Maximising Your Sales Commission: Is Your OTE Wrong?

Sooner or later, most sales executives discuss their packages with each other. Usually, beer, wine or G&Ts are involved.

OTEs will figure high in the conversation. Mine is bigger than yours etc. It’s perceived as a key barometer of alpha sales ability.

But it’s all too easy for the red mist (or rather gold mist) to descend and cloud your vision when you see that big beautiful OTE.

We sympathise. That lovely large OTE is sitting smack bang in your crosshairs, just waiting to be bagged…and somehow, the other numbers just seem to drift off into the periphery.

Don’t let them, though. Remember that OTE is a headline number. Merely an indicator. Don’t forget the other factors that will determine how much you’ll really earn.

Why OTE Is Only Half The Story?

Take this example of two sales executives…

Executive A is on £75k basic + £75k OTE with a target of £750,000. That’s a 10 per cent commission rate. There are ramps of 12 per cent for £750,000 to £900,000 and 15 per cent for £900,000 to £1 million.

Hit the nice round million, and Executive A will earn:

• £150,000 for smashing their £750,000 target

• £18,000 commission for passing the £900,000 mark

• £15,000 commission for hitting £1 million.

Grand total: £183,000.

Now compare that with Executive B, who’s on a much higher package – £100k basic + £100k OTE – but with double the target at £1.5 million.

If Executive B were to sell £1 million (like Executive A), they would miss their tougher target. They would make only two-thirds of their number.

So they would receive £166,000 (£17,000 less than Executive A) – despite starting out with a much higher OTE.

Oh dear. Who’s getting the beers in now?

Beyond OTE: Other Key Factors That Affect Your Package

There you have it – the fab four of sales salary: basic, OTE, target and accelerators.

But there are plenty more variables that can undermine your salary if you underestimate them.

• Territory – How big is your hunting ground? And how well stocked with the game is it?

• Product/Service – How good is the thing you have to sell? Especially when considered in relation to your target.

• Competition – you may be selling a fantastic product, but what if your competitor’s is better? Or what if a swarm of agile new challengers is threatening death by a thousand cuts?

• Sales Cycle – How will you fill the hole in your finances if your market takes ages between seeing your product/service and signing for it?

• Guarantee – What safeguards will your employer provide to plug this aforementioned hole while you’re still waiting for your first ‘yes’?

• Shares – How big a slice of the equity pie is your new employer prepared to give you?

You’re a high achiever. You work hard for your employer, and you smash your numbers.

So let’s make sure your remuneration is everything you would want it to be.