Q&A: How Do You Pay on Windfall Deals?
Q: How do you handle windfall deals when it comes to compensating your sales team?
A: Once in a while, a sales win will defy all expectations. Sometimes, that means encountering a windfall deal; an extremely large unexpected deal that includes a significant payout for the sales team. You don’t want to discourage your team from pursuing and securing deals that are good for the company, so you should have a plan for compensating your reps when it comes to these unique situations.
First of all, congratulations on having this problem! It’s not every day that a large deal falls into your lap. Secondly, your sales compensation plans should include a windfall clause to identify how large unexpected deals are handled. In principle, you should payout according to your comp plans whenever you can, but there are two modifications that can be helpful depending on the deal structure and the actual comp plan.
1. Carve this deal out of quota attainment
You would choose this option if you have really rich accelerators (i.e. 3x your base commission rate.) You can agree to pay this deal at the accelerated rate, but try to avoid paying out all future deals at this really high rate until your rep hits quota by closing more “typical” deals. In reality, a rep’s quota is more important for driving behavior than the comp itself, so this could be a reasonable option.
2. Create a different payment schedule for this commission
If this bluebird flies south (ha!) for whatever reason and terminates early/doesn’t pay, you should think through how you would claw back this deal. We’ve seen clawbacks in excess of $200K, which would take a rep two years of hitting quota to earn back. You and your reps both don’t want to be in that situation!
Regardless of what you choose (even if you pay your reps like you ordinarily would) the key is to communicate early. Don’t just wait for the windfall deals to close to have this conversation. Your team is probably a little distracted by the ambiguity of it as well!
We break down the basics of sales commission agreements for you in our Sales Commission Agreements 101 post. And when you’re ready to celebrate closing that windfall deal, check out our Top 10 GIFs for celebrating every sales win.
Want a refresh for everything you need to know about sales compensation? Our Ultimate Guide to Sales Comp is just what you need!
Book a demo with us today to get your commission questions answered and to learn how to improve your team’s motivation and performance with a comp plan designed to increase sales productivity.