Planning a sales team around sales multiples

Sales teams can be a massive cost, there’s base commission coupled with commission and sometimes even bonuses, and commission and bonus structures can be significantly complex.

Ultimately however, Sales teams are a customer acquisition cost, inferring that the cost expenditure here should be proportional to an impact in revenue, in other words, the more i invest in CAC, the more customers and revenue i should expect to see.

Generally a rule of thumb is for a sales person to generate 3-5x on their total cost. So you can use this multiple and “triangulate” the relationship between revenue targets, commission amounts, bonus amounts, salary and number of headcount, by basically balancing the equation.

below you can see two examples of this ‘balanced formula’.

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