A Rose by Any Other Name Would Smell So Sweet – And Cost Quite a Bit Less
Yes, that’s a pretty horrible use of Shakespeare’s language and that’s coming from an English major, but it’s not wrong. Names and titles mean a lot and more often than not, they’re directly tied to compensation levels. We’re trained to think that any role with the same title will have roughly the same compensation. Unfortunately, sales teams in ScaleUp companies are running into the same challenge that plagued financial services in the past, title confusion; I remember years ago working in financial services and it seemed that everyone was a Vice President. In sales, we see the opposite – we see sales reps having a wide range of titles for the same function. District Sales Manager, Sales Executive, Account Executive, Business Development Executive, Sales Associate, Sales Manager, and Sales Consultant are just a few of the titles that refer to individual contributors who sell a solution and carry a quota. While this array of titles can be confusing, it can also lead to companies paying more, or less, to an employee than their skillset requires. To enable you to compensate your employees more appropriately, we will highlight three key areas of concern that we encountered as we built our latest Insight Partners Quota and Compensation Study.
The first and most widespread area of title inflation is in titles based on target customer segment. Most companies segment their customer base and then align sales resources to those segments and typically, they use standard terms such as SMB, Midmarket, and Enterprise to define the segments. This is a great practice and one that we strongly recommend. Our recommended definitions are SMB represents companies with <100 employees and where revenues are below $50 million per year, Midmarket is 100-1000 employees and up to $1B in revenue per year, and Enterprise is 1000+ employees and more than $1B in annual revenues.
Segmentation of customers does not always equate to the skill set of a rep. Historically, companies have used customer segmentation synonymously with rep segmentation, but as selling motions continue to develop, we would probably be much better off calling reps Transactional, Solutions, or Consultative reps than SMB, MM, or Enterprise. We recommend establishing categorization of reps using the following criteria (Reps should match 3 or more criteria).
The second major area of title confusion comes from misaligning roles and responsibilities and titles. While sales roles largely avoid this issue, there is significant misalignment within the customer success space. We have noticed that customer service reps (handling basic break-fix maintenance and ticket management) are being titled as customer success managers; this may lead to challenges as candidates expect compensation to match the title rather than the activities. The same situation occurs with some account management roles where the activities are more customer service focused or renewals focused. We recommend maintaining clarity across the titles as follows:By categorizing your reps using the above criteria you can avoid, over or undercompensating, your reps versus the market. We often see companies that have transactional sales to Fortune 1000 companies listing their reps as Enterprise Reps since they’re selling to the enterprise. But since these reps are engaged in quick sales cycle deals for smaller dollars, they don’t need to have all of the skills for a full consultative enterprise sale that involved multiple decision makers. They should be compensated more like a Transactional or SMB rep given they are selling only to one decision maker in a short sales cycle, transactional deal. With compensation for Consultative reps averaging $100k higher than SMB reps, these companies could be incurring significant incremental costs. Take the time to evaluate the skills of your reps, their selling motion and align them to the appropriate rep category.
- Account Manager: Responsible for managing large accounts post-sale – they are often tasked with upsell, expansion and renewal. This function is a hybrid of a sales rep and customer success manager.
- Customer Success Manager: Responsible for the retention of customers by driving adoption and business outcomes.
- Customer Service Manager: Helps to address any break-fix issues with the solution, manage service tickets, and supports end users. This can also be called Customer Support.
- Renewals Manager: Responsible for driving early, on-time renewals. This role may also manage license uplift and pricing changes.
The final area around title confusion and compensation occurs when there is differentiation in pay based on quota, skillset, or experience, but where the titles are the same. This often occurs when companies do not establish multiple steps in the career ladder and instead use only one role type and title. We recommend creating multiple levels within a given title. For example, Sales Rep I might be the level for an inexperienced sales rep, while Sales Rep IV might be reserved for reps with more than 10 years of experience or with specific skills. By creating these distinct levels, we can minimize the risk of confusion on differentiated pay. Please note that if you have two employees doing the same job with roughly the same background and skills and in the same geography, the compensation should be similar. If you do have discrepancies, please consult with your HR business partner to determine a path forward.
These are just a few of the most common areas of title and compensation confusion in the Sales and CS space. We recommend working with your HR team to develop robust and clear role definitions, compensation structures, and career paths. Tackling these issues early in your scaling journey will save you a lot of money and headaches as you continue to grow.