The Ruthless Sales Culture Behind ElevenLabs Growth | Carles Reina

How to Create a Compensation Plan for Sales Reps

Establishing Quotas

• The speaker emphasizes the importance of setting a clear quota for sales reps, suggesting a target of 20 times their base salary. For example, if a rep earns $100k, their quota would be $2 million.

• The company maintains strict accountability; if reps do not meet their quotas, they risk termination. This approach has led to over 80% of the team hitting their targets.

Compensation Structure

• Both account executives and customer success managers (CSMs) are compensated for upselling. Account executives continue to earn commissions while CSMs receive compensation based on net revenue retention (NRR).

• The speaker acknowledges that while this dual compensation may seem costly, it incentivizes both roles to work harder and ultimately benefits the company.

Adjusting Quota Standards

• The speaker advises founders to start with the 20x quota as a benchmark but suggests adjusting it based on industry specifics. He notes that typical SaaS standards range from 6x to 10x.

• There is an emphasis on experimentation; if the initial quota does not yield results, adjustments can be made without penalty to employees.

Analyzing Underperformance

• Among those who do not meet quotas, two main categories emerge: individuals who are not a good fit for the company and those building long-term pipelines.

• Employees lacking product knowledge or market aggressiveness may be let go after receiving severance packages. The company aims to support them in finding better-suited opportunities.

Long-Term Pipeline Development

• Some underperformers may actually be developing valuable long-term relationships and pipelines. A specific example is given of an employee from AWS who initially struggled but later excelled due to his strategic approach.

• It’s crucial for management to differentiate between poor fits and those needing more time or resources to succeed in challenging markets.

Performance Review Practices

• Regular pipeline review sessions are conducted monthly with account executives and CSMs. These meetings focus on detailed analysis of each individual's performance metrics.

• By drilling down into specifics during these reviews, management can better assess individual contributions and provide necessary support where needed.

Sales Team Management and Culture Building

Performance Evaluation and Honesty

• The speaker emphasizes the importance of honesty in performance evaluations, stating that team members must be held accountable for their results. They express a willingness to confront underperformance directly.

• Acknowledgment of improvement is crucial; the speaker mentions giving feedback based on past performance while encouraging growth for future success.

Meeting Structure and Frequency

• Monthly meetings are conducted separately for Customer Success Managers (CSMs) and Account Executives (AEs), with AEs further divided by region.

• All meetings are held remotely, reflecting a preference for flexibility over traditional office settings.

Sales Culture in Remote Settings

• The speaker believes that salespeople should spend significant time on the road rather than in an office, highlighting travel as essential for building customer relationships.

• Building a strong remote sales culture requires rigorous oversight and hiring experienced, autonomous individuals who can handle rejection effectively.

Preparation and Accountability in Meetings

• Prior to meetings, team members are expected to report on closed deals, pipeline status, and upcoming expectations. This preparation ensures focused discussions during meetings.

• The speaker stresses the importance of identifying blockers during these sessions, compiling them into actionable insights shared across the organization to enhance overall performance.

Handling Deal Delays

• It’s acknowledged that some deals will inevitably slip into the next quarter; however, transparency about this process is vital.

• Public accountability is emphasized as a learning tool; addressing underperformance openly helps reinforce standards without shaming individuals unnecessarily.

Feedback Mechanism

• The speaker rejects the notion of praising publicly while criticizing privately. Instead, they advocate for direct communication regarding both successes and failures within the team dynamic.

Sales Leadership Insights and Strategies

The Role of Luck in Sales Success

• A discussion on how luck can play a role in closing deals, with an example of two salespeople presenting similar cases but achieving different outcomes based on luck rather than skill.

• Emphasizes the importance of continuous improvement for salespeople; accepting criticism is crucial for growth and success.

Meeting Structure and Challenges

• Meetings typically last an hour and a half, allowing each participant about seven to eight minutes to present their case.

• Addresses the challenge of leading meetings when sales numbers are not improving; understanding the root causes is essential before addressing team performance.

Understanding Sales Performance

• Highlights the need for leaders to investigate why numbers aren't meeting expectations—whether it's due to team performance, product quality, or market aggressiveness.

• Shares personal experience as a leader who actively engages in outbound sales efforts, believing that effective leaders should also be hands-on in selling.

Forecasting Sales Numbers

• Advises being conservative in forecasting; setting realistic expectations helps avoid inflating pipeline numbers which can lead to distrust among investors.

• Suggests underestimating potential deal values during forecasts to create a more reliable pipeline and prevent over-inflation of expectations.

Building Trust with Investors

• Discusses the risks associated with over-promising on deal sizes; discrepancies between expected and actual figures can damage credibility with investors.

• Stresses that consistently underestimating pipeline needs leads to increased workload and pressure on teams, necessitating a cultural shift towards balanced inbound and outbound strategies.

Cultural Shifts in Sales Strategy

• Describes a cultural change aimed at balancing inbound versus outbound sales efforts; emphasizes the importance of maintaining diverse pipelines for long-term sustainability.

• Mentions weekly reports tracking individual performance against targets as part of fostering accountability within the team.

Outbound Culture and Accountability in Sales

Embracing Outbound Efforts

• The speaker expresses enthusiasm for outbound sales, referring to themselves as the "outbound king," indicating a strong personal commitment to this approach.

• There is a cultural aspect emphasized; the speaker holds peers accountable for their outbound efforts, suggesting that accountability is integral to team dynamics.

• The speaker mentions calling out individuals who are not engaging in outbound activities, highlighting a proactive stance on maintaining performance standards within the team.

• A warning is issued about potential issues arising if someone is called out too frequently, hinting at the need for balance in accountability measures.

• Overall, the discussion underscores the importance of fostering a culture where outbound efforts are recognized and encouraged among team members.