
Uncapped Commission
Uncapped commission means there is no limit to the amount of commission a sales rep can earn during any given pay period.Continue Reading
What is Total Target Compensation?
In sales, Total Target Compensation (TTC)– sometimes called On Target Earnings– refers to the total amount of money a salesperson will bring home if they hit the milestones set for them. Total target compensation includes all base pay, variable pay, commission, and bonuses a rep is likely to earn if they hit quota.
Total Target Compensation (TTC) is not the same thing as total cash compensation (TCC). TTC includes base salary and commission, but does not include bonuses or perks like car allowances or vacation days. TCC on the other hand may include any additional incentive plans from your employer to incentivize you to perform well over time; this could include things like stock options or profit sharing plans.
To calculate Total Target Compensation, simply add base pay to the amount of sales commission a rep would earn if they were to hit 100% of quota. See the graphic below:
Setting total target compensation is critical in sales roles because it’s a major building block of most sales comp plans. Without a baseline understanding of what a rep’s on target compensation looks like, activities like budgeting, hiring, and managing sales performance may be impacted negatively.
There are some key advantages and disadvantages when it comes to using Total Target Compensation as a KPI to guide your sales organization. Let’s take a look at benefits first:
The main disadvantage we’ve found when it comes to using Total Target Compensation is the following:
There are many factors that influence how an organization thinks about Total Target Compensation for their sales teams. Here are a few of the main factors:
For most companies, these factors inform and reinforce one another. For example, if you have an aggressive compensation philosophy (e.g., pay based on performance), you’re more likely to create a performance-based commission plan. You’re also more likely to have processes in place to enforce sales behaviors that support your overarching compensation philosophy.
If you’ve worked in sales, revenue operations, or finance for any amount of time, I don’t have to tell you how important sales compensation is. You already know the right sales compensation plan can motivate your team, improve their performance, and boost overall job satisfaction. And, conversely, you already know the wrong compensation plan can do the exact opposite.
Sales Development Reps– or SDRs– are a crucial part of any business. SDRs are often the first line of qualification and a major source of pipeline at most organizations. To put it bluntly, how you compensate your SDRs can make or break the success of your sales organization.
Imagine having something in place that could pave the way towards alignment between your sales and finance teams and could save both teams a lot of time, allowing them to focus on revenue-generating activities. The right sales commission automation platform will do this for you.