vp sales business plan

What Makes a Great VP of Sales and How to Hire One: The Complete Guide

by Jason Lemkin | Blog Posts , Compensation , Hiring , Sales

In SaaS, #1 most common misfire, with a bullet, is the VP/head of sales.   In fact, there’s a VC saying that I used to really hate.  It goes something like “You’ve Got to Get Past the Carcass of Your First VP of Sales” or “It’s The Second VP of Sales When You Really Start Selling” or variants thereof.  It used to really bug me because I am a firm believer in the strategy of Zero Voluntary Attrition and trying to hire fewer, more committed resources over a higher volume of mercenaries that turn over more often .

"A VP of Sales can't be a magician. Their job is to take what's working with 2 reps, or at least 1 1/2 reps … and make it work for reps 3-300." pic.twitter.com/Dg0XyGxLlG — Jason ✨????SaaStr.AI Sept 11✨ Lemkin (@jasonlk) February 2, 2023

The thing is, it turns out the VCs are basically right.  Because in SaaS start-ups, it seems like the majority of first VP Sales fail.  Don’t even make it 12 months.   And totally screw things up as they fail.   And this is really, really painful.  It’s much worse than a bad VP Marketing hire .  Because with a bad VP Sales you can lose so much momentum, and create so much internal confusion, that this one bad hire can really cripple you as you try to get from Initial Traction to Initial Scale.

So I want to try to help you if you’re going through this.  It’s going to take a few steps. First, in this post, I want to outline what a VP of Sales in a SaaS company actually does.  Because I think this is 50% of the problem – founder/CEOs are looking for the wrong things out of their VP Sales. Then later, in a different post, I want to describe who to hire, and how.  And I’ll even give you a script to help you make the right hire.

Before we get there, though, let’s outline in order of importance The Top 5 Things a Great VP of Sales Actually Does at a SaaS Company from say $500k in ARR to $20m+ ARR:

1. Recruiting

Like Nick Saban:  20%+ of their time .  Because you’re going to need a team to sell.  And recruiting great reps and making them successful is the #1 most important thing your VP Sales will do.  And the great VP of Sales all know this. They all either have in their back pocket, and/or are constantly on the prowl for, the next 2-3 great reps.  Because sales is a lead-driven but headcount- closed business.  To hit their number, they know they need the heads.  It becomes mathematically impossible without them.  

You'll know if your VP of Sales is going to work out even before they start How? You'll know based on who wants to already come with them pic.twitter.com/85ajodCHGK — Jason ✨????SaaStr.AI Sept 11✨ Lemkin (@jasonlk) October 14, 2022

2. Backfilling and Helping Their Sales Team

Helping their sales team close deals.  Working and closing key deals with them. Spotting issues before they blow up.  Seeing opportunities ahead of the horizon. In general, making sure their 3 reports, then 10 reports, then 30 direct and indirect reports — work as effectively and efficiently as they can.

3. Sales Tactics

How to compete.  Pitch scripts. Coordinating FUD and anti-FUD.  Segmenting customers. Optimizing how best to work with Demand Gen and marketing.  Getting feature gaps filled with Product and Engineering. In sum -> Learning and understanding how to maximize the revenue per lead.

4. Sales Strategy

What markets should we expand into?  How do we shore up our base? Where should we spend our resources, our money?  Once you’re past $20m or so in ARR, Strategy passes Tactics and goes higher on the list — once the VP Sales has a strong group of lieutenants/managers (e.g., Directors of Sales) to repeatedly execute core Tactics.

5. Creating and Selling Deals Themselves

This is the last of the Top 5.  Important, yes.  But #5 on the list 5 most important things your VP Sales should be doing.  And this is perhaps the unobvious part.

It’s #5 I think that is the root of half of the problems hiring your VP Sales.  Up until you make this hire … you the founder have likely been the acting VP Sales yourself, hopefully with 1-2 reps to help you ( ideally two ).  And you want to accelerate, do better … so you want to hire a VP Sales to … sell better than you.

Makes sense.  Except it doesn’t — because believe it or not, even at just $1-$2m in ARR, you’re already getting too big for VP Sales to be spending most of his time selling himself.  Let’s say you hire your VP, Sales when you are at $1m in ARR.  And you want to get to $2m in ARR in the next X months. OK, adding in churn, you’re going to have to add another >$1m+ ARR … quickly.  To do that, you’re probably going to need at least 3 scaled-up reps working 100% to hit quotas of say $300k-$400k each (you can raise these later, but it’s hard early).  And to do that, if your ACV is, say, $5k … you’re gonna need to close 200 deals in the next 12 months. 200 deals.

And then … as soon as you hit that run rate (which actually should happen earlier than month 12, because you have to hit the velocity earlier than that to hit the full year-end goal) … you’re gonna need 6 more reps to hit the next goal.  All of a sudden, that’s 10 reps.  Before you know it. And 400-500 deals a year.

So a little ways back @HarryStebbings + I did a deep dive on Building a Successful Sales Team: 1⃣ The Great VPs Know How to Spend The Money 2⃣ Founder Usually Has Be First Head of Sales 3⃣ The 10x Sales Rep pic.twitter.com/kHftTU9s3R — Jason ✨????SaaStr.AI Sept 11✨ Lemkin (@jasonlk) June 18, 2024

So yes, your VP Sales should be out there closing the big ones, the huge deals, on a plane, on a jet, of course.  Sometimes, soup to nuts, lead to close. And it’s great when they even take a quota at first, to do it themselves.  But there’s no frackin’ way he/she can do more than a handful of all your deals directly, him/herself.  The deal volume to hit your growth targets is just too high.

So my uber-point here is you shouldn’t hire a VP Sales until you are ready to scale and build and fund a small, growing sales team.   And any VP of Sales that doesn’t see this — probably isn’t a great VP of Sales for you.  Instead, he/she is either just a great individual contributor, a great figure-it-outer … or a deeply flawed candidate.  Either way, not a great VP Sales.

Your VP Sales cannot rescue you from “Great Product.  No Revenues”. Your VP Sales cannot rescue you from having no organic demand for your product.

>> But a Great VP Sales can take that tiny bit of Initial Traction, that small little trickle of inbound lead flow … those raw materials … and do something really magical with them.   Drive your revenue per lead way up, and put you in place to jump on and close every practical piece of business that comes through the door.  Create a real machine to monetize the prospects and leads that find their way to you. And then add some gravy in outbound and other expansion on top of that.

That’s the magic in a great SaaS VP Sales.

10 Great Questions to Ask a VP Sales During an Interview

Ready to hire your first VP Sales?  But haven’t done it before?

Let me give you a partial interview script that may help a bit.  You’ll have to vary it for different types of SaaS businesses — a bit.  But it will basically work for all SaaS companies from, say, $200k in ARR to $10m in ARR or so — a wide range.  (After that, you’ll probably be looking for a different type of VP Sales. We’ll get there in our next and final VP Sales post.)

Before we get there, as a reminder, I strongly recommend you hire 1-2 sales reps (ideally 2) before you hire a VP Sales, at a minimum.  And make them successful first. So you can practice what you preach, and know of what you are hiring. And also to get big enough so a VP Sales can actually help, not hinder you.  More here in our prior VP Sales post: When You Hire Your First Sales Rep — Just Make Sure You Hire Two  

Now if you are ready, but haven’t done it before in SaaS, here are 10 good screening questions to see if you have a real VP, Sales candidate in hand — or not.  These questions mostly don’t have right or wrong answers, but will help you determine the quality and fit of the candidates:

1.  How big a team do you think we need right now, given what you know?   

If he/she can’t answer — right or wrong — pass., 2 .  what deal sizes have you sold to, on average and range , if it’s not a similar fit to you, pass.  if he/she can’t answer fluidly, pass., 3.  tell me about the teams you’ve directly managed, and how you built them .  , if he/she can’t describe how they built a team — pass., 4.  what sales tools have you used and what works for you  what hasn’t worked well   , if they don’t understand sales tools, they aren’t a real vp sales., 5.  who do you know right now that would join you on our sales team   , all good candidates should have a few in mind.  tell me about them, by background if not name., 6.  how should sales and client success/management work together   , this will ferret out how well he/she understands the true customer lifecycle., 7.  tell me about the deals you’ve lost to competitors.   , what’s going to be key in our space about winning vs. competitors, 8.  how do you deal with fud in the marketplace   , this will ferret out if they know how to compete — or not., 9.  do you work with sales engineers and sales support  if so, what role do they need to play at this stage when capital is finite   , this will ferret out if he/she can play at an early-stage saas start-up successfully — and if he knows how to scale once you scale., 10.  what will my revenues look like 120 days after i hire you   , have him/her explain to you what will happen.  there’s no correct answer. but there are many wrong answers..

ok let’s make it an even 12 actually:

11.  How should sales and marketing work together at our phase?   

This will ferret out if he understands lead generation and how to work a lead funnel.  Believe it or not, most candidates don’t understand this unless they were really a VP Sales before.

12.  How much easier or harder will our product be to sell than the last one you sold?

Very few VPs of Sales can really sell a product that is more complicated, more technical, more nuanced, and more vertical-specific than the last one.  Be very wary here.  Use this question is try to figure out if selling your product will at least be a tiny bit easier to sell than their last one.

There will always be the exception But still I say, whatever you do, no matter what: Don't hire a VP of Sales that has only sold products that are easier to sell than yours, or less complicated, or less technical, or simpler I just so rarely see them make it — Jason ✨????SaaStr.AI Sept 11✨ Lemkin (@jasonlk) May 23, 2023

These questions aren’t magic.  None of them are particularly insightful or profound in isolation.  In fact, hopefully they are kind of obvious. But what they will do, is they will create a dialogue .  From them, you’ll be able to determine: (x) if this candidate is for real, or not, (y) if this candidate can really be a true VP, a leader, a manager — or not — and take you to the next level — or not, and (z) if the candidate is a good fit for your company and space in particular.

If any of the answers are terrible, pass.  If any don’t make sense, pass. And if you know more about any of these questions that the candidate does — pass.  

Your VP Sales needs to be smarter than you in sales, sales processes, and building and scaling a sales team.

VP of Sales Compensation Plan

So now that you’ve hired your VP Sales, it’s important to know how to pay this critical role. I don’t think it’s necessarily as nuanced and interesting a topic as how to pay and scale the sales team itself, or how to hire for this role.

But incentives are critical, and the VP Sales will likely be the Seemingly Most Expensive hire you ever make.  That’s stressful. So let me tell you what I did and learned. The 50/50/25+ plan. And as you can see if you look at the Boston Strategy Group chart at the right , as usual, it’s just a little different from The Ordinary way to go.  Not a lot different, but meaningfully so.

The 50/50/25+ Plan

Here’s what I learned and knew before I figured out the 50/50/25+ plan:

No best efforts cr*p .  Even if you hire a VP Sales very early, there has to be a clear quota and plan for him or her to hit.  No best efforts stuff. I know it’s teamwork in a start-up. But sales is sales.

In a start-up, the VP Sales has to also be aligned to costs, not just revenue.   It’s natural for a VP Sales not to care about costs.  Just to want a budget and a top-line number to meet. But costs are critical when you’re adding sales reps and then a VP Sales ahead of profitability.  Sales just feels sooo expensive early on.

The VP Sales has to somehow be accretive.   This seems almost impossible unless you give her a big quota, which as we’ve discussed, doesn’t scale.  So how can this big salary not just be a big drain on limited capital? How can the VP Sales not be a “tax”, at least from a financial plan perspective?

The Good VP Sales have large OTE (On-Target Earnings) Expectations.   You can’t get a great VP Sales for a nominal $1X0k salary.  You can get a crummy one, however.

Many candidates will tell you they want a guaranteed draw for 6+ months. They’re leaving something good for something risky.  So guarantee me my full bonus for 6+ months until I’ve built up a big enough pipeline to close enough revenue to hit my number.  Sounds fair — on the surface.

It’s tough.  And I got most of this wrong before I got it right.

So here’s what I figured out, for us, and it worked well.  It’s just one way to go:

A High OTE is No Big Deal — if your VP Sales Hits Your Number .

So don’t sweat it.  Instead, align it. Do you really care if the OTE is $300k, or heck even $500k, if the VP Sales brings in $Xm more revenue than you expected?  Of course you don’t … and you don’t pay it if it doesn’t happen … plus bonuses “vest” over the course of the year …

So we paid 50/50/25+, which means:

50% of OTE paid as base salary .  No draw (i.e., no guaranteed bonus for X months until you scale).

50% of OTE paid as a bonus, with the target being the overall company revenue number for the year .  Top-line revenue, inclusive of churn, inclusive of upsells and self-service, net of everything.  The same number you and everyone else in the company is trying to hit. A number that’s hard to hit, but that you have say 50-60% confidence you can hit.

25% or more upside for exceeding that plan .  Basically, we paid our VP Sales X% of every single dollar after we hit the plan for the year out.  That % has to go down over time, but the basic idea was if the Stretch Plan was hit (Stretch for us = plan that I had a 25% confidence in hitting), then there would be a 25% boost on top of the OTE.  If the Stretch Plan was exceeded, the comp goes up from there. No cap.

It was that simple.   And what it meant was, like the sales rep comp plan, if the VP Sales killed it — the money would follow.  And if he didn’t, it didn’t, and the cost wasn’t that stressful. And since our Real VP Sales killed it, he made good money, was highly accretive, and we got to cash-flow positive at $4m in ARR even paying our VP Sales well and paying our sales reps 25% of the deal size.

A few thoughts on the plan:

Ideally, don’t do a guaranteed draw .  I know it seems to make sense.  But the thing is, if you pay your VP Sales in full on hitting the plan, it shouldn’t matter if that gratification is delayed a few months, so long as the real OTE is high.  A draw actually can be an excuse for laziness. It sucks some of the hunger out. And lets the candidate blame others for their own issues. {Yes, I know some will disagree and this is controversial.  Just my view.} If you do end doing a draw, keep it short (e.g., one quarter) and make sure the VP Sales have to “make it up” in sales quota payments by the year-end.

But do pay well when they kill it — against a sane plan.  And please don’t cap the upside .   That’s the trade-off.  No draw, no huge salary for just showing up.  But you have to pay very well when a realistic plan is hit (not a ridiculous one), and you have to pay very, very well when you exceed it.  This will appeal to a great VP Sales on the way up.  It won’t appeal to a mediocre one or one on the way down.

Pay bonuses out monthly, even if the goals are quarterly .  This is the flip side of the no guaranteed draw.  No delayed gratification here. It’s hard enough to come into something new as VP Sales and make magic happen.  Once it does — pay now. Not later. Don’t make your VP worry her quarterly bonus might not come, or be subject to vagaries.  

Pay it out monthly, even if it’s a bit of a guesstimate, and true it up later.  Many sales leaders have some scar tissue about not being paid a bonus or two. Just pay ’em.  Be better than that, and build trust and loyalty back.

In the beginning, consider bonuses and goals that match the overall company ARR goals — not just net new bookings.   My VP Sales and I both worked toward the same goal as everyone else in the company — the end-of-the-year revenue goal.  EchoSign has a self-service component, and the Client Success team managed churn, and upsells were split between Sales and Client Success.  You could make an argument the VP Sales should only be responsible for net new revenue from sales. And that may be the way to go later. But until you are at $Xm in sales, I say everyone should have the same revenue goal where practical.  One overall revenue goal for the founders and VPs and everyone. It also incents the VP Sales to work with the other functional areas around post-signature revenue (support, product, client success, etc.).

Good luck!  I think anything works well here, as long as you align interests, and the plan is achievable.

You can see from the above chart, and in the BSG Team Ventures data here , that most VP Sales are heavy on guaranteed comp and light on the upside.  You’ve been warned. ????

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• The Ultimate Guide to Hiring a Great VP of Sales
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Founder SaaStr

The First 100 Days – When a New VP of Sales or a CRO Starts

I was recently asked what a new Sales Leader should do during their first three months (i.e. the first quarter) at their job.  And just the other day, I saw a link from SBI  posting a video where Matt Sharrers  (the CEO of SBI) asked Eric Vermillion (a former CRO of BlueCat) about what happens when new head of Sales starts – see this video here: “ A Quick Start Guide for New CROs “.

Eric mentioned the following in this video (my notes on the couple of steps that Eric discussed):

• Don’t be the “anti- guy before me” – don’t start your legacy by saying what a louzy job the prior executive did and don’t criticize them. Focus on building your own legacy and learn the good things they did before.
• Listen, learn and build a plan. Don’t bring in the slide decks from your last place and just replace the logo – every company is different even if it looks similar.  You need to build a plan that is relevant to your new organization at this time and place.
• Create a roster of the top deals that you can personally impact and help deliver yourself (not necessarily the biggest ones on the rails but the ones you can help with)
• Have a level of transparency with the rest of the organization and build a good story with everyone about their involvement and what you expect in terms of helping sales with deals. Get the rest of the company behind you and get them vested in the success of the sales organization.  Your success is the byproduct of the buy-in that the rest of the people have.

I really like what Matt and Eric discussed and also wanted to share some of my own thoughts on this topic.  I think of starting a new role as the “First 100 Days” which applies to U.S. Presidency and equally applies for a VP of Sales or a CRO (or a CEO or any C-Level for that matter).  Here are a couple of steps in the process for the First 100 Days that I want to share:

• Remember that “Prescription without diagnosis is malpractice” – first seek to understand what is happening rather than instantly prescribing any changes
• Do not act impulsively on what you learn or hear – keep listening and learning
• Seek to understand before seeking to be understood
• respect the existing culture and the people who have invested previously in the organization
• don’t rush into making any changes right away before you really understand and listen
• be supportive and respectful of the legacy of the organization in all communications with everyone
• as Eric Vermillion discussed in the SBI video, don’t criticize the previous VP – it’s unnecessary, not tactful & sets a bad precedent for your team
• also – while you will begin to instill your own systems, decisions, processes and, of course, sales team “Principles/Core Values” as well as Sales Culture, you need to first ground that in respecting the history before you earn the trust and the right to show why you can introduce something new (i.e. it should end up being a smooth and logical transition rather than an abrupt one that ignores and doesn’t respect what has already been working or been put in place and followed historically)
• The overarching focus is on “ Organizational Health ” during this period
• Spend 90% of your time with people – most of your time should be focused exclusively on the people
• Be present and ensure you earn trust of your new team
• Build bridges and new relationships
• Do a sales team weekly kickoff with an Open Q&A
• Communicate your intentions to listen, observe and learn
• Do a casual meet & greet for the team to get to know people outside of work
• Ensure everyone feels comfortable coming to you with any questions
• Meet other groups as well including Marketing, Customer Success, Product, etc.
• Invest in 1-on-1 time – ask what’s working and what’s not working
• Be Open-Minded to everything you hear and learn from the existing team
• aka “Guiding Coalition” –  trusted allies and stakeholders in managing the change period
• internal influencers who help you oversee the success during the transition and beyond
• a leader needs a team of willing and trusted people – successful transition is a team sport
• this is one of the key fundamental steps to do immediately to ensure ongoing sales productivity
• ensure that there is ongoing development to ensure to continuously level up the team
• every sales team in the sales group should have a process for sales coaching and ongoing training
• every FLM (Front Line Manager) should have a “coaching plan” for each of their reps on the team
• Create a Skillset Matrix – assess what skill gaps you need to fill
• If needed, recruiting world-class A-players is critical (it’s a continuous process – i.e. every day is a Draft Day)
• Remember that this can be a stressful time for the entire sales organization and the people don’t know what to expect
• Communicate your high-level vision and strategy for the long term (do not imply any short-term changes)
• Communicate your core values and principles even if you don’t yet formally implement them
• see what “ over-communicate ” really means by Patrick Lencioni
• Focus on how your actions and words can impact others before you say or do anything
• Be intentional in your communications and even in body language
• Avoid and disincentivize any gossiping or complaining
• Remember that your actions speak louder than words
• Be proactive and not reactive in your communication and clarity
• Your primary job is to make the sales team more successful and produce results
• But you can hit the ground with closing some deals which brings us to the next point…
• Be more of a player in the “Player / Coach” context
• Help sell new deals (usually at smaller companies you’ll do that right away)
• Help your sales reps close some of their deals – help bring a few deals in
• You can start with some existing leads or prospect for a bigger strategic deal
• If you sell then it’s a great way to dig in, learn and understand as a VP of Sales
• Culture of Accountability – it’s all about performance, execution and accountability
• Create a sense of urgency to keep executing and hit the sales targets
• Empower your team to be action-oriented and to have autonomy to execute
• Generate “short term wins” in the first 30 days and over the span of 100 days
• Transition is a critical time – ensure that your team is  focused on execution
• Reduce and mitigate any disruptions during the transition period
• Ensure the team is focused on the High Payoff Activities (HPAs)
• Keep an eye on Sales KPIs/metrics and leading indicators regularly
• Pipeline health – a healthy pipeline is key to ensuring the sales force makes the number
• Ensure that an effective Pipeline Management process is in place
• Review the pipeline metrics regularly
• carefully review lost Opps (even if qualified out) – what are the loss reasons, why do we lose
• understand why deals are typically lost as this is an important factor going forward
• start with the select strategic customers
• introduce yourself to new recent Customers
• join on the phone with prospective Customers to help close the deals
• you should try to meet in person with key and strategic customers
• this will help you get to know them really well
• will help you build true relationships that are valuable to the company
• don’t just get to know the business side, become real friends
• Understand the customer pain points and how your solution helps your customers
• You should also be helpful to your team when needed to finalize a sale with new customers
• Process drives outcomes
• Make sure you have the repeatable, predictable and consistent process
• Talk to Customers and understand their buying journey to make sure the sales process matches the way they want to buy
• assess the Overall Capability & Strength of the Sales Organization – how to audit the overall sales group strength
• begin looking at the existing  Sales Strategy  to understand if adjustments should be planned ahead
• assess the effectiveness of the  Go-to-Market (GTM) Strategy and Plan
• review the  Sales Process  to ensure it is effective and also consistent and repeatable
• review the Sales Playook to ensure everyone is getting consistent training and follows a consistent process
• At that stage it would be more general, focused on bigger picture
• Would include your general Summary of Expected Achievements, Sales Goals / KPIs, high-level People Plan, etc.
• Also think of it as a “30-60-90 Plan” (i.e. first 3 months) but under the banner of “ The First 100 Days “
• Establish the process for value creation and name the roles and responsibilities of the Guiding Coalition
• Establish the “small wins” milestones and more concrete goals for each month
• Communicate the plan to the executive team and the Sales group
• ensure there is alignment with all the key stakeholders and groups that help enable sales success
• make time to have a 1-on-1 with all your peer executive VPs in the company during the 2-4 weeks
• work closely with Marketing to gather the process of lead generation and pipeline creation for the sales team
• work with the Product team and understand the release timelines and the process of their work with sales
• Also: only *when and if* swift action is necessary – on rare occasions there are times when a new VP of Sales or a CRO starts out needing to make a few immediate  decisions combined with swift action in the first 30-60 days – but this should be done very carefully by considering the impact on the organization and its people and always with thoughtful input of key stakeholders, starting with the CEO and other executive team members based on carefully collecting facts and information

What else? What are some other thoughts on a quick start?

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How to Manage Your First 90 Days as a Sales VP

You’re the VP of Sales. You’ve evaluated the role, accepted it, and you’ve nailed your first impression. But now it’s time to get some real work done.

The first 90 days as a VP of Sales will set the tone for your entire run. We’re here to make sure you manage them properly.

We’ll divide them in three 30-day periods in which you will focus your efforts in different areas. By the end, you’ll be well on your way to becoming a rockstar VP of sales.

Plan for Your First 30 Days as VP of Sales

Your first 30 days as a VP of Sales will be the most passive out of your 90-day sales management plan.

You’d be tempted to jump right in and start proving your worth. We ‘d advise against it. At this point, you still don’t know enough about the organization to make any meaningful changes. You don’t know what works and what doesn’t. Furthermore, you’ve barely met your team, so you still don’t know the dynamics.

This is not a good position to start making changes. You don’t want to become the antagonistic “boss” who starts firing people on his first day. It may be entertaining in sitcoms, but it will not end well in the real world.

Instead what you want to do is simply observe, listen, and learn. That’s all you need to be doing during the first 30 days as a VP of Sales.

Learn the product

As the VP of Sales, it’s your responsibility to know the product inside and out. If you don’t know it, there’s no way you’ll be able to sell it.

Dig deep. If someone asked you in your sleep, you need to be able to answer:

• What does the product do?
• What problem does it solve?
• What’s the ICP?
• What’s the USP?
• Why is it the best product for that target market?
• Why should clients use this product and not the competition?
• What does feature X do?

This should be your first job after establishing yourself and nailing your first impression as a VP of Sales. Learn the product inside, out, and backwards.

Watch demos

Watch some product demos. At this point, you’re still not going into meetings with the reps. You’re only reviewing recordings to get a better feel for the product, as well as the sales process.

Write down any impressions you’re getting. This will become important later. But don’t be too quick to judge.

Learn and document the entire sales process and pipeline

With all the data we have at our disposal, it’s almost criminal not to use it.

Get to know the sales process and make sure everything is handled properly. Make sure:

• Leads get tagged on the way in
• Leads get correctly qualified
• The funnel is kept in a pristine condition
• Everything is regularly updated

If you don’t tag it, you can’t track it. If you can’t track it, you can’t use it.

Identify the proper metrics to track

As a VP of Sales, it’s your responsibility to make sure everything runs smoothly. You’re the one setting the course. You’re the one setting the targets.

Plan for Your Second 30 Days as a VP of Sales

Your second 30-day period marks your jumping into the action. You’re still not going to be making organization-level changes (yet), but you’ll be more involved. Introducing some small changes and best practices is fine, but at this point, we’re still not looking for tectonic shifts.

Start selling with the team

Now that you know the sales process and the product, you’re going to start selling. It’s time to test things yourself and see what works and what doesn’t.

Nothing will give you more insight than going in the trenches with your team. This will also serve as inspiration – they won’t see you as “some suit”, but as a true leader. This is how you gain their respect.

Attend demo meetings

You’ve already seen some demos. Now it’s time to attend them. Let the reps lead for now. Only jump in if you feel it’s absolutely necessary. Don’t leave the client with the impression the rep doesn’t know what to do. And don’t leave the rep with the impression you don’t trust them and you’re there to micromanage.

Make sure all client questions and concerns get addressed. Also, pay attention to client feedback and client needs. If a few clients ask for a certain feature you don’t offer, this is a good indication you want to make adjustments. You don’t make a sale with one big “yes”, but with a bunch of small ones along the way. So pay attention.

Get familiar with how people operate

You already have a basic understanding of how your team operates. Now it’s time to dig deeper. Poke at and analyze everything. If there’s something that doesn’t quite work, people are unlikely to point it out outright. So you need to discover it on your own.

This is another place where data can help you. By using pipeline management tools , you can get a pretty good idea about the current state of affairs. Then, you can use it to ask your reps specific questions and identify the weak links in the process.

Your second month as a VP of Sales should be marked by getting knee-deep in the trenches and getting your hands dirty. Doing this well will set you up for success on your third 30-day period in your new role.

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Plan for your third 30 days as a vp of sales.

Your third 30 days as VP of Sales is where you finally get to exact bigger changes in the organization. Now that you’ve done all the prep work for the past two months, it’s your time to shine.

Refine the sales process

You’ve spent the past two months studying the sales process. You should have an idea where things work and where they stand to be improved.

Start coaching the team

Now that you’ve acquainted yourself with the process and you’ve seen the reps in action, it’s time to start coaching. This will be one of the most important aspects of your job as a VP of Sales. The effectiveness of your team is a reflection of your own effectiveness as a sales leader.

By this point, you should have a pretty good understanding of the strengths and weaknesses of each team member. You can also use activity tracking software to put the data in order. Combining activity data with your own assessment will give you a more complete picture.

Start making company-level changes

Finally, it’s time to take charge. This is what your new role is all about. This is what you’ve been preparing for during your first and second 30-day periods. At last, you get to test your mettle.

Company-level changes are no laughing matter. But thanks to the extensive time spent in studying the org and the processes, you can make a real impact. If something doesn’t work, you can either improve it, or toss it aside and get something that works better.

At this stage, you’ll be the one setting the targets for the team. This is also where you can start hiring or firing people. Now you can make those tectonic shifts we were talking about earlier, because you’ve laid all the groundwork.

Why is Data Important for Your 90-day Sales Management Plan?

During each step of the process, data is going to be invaluable. It will allow you to get acquainted with the org and the pipeline in no time. Furthermore, it will enable you to follow the flow of the deals and identify any underlying problems.

Data will give you the full picture. Especially in bigger orgs and big teams, it’s hard to listen to every rep individually. This is where data will fill in the blanks.

With software like MoData, processing your data and getting an action-ready insight is as easy as clicking a few buttons. Nothing will make your first 90 days as a VP of Sales easier.

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If you want your sales team to get the right results, you need to solve problems that delay or curb your sales goal and conversion. But do you know what the real problems in your sales process are? Download your free eBook, which includes a list of questions, to help you identify them.

How to Design a VP of Sales Compensation Structure

What is VP of sales compensation structure?

Sales team considerations in compensation planning, how to design a vp of sales compensation structure, vp of sales compensation structure template.

• Step 1. Define sales goals.
• Step 2. Benchmark compensation standards.
• Step 3. Determine base salary and variable pay.
• Step 4. Set clear performance metrics.
• Step 5. Incorporate long-term incentives.
• Step 6. Review and adjust regularly.

Designing a VP of Sales compensation structure is a strategic decision that requires careful planning and insight into the organization's goals and sales performance metrics. A well-designed compensation plan is crucial for attracting and retaining top talent while motivating the VP of Sales to drive results.

A VP of Sales compensation structure refers to the payment system specifically designed for the Vice President of Sales within an organization. This structure includes base salary , variable pay, bonuses, commissions, and other incentives tied to performance.

The goal is to create a balanced package that rewards the VP of Sales for achieving organizational objectives, such as meeting or exceeding revenue targets, expanding market share, and leading a high-performing sales team.

The compensation structure typically aligns with both the company's short-term and long-term strategic goals. It should incentivize the VP of Sales to focus on not just revenue, but also on the quality of deals, profitability, and customer satisfaction.

Key factors that affect VP of sales compensation

The compensation for a VP of Sales is influenced by multiple factors, including:

Company size and revenue: The size of the organization and its overall revenue heavily influence the compensation package. Larger companies with higher revenues may offer more competitive packages.

Industry: The industry in which the company operates also plays a crucial role. For instance, tech companies might offer stock options or equity , while manufacturing firms may focus more on bonuses tied to production efficiency.

Geographical location: Salaries and compensation packages vary by region due to differences in the cost of living and local market conditions.

Sales targets and performance metrics: Compensation is often tied directly to the achievement of sales goals, whether in terms of revenue, new customer acquisition, or other performance indicators.

Market competition: Competitive pressure in the labor market can push companies to offer more attractive compensation packages to attract top-tier candidates.

Leadership responsibilities: In addition to sales quota payments, the VP of Sales often has managerial and strategic responsibilities, such as overseeing the sales team, developing new sales strategies, and driving business growth.

When designing the compensation package for the VP of Sales, it's important to consider the dynamics of the broader sales team.

Alignment with sales team goals

The VP of Sales’ compensation should align with the sales team’s goals, balancing short- and long-term incentives. Focus not just on net new revenue but also on client success and the sales rep comp plan to avoid scenarios where VP Sales hits targets but disrupts team cohesion or where VP Sales killed collaboration.

Performance-based incentives

Incorporate individual and team performance metrics into the VP’s compensation, encouraging collaboration. Include metrics like sales rep performance and client success to drive toward on-target earnings and support adding sales reps effectively.

Clear and transparent communication

Communicate the VP of Sales’ compensation package to the team. Transparency helps ensure everyone, including the client success team and sales reps, understands expectations and how success will be rewarded.

Recognition of team contributions

The VP’s compensation should reflect the entire sales team’s performance. Linking rewards to team success integrates the sales rep comp plan and acknowledges contributions, promoting leadership that promotes overall team success.

AS mentioned, creating a VP of Sales compensation package requires careful consideration and a step-by-step approach to ensure it is competitive, fair, and aligned with company objectives. Below is a detailed guide on how to structure this process:

Set clear sales goals, such as revenue targets, market expansion, and customer retention. Ensure that the VP of Sales is incentivized not just for achieving revenue goals but also for meeting these other objectives. Outline these goals carefully before designing the compensation package.

Research industry standards and compare compensation packages. Look at salary data for similar roles and consider competitors' structures to ensure your offer is competitive and attractive to top talent.

Market Pricing provides detailed market pricing data, essential for benchmarking compensation against industry standards.

Combine base salary with variable pay (bonuses, commissions) to create a balanced compensation package. Depending on your company’s needs, you might choose a 50/50 split or adjust the ratio based on sales targets.

Define clear, measurable metrics that align with your sales goals, such as revenue target or profit margins. These metrics should be challenging but achievable to motivate high performance.

Offer long-term incentives like stock options or profit-sharing to align the VP's interests with the company's long-term growth and sustainability.

Competitive Compensation ensures that long-term incentives are competitive and aligned with the company’s long-term objectives.

Regularly review and adjust the compensation package to keep it competitive and aligned with evolving company goals and market conditions.

Reporting provides advanced reporting capabilities to facilitate regular reviews and adjustments of the VP of Sales' compensation package, ensuring it remains competitive and aligned with company goals.

A compensation template can help you design a structure that is both clear and adaptable. Below is a simplified template that you can adjust based on your company’s needs:

This sample outline of VP of Sales compensation package, detailing a base salary of $150,000, performance bonuses up to $50,000, and a 1% commission on sales revenue. It also includes other benefits such as stock options or equity, health insurance coverage, and more.

VP of sales compensation structure example

Here are some examples of VP of sales compensation plan

50/50:25+ Stretch plan

The 50/50:25+ stretch plan is ideal for startups in the growth phase. It offers a balanced compensation package with a 50% base salary, 50% commission, and a 25% accelerator bonus on revenue above target. This plan motivates the team to exceed targets while providing financial security. Setting realistic goals is crucial to avoid either overpaying or demotivating the team.

70/30: Equity plan

The 70/30: equity plan is suited for attracting experienced VPs who value stability. It includes 70% base salary and 30% commission, with additional stock or cash bonuses for exceeding targets. The equity component keeps VPs invested in the company’s long-term success and is an effective way to attract and retain top talent who want to make a meaningful impact.

Year-over-year comparison plan

This plan ties bonuses to the growth of key financial metrics like revenue and gross profit by comparing year-over-year performance. Bonuses are awarded based on the company’s growth, motivating the VP to focus on strategies that drive progress. The flexibility of this model allows it to be customized to suit the specific needs of your startup, encouraging consistent performance and team growth.

Designing a VP of Sales compensation package demands a strategic and thoughtful approach. Aligning the compensation package with your company’s goals, market standards, and sales performance metrics, you can develop a plan that attracts top talent and drives sustained growth. Ensuring that the compensation structure is transparent, fair, and regularly reviewed will help keep the VP sales ahead in performance, promoting motivation and effectiveness in leading your company to success.

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What to include in your VP of Sales compensation package

By QuotaPath Team | March, 2022 | Updated on September 18, 2023 | 5 mins

A VP of Sales is a vital part of your management team and is integral to the success of your company. They are responsible for hiring, training, and developing members of your talent pool and making sure they have the skills and team to help your organization achieve its key performance indicators (KPIs). 

With this in mind, it’s essential to hire the right person for the position, and for that, you need to offer the right sales compensation package. 

In this article, we explore some options to offer a prospective VP of Sales that will fit their expectations as well as the needs of your business.

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How should a VP of Sales be compensated?

As with any position of such importance, there is no “one size fits all” package for compensating your VP of Sales.

Rather, consider the following factors when building your package:

• Track record — Have they a proven record of achieving targets and retaining the best sales team?
• Years of experience — Will this be the person’s first time as a VP, or will it be their 8th?
• Size of employer — Larger employers have larger sales teams, and typically compensate to reflect that.
• Years of tenure at an employer — A new employee often has lower compensation expectations.
• Employer’s industry   — Niche industries often need to pay more for experienced VPs.
• Industry knowledge and connections — Those who bring a larger network and industry knowledge to your organization may deserve a higher package than someone who does not.
• Method of compensation — Salary, bonuses or stock options? Different combinations suit different companies and candidates, as we shall explore later.
• Location — If this person lives in an area with high living costs, they’ll expect their compensation to match.

VP of Sales compensation structure

As we indicated earlier, there is no one-size-fits-all structure for compensating a VP of Sales, but some basic guidelines apply. 

Usually, a package includes a base salary and some sort of bonus or commission-based element, depending on the stage of the VP’s career and the industry they work in. 

For SaaS (Software as a Service) organizations, the salary and bonus figures depend on the organization’s size, how many sales managers and reps they employ and the geographical area they work in.

3 examples of a VP of Sales compensation package

Choosing the best compensation package for your VP is closely related to the size of your company, its needs, and your growth goals. This may change over time and should also relate to the expectations of the type of candidate you wish to attract.

To help, we sourced three VP of Sales compensation package examples based on commonly adopted compensation structures. 

1. A stretch plan for startups: 50/50:25+

If you’re running a start-up, growth is vital, so you need a package that incentivizes growth. However, you don’t want to offer too much and jeopardize your organization’s profitability. So a good package to offer at this stage can be made up as follows:

• 50% commission
• 25% of all revenue above the total revenue target goes to the leader (accelerator)

To make this work, you need to set your goals early on and ensure they’re realistic. If you pitch your targets too low, you may needlessly lose a chunk of revenue — although your VP will be happy! Too high, and a good VP of Sales will recognize this and become demotivated.

2. Equity package: 70/30: equity

A package with a solid salary base can attract experienced VPs who want a predictable income. And, of course, a commission element keeps them motivated. A good split for that will go like this:

• 30% commission
• Stock or cash bonuses for milestones above target

The stock or cash bonuses also motivate your VP to bring on team members who can contribute strongly to your revenue. This gives them a good connection to your organization and keeps them invested.

3. Year-over-year comparison

This highly-motivating package compares revenue, net profit results, and gross profit. You then calculate bonus payouts to align with the gross profit for each category over the previous year. If your business doesn’t grow, there’s no bonus for your VP of Sales. You can scale this model to suit the needs of your organization and also inspire your VP to build a team well-suited to helping the company grow.

Create Compensation Plans with confidence

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Best practices for building a VP of sales compensation package

When building your compensation package for a VP of Sales, start with a pre-determined and clearly laid-out quota and annual plan. This may involve:

• Setting an annual budget for sales hiring and expenses.
• Modeling the numbers to ensure the gross profit your VP brings in will outweigh the cost of their role.

You should also be aware that the strongest VP of Sales candidates will require a large OTE salary . It’s also a good idea to offer a guaranteed draw (full bonus), as you would with a new sales rep.

Of course, once you have the right VP of Sales compensation package in the first year, the journey isn’t over.

As your company grows, your VP of Sale’s role will grow with it, so it’s best to revisit that package annually to ensure it still meets the needs of both your organization and your valued VP of Sales.

Need help with comp plan design for AEs and SDRs? Our free and ungated resource, Compensation Hub , includes a library of 20 adjustable templates to find the right plan fit for your business.  To learn more about QuotaPath’s automated commission tracking and incentive compensation management software, book time with our team today or sign up for a free 30-day trial .

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