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 $40k new ARR generated
- Below 80% of the objective: No variable. e.g.: if you generate $30K 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 $36K ARR, this means you reach 90% of your objective. You will get 90% of your monthly variable.
e.g.: if you generate $44K ARR, this means you reach 110% of your objective. You will get 110% 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%