Welcome to Everstage's ‘CC: Commission Chats’ – an interview series from Everstage featuring stories of world-class GTM leaders.
Ethan Peck is a true superstar in the world of Sales Compensation.
With over a decade of experience in the field, Ethan has been an integral part of success of sales teams across industries, including e-commerce, media, software, and travel.
Currently, Ethan wears the hat of Sales Compensation and Strategy Manager at Blend.
In this exclusive interview, Ethan discusses the significant changes that have taken place in sales comp in recent years, shares his personal philosophy on sales compensation, and offers insights on handling commission disputes.
How big is the sales team at blend?
We have a 100-member sales team. Between that, we have Account Executives, Customer Support Managers, Sales Engineers, Solutions Engineers, and then we also have SDRs. Then we have another team that I don't oversee, but they operate. They're insurance agents with whom we partner. It's like a third channel for us.
We have a sales operations team that has 12 members. It includes two deal desk representatives. We have other salesforce experts and enablement folks. If you include enablement too, we're looking at 20 plus people, but we have a fair amount of support for them.
What would you say are the two major changes that have happened in the sales compensation over the last decade? Are there any transitions happening right now in the sales compensation market?
One of the biggest trends that I've seen is we've gone to a point where plans have gotten really complex and it's a point of frustration with a lot of reps. The next step that everyone's trying to get back to is simplifying things. It was simple probably 10 years ago. When your company is growing, you just have a bare bones plan in place and it's free for all. But then as you scale, you need to put something a little more standard in place. And each time you do that, you have to include all your learnings over the year. But when your plan is massive and has 10 different components, it's just hard for reps to understand it all. You really want them focused on selling, not on understanding how they're going to get paid. I think the big trend now is going to be how do we best do that? How do we make reps focus on the right behaviors but not have too many components of the plan?
There are a few other things that we look at, like: How do we do multi-year agreements? Do you incentivize them right away? What will be the timing of payouts? Or do you have them wait on incremental pay down the road as we get billings in? Timing of payments is a big hot topic for us right now. But yeah, I think overall, the goal is really pulling back and getting back to a much more simple place.
What's your general philosophy around structuring a sales compensation? How do you design compensation plans for different markets?
Setting quotas could be really crazy in a new market. You can go about it two ways. My best approach that I've used is, not necessarily trying to align them to what you're doing with your regular market. Understand that this is different, it's a new venture. A lot of times you might want to start somebody on an MBO or Manage Business Objectives where it's like, Okay, manager's overseeing this. We don't really know what's going to come out of this territory. Let's just say based on the standard performance, how do you think this employee did? It's not necessarily like, Okay, he brought in X amount of revenue, but it's like, Oh, he went above and beyond, and got so many customers, got this many new logos. And for that reason, we see it as a success, even though revenue might have not come in. So we give him 120% to go or something like that. It is a way to dip your toe into a new market without having to risk a crazy quota.
The second option is obviously to try matching that to align with your other policies and do a quota, but then have adjustments. One of the things that I've implemented is a market wide adjustment where if you see that everyone in a specific segment or market is way over or under goal, you state at the beginning of the year, we'll adjust it. An example would be if everybody fell below 80% of goal, we're going to move the average up to 80%, or everybody hit over 130%, we're going to move the average down to 130 % and give them that range. Not as crazy as upside, but it makes it more stable for the company to be able to pursue things like that.
Makes sense, and this brings up my next question. How do you handle commission disputes? Do you have any process set up to minimize the commission disputes, or what is the structure you follow?
I think half of compensation jobs are handling exceptions and people not being pleased with outcomes. A lot of it is saying no. But I'd say yeah, we definitely have a process. Your communication has to be effective. One thing for me is I always have managers submit exception requests on each of the reps just because there's so many that you can't do individually. Then we try to figure out the trends of these exceptions. A lot of the exception requests can be used to make changes in the next year plans if everyone faces the same problem.
If it was a technical issue where the seller sold something that you customers weren't ready for, or if the customer had a bad experience not because of the seller, but because of the product team, then we'll assign this as a product issue and take a standard approach on how we do that.
Set up at least a month or two in advance of when everything is going to be finalized so that you can have these conversations, go down the list, get a glimpse of everything as a whole, figure out how you're going to treat it. Communicate that back to managers and to the reps, explain why. They might not always be happy about it, but as long as they feel heard, it goes a long way.
How do you handle the complete commission process from the ideation of the plan to the point where it reaches the sales rep? Do you have a checklist for the process?
It's always an ongoing process. Every year you hope for minimal change, especially because reps understand things and if you change it, they might not be the happiest with changes. But I'd say one is, we run on annual plans. Towards the end of third quarter and beginning of fourth, I'll make sure to start getting all the managers together, and we do the analysis of the plan. We look into what's worked really well and what hasn't. Getting their buy in goes a long way because they're the ones who are going to have to sign up for the plan next year.
Beyond that, ideally, you want to keep the plans as similar to each other as possible year over year, unless there's a drastic change in the company strategy. Other than that, I also visit different seminars and trainings to find out what other companies in the industry are doing, just to make sure we are doing the right thing.
Also, there are tons of compensation symposiums that’ll help you understand the pain points of other companies, and how they are handling it. You have to always know what's going on in the market and what the trends are.
Then finally, align the compensation plan with your corporate strategy. As long as we're incentivizing our sellers to sell the products that are most important to us, and we are seeing success with that, that's all that matters. Then the final thing is to make sure that payouts are in line with what we want because we want to make sure that our sellers are happy, and they're not going to leave, and we can attract talents as well.
You’ve worked in different industries. So how did you adapt to a new industry as a sales comp professional?
I've really realized that I prefer SaaS. Saas comp plans are pretty standard. Blend is my first experience in banking and mortgage. There are definitely some nuances that you have to bake into the plans when deciding on the compensation strategy. But I'd say it still follows the same general principle.
What's helped is I've been able to use my experience from each of my prior employers, and leverage it to enhance and standardize the processes. At the bigger companies like Google and Adobe, things are much more standardized and it's not as variable at times.
Are sales compensation certificates still relevant considering the AI domination everywhere?
Sales compensation is a unique field, and a lot of people I talked to have gotten into it. I think a lot of the progress on these commission tools going forward is going to be low code or no code. If you have some experience with basic coding or anything like that, you'll be able to get the tools to do what you want. I think the certifications will be less important, but I would definitely say make sure that employers know that you have familiarity with these different tools. Make sure to list those as skills. But I don't know if the certifications will be that important going forward.
