount policy, payout timing, clawbacks)\n7) **Retention-alignment addendum** (choose one approach; define measurement + timing)\n8) **Admin & governance** (required CRM fields, payout process, disputes, exceptions, change control)\n9) **Rep-facing one-pager + FAQ** (copy/paste)\n10) **Risks / Open questions / Next steps** (always included)\n\nTemplates: [references/TEMPLATES.md](references/TEMPLATES.md)\n\n## Workflow (7 steps)\n\n### 1) Intake + plan boundaries (what problem are we solving?)\n- **Inputs:** User context; [references/INTAKE.md](references/INTAKE.md).\n- **Actions:** Confirm roles in scope, selling motion, time horizon (bookings vs retention), budget constraints, and “must-not” behaviors (discounting, churny deals, channel conflict). Identify what data you do/don’t have.\n- **Outputs:** Context snapshot + assumptions/unknowns + decision on time horizon.\n- **Checks:** Success is measurable (who/what/by when) and the plan scope is explicit.\n\n### 2) Define role responsibilities + “what gets paid on”\n- **Inputs:** Role definitions; pipeline stages; revenue recognition basics; retention model.\n- **Actions:** Choose 1 primary performance metric per role (e.g., ARR bookings, qualified meetings, expansion ARR, gross profit). Define “crediting” rules (when a deal counts, splits, renewals).\n- **Outputs:** Role → metric mapping + crediting rules draft.\n- **Checks:** The metric is (a) measurable, (b) attributable, and (c) reasonably controllable by the rep.\n\n### 3) Set OTE + base/variable mix (pay risk where it belongs)\n- **Inputs:** Talent market bands (if known), role seniority, sales cycle, role risk, stage.\n- **Actions:** Set OTE targets and the base/variable mix per role. Choose a default mix (often ~50/50 for many AE roles) and adjust based on cycle length, product maturity, and expected rep autonomy.\n- **Outputs:** OTE + pay mix table with rationale and guardrails.\n- **Checks:** OTE is economically viable for the business and believable to candidates; pay mix matches controllability and sales cycle length.\n\n### 4) Build quota + ramp model (make “on target” realistic)\n- **Inputs:** Targets; baseline conversion (or assumptions); expected ramp time; territory/segment definitions.\n- **Actions:** Create a quota model (top-down + bottom-up cross-check). Define ramp schedule, draw/guarantee (if used), and what happens if the plan changes mid-year.\n- **Outputs:** Quota + ramp tables (low/base/high scenarios).\n- **Checks:** A rep at OTE can realistically hit quota with the assumed pipeline and conversion.\n\n### 5) Define commission mechanics (simple, compute-able, enforceable)\n- **Inputs:** OTE/Quota; metric definitions; discount/margin constraints.\n- **Actions:** Set rates, accelerators/decelerators, and payout timing. Add guardrails: discount approval thresholds, deal qualification minimums, splits/overlays, clawbacks/chargebacks, and edge-case rules.\n- **Outputs:** Commission mechanics spec + 2–3 worked payout examples.\n- **Checks:** A Sales Ops/admin can calculate payouts from CRM data without manual interpretation.\n\n### 6) Add retention/quality alignment (avoid paying for churn)\n- **Inputs:** Retention/NRR goals; churn timing; implementation/onboarding reality; data availability.\n- **Actions:** Choose one retention-alignment approach (e.g., partial holdback until 90 days, commission adjustment on early churn, pay on collected revenue, or NRR multipliers). Define measurement windows and how disputes are handled.\n- **Outputs:** Retention-alignment addendum (chosen approach + rationale + admin rules).\n- **Checks:** The approach is understandable to reps and proportional to their influence on retention.\n\n### 7) Quality gate + finalize (rep-ready + admin-ready)\n- **Inputs:** Draft pack.\n- **Actions:** Run [references/CHECKLISTS.md](references/CHECKLISTS.md) and score using [references/RUBRIC.md](references/RUBRIC.md). Produce the rep-facing one-pager + FAQ. Always include **Risks / Open questions / Next steps** and a 30–90 day validation plan.\n- **Outputs:** Final Sales Comp Plan Pack.\n- **Checks:** The plan can be explained in one page, computed from CRM fields, and aligns incentives with business + customer outcomes.\n\n## Quality gate (required)\n- Use [references/CHECKLISTS.md](references/CHECKLISTS.md) and [references/RUBRIC.md](references/RUBRIC.md).\n- Always include: **Risks**, **Open questions**, **Next steps**.\n\n## Anti-patterns\n\nAvoid these common failure modes when designing sales compensation:\n\n1. **Formula soup.** Creating a comp plan with 4+ metrics, nested multipliers, and conditional accelerators that no rep can mentally model. If a rep cannot estimate their payout from memory after closing a deal, the plan is too complex. Stick to 1 primary metric per role and at most 1-2 secondary adjustments.\n2. **Paying for bookings while ignoring churn.** Rewarding reps purely on closed-won ARR with no retention alignment. This incentivizes closing bad-fit customers, aggressive discounting to pull deals forward, and over-promising during the sales process. Always include at least one retention-alignment mechanism.\n3. **Unrealistic quotas that kill morale.** Setting quotas top-down from the board plan without a bottom-up cross-check (pipeline coverage, conversion rates, ramp time). When fewer than 50-60% of reps hit quota, the plan is broken, not the reps. Always stress-test quotas under low/base/high scenarios.\n4. **Copy-pasting comp plans across stages.** Using a Series C comp structure (territories, overlays, SPIFs, multi-tier accelerators) for a seed-stage team with 2 reps and no pipeline history. Early-stage plans should be simple: base + variable on one metric, with a clear ramp and draw.\n5. **No ramp protection for new hires.** Putting new reps on full quota from day one without a draw, guarantee, or reduced ramp quota. Reps who feel underwater from week one either leave or cut corners. Ramp plans must reflect realistic time-to-productivity.\n\n## Examples\n\n**Example 1 (first AE comp plan, seed-stage SaaS):**\n“Use `sales-compensation`. We’re seed-stage B2B SaaS, $12k ACV, 45-day cycle. Hiring first 2 AEs. Goal: $600k ARR this year. Output: a Sales Comp Plan Pack with OTE/pay mix, quotas+ramp, commission mechanics, and a rep-facing FAQ.”\n\n**Example 2 (retention-aligned comp, churn problem):**\n“Use `sales-compensation`. Reps optimize for bookings and we churn in the first 90 days. We want comp to reflect retention/NRR without being overly complex. Output: a Sales Comp Plan Pack with a retention-alignment addendum and clear admin rules.”\n\n**Boundary example (redirect to legal counsel):**\n“Write a legally binding compensation agreement for California employees and tell me what’s compliant.”\nResponse: explain this skill produces a comp-plan spec and rep-facing materials, but legal/compliance review must be done by qualified counsel.\n\n**Boundary example (redirect to building-sales-team):**\n“We need to figure out what roles to hire, how to interview them, and how much to pay them.”\nResponse: the org design, scorecards, and hiring process belong to `building-sales-team`. Use this skill specifically for the comp plan (OTE, quotas, commission mechanics) once you know which roles you are hiring.","tags":["sales","compensation","lenny","skills","plus","liqiongyu","agent-skills","ai-agents","automation","claude","codex","prompt-engineering"],"capabilities":["skill","source-liqiongyu","skill-sales-compensation","topic-agent-skills","topic-ai-agents","topic-automation","topic-claude","topic-codex","topic-prompt-engineering","topic-refoundai","topic-skillpack"],"categories":["lenny_skills_plus"],"synonyms":[],"warnings":[],"endpointUrl":"https://skills.sh/liqiongyu/lenny_skills_plus/sales-compensation","protocol":"skill","transport":"skills-sh","auth":{"type":"none","details":{"cli":"npx skills add liqiongyu/lenny_skills_plus","source_repo":"https://github.com/liqiongyu/lenny_skills_plus","install_from":"skills.sh"}},"qualityScore":"0.474","qualityRationale":"deterministic score 0.47 from registry signals: · indexed on github topic:agent-skills · 49 github stars · SKILL.md body (10,328 chars)","verified":false,"liveness":"unknown","lastLivenessCheck":null,"agentReviews":{"count":0,"score_avg":null,"cost_usd_avg":null,"success_rate":null,"latency_p50_ms":null,"narrative_summary":null,"summary_updated_at":null},"enrichmentModel":"deterministic:skill-github:v1","enrichmentVersion":1,"enrichedAt":"2026-04-22T00:56:25.202Z","embedding":null,"createdAt":"2026-04-18T22:17:03.218Z","updatedAt":"2026-04-22T00:56:25.202Z","lastSeenAt":"2026-04-22T00:56:25.202Z","tsv":"'-2':1075 '-60':1160 '1':393,507,592,1025,1066,1074,1279 '10':493 '12k':1299 '2':402,572,834,1078,1208,1306,1333 '3':414,638,835,1127 '30':369,966 '4':427,722,1033,1180 '45':1301 '5':335,437,793,1232 '50':1159 '50/50':676 '6':448,852 '600k':1309 '7':461,505,926 '8':472 '9':484 '90':298,370,880,967,1354 'abl':800 'acceler':43,102,454,1039,1200 'accelerators/decelerators':811 'across':1186 'action':521,590,661,742,808,869,939 'actual':71 'acv':1300 'acv/arr':265 'add':815,853 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'ote':9,32,87,428,640,663,694,703,782,1476 'ote/pay':1320 'ote/quota':803 'outcom':285,996 'output':372,552,616,693,772,830,902,971,1313,1366 'over':231,1364 'over-promis':1111 'overlay':1195 'pack':379,938,976,1318,1371 'page':243,985 'pager':490,955 'paid':420,578 'partial':877 'past':1183 'pattern':1015 'pay':429,643,695,714,857,887,1079,1452 'payback':276 'payout':45,69,317,458,478,813,837,845,1052 'per':596,669,1069 'perform':594 'period':288,443 'philosophi':404 'pipelin':154,307,583,790,1150,1212 'plan':8,21,64,79,97,149,191,203,235,362,378,509,568,767,970,975,979,1031,1060,1141,1166,1185,1217,1269,1283,1317,1370,1411,1475 'polici':457 'prefer':319 'prevent':413 'price':215,262 'primari':256,593,1067 'problem':205,512,1339 'proceed':341 'process':479,1117,1461 'produc':60,374,948,1407 'product':687,1276 'profession':195 'profit':606 'promis':1113 'proport':920 'protect':1235 'pull':1107 'pure':1087 'put':1239 'qualif':159,164,821 'qualifi':194,601,1425 'qualiti':155,927,997 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'revenu':23,585,890 'review':1420 'reward':1085 'risk':320,494,644,659,959,1008 'role':24,258,396,415,435,523,574,581,597,617,654,658,670,680,1070,1441,1484 'rule':42,67,103,609,621,829,911,1381 'run':940 'runway':279 'saa':1287,1298 'sale':2,6,15,136,141,163,257,267,282,376,656,719,841,973,1023,1116,1290,1315,1342,1368,1433,1466 'sales-compens':1,1289,1341 'sales-qualif':162 'scenario':360,777,1179 'schedul':445,758 'scope':17,525,569 'score':157,944 'scorecard':146,1458 'sdr/bdr':26 'secondari':1076 'seed':1204,1285,1295 'seed-stag':1203,1284,1294 'sell':261,526 'senior':655 'sensit':354 'seri':1190 'set':31,92,639,662,809,1133 'simpl':797,1220 'simplic':315 'skill':1406,1470 'skill-sales-compensation' 'snapshot':395,554 'solv':515 'soup':234,1027 'source-liqiongyu' 'spec':451,833,1412 'specif':170,190,1471 'spif':1196 'split':90,433,455,614 'splits/overlays':823 'stage':251,397,584,660,1187,1205,1216,1286,1296 'step':498,506,963,1012 'stick':1064 'strategi':331 'stress':1174 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