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Commissions

Philosophy

We know everyone in the GTM (and in the overall team) contributes to the commercial successes.

We believe a variable isn’t a bonus. It’s an integral part of the compensation (split between variable and base). Thus variable incentives are for salespeople only.

Here are the core principles of our commission model:

  • We want a fair & transparent model
  • We want something straight to the point and simple (% of ARR closed during the month)
  • We want to keep the momentum (monthly payouts based on the previous month's objectives - trigger is on payment)

Commission model at folk

Who is concerned?

A variable isn’t a bonus, it’s part of the compensation (split between variable and base). In most companies, it's usual for sales teams to have a bonus while it’s not usual for other go-to-market roles. At folk, only people who spent time doing demos will be concerned.

How does it work?

100% of the variable is individual.

>80%+ of the target per sales

Let's take the example of a target at $20k new ARR generated

  • Below 80% of the objective: No variable. e.g.: if you generate $15K ARR, this means you reach 75% of your objective. You won't get any variable this month.
  • Above 80%: variable = 1x the percentage
  • e.g.: if you generate $17.6K ARR, this means you reach 88% of your objective. You will get 88% of your monthly variable.

    e.g.: if you generate $26K ARR, this means you reach 130% of your objective. You will get 130% of your monthly variable.

Our model is uncapped.

We believe capping a variable is a very bad message to give to sales teams. That being said, we’re quite clear the objective is for a salesperson to be more or less at 100% of their objective. We will revisit targets every month if needed.

Acceleration

There is an acceleration clause of x1.5 for an annual contract.

For example, in month N, if closing:

  • Yearly: 5K
  • Monthly: 6K

The monthly performance of this salesperson is calculated as being 5*1.5 + 6 = 13.5

What’s accounted for as revenue?

Upgrades and downgrades resulting from deals closed in prior months but occurring in month N are now included in the performance metrics for month N.

It’s counted for the 3 months after closing.

Churn is not currently factored in.

Is there a ramp-up?

Yes. In the initial months after a new sales joined the team, we implemented a gradual ramp-up of their objectives, rather than expecting them to meet the full objective right away.

  • Month 1: 50%
  • Month 2: 75%
  • Month 3: 100%