Let’s talk about money!
As a recruitment partner to Canadian tech companies, we’ve had the opportunity to talk with hundreds of high-growth start-up and scale-up leaders about their experiences, aspirations, motivations, and of course…. their compensation strategies!
Hot off the phones, we’ve got some fresh VP Sales comp data! Over the past 8 months we’ve had the chance to complete 5 major searches for CRO/VP Sales roles at SaaS startups and scale-ups ranging from 25 to 720 employees in size. We’ll pull back the curtains and share some insights to help you create a competitive comp package for your sales leader. And if you’re a Sales Leader on the hunt for a new challenge, we hope you’ll find this data to be useful in the negotiation process.
The VP of Sales role may be the single most challenging (and arguably the most important) hire that a scaling tech company will make. A well-aligned sales leader can completely transform your growth trajectory, whereas a misaligned hire can be devastating if you miss market opportunities and fail to build the team and processes you need.
To illustrate just how difficult it is to find the right sales leader, consider the jaw-dropping statistic that almost 70% of the first VP Sales hires at SaaS companies don’t make it to the first 12 months.
So why do so many smart CEOs get it wrong?
We could write a very long book on this, but here are the basics. We see many hiring teams underestimate the importance of creating specific and hyper-targeted criteria for this hire. You need to think through who will strongly align with your company, product, stage, market and growth objectives. And as with other functions, great sales leaders have fundamentally different skills and strengths than the top individuals on their teams. Even when there are examples of exceptional sales reps who became great leaders, this can’t be assumed as the rule. There are A LOT of ingredients to take into consideration with this hire.
The high-risk high-reward nature of Sales, and the profound impact on the success of the company is a prime reason why the Sales Leader comp is the highest among all executive roles. This is also the role with the most variability in compensation from candidate to candidate, because where experience can look similar on the surface, comp is driven by factors well unrelated to years of experience, most importantly how much overall revenue, profit and value creation they can drive with their efforts and that of their team.
Sales salary data is somewhat elusive - perhaps because the numbers are so high and inextricably tied to individual performance. We’re here to untangle this mystery and show you some recent VP Sales compensation data from the SaaS industry that is highly reflective of current marketing conditions.
What are you looking at?
Our recent searches were split fairly evenly between US and Canadian markets, which gives us a great opportunity to compare VP Sales compensation trends on both sides of the border. With that in mind, we separated compensation by US and Canada, and the currencies follow suit.
Sales professionals have a larger split between base cash compensation and incentive at every seniority level, often listed as commission. In some cases, commission is represented as a (very) large bonus but for the sake of simplicity, we labeled them all as commission.
Keep in mind: We support start-up and scale-up organizations, so most of these data points represent Sales Leaders from organizations who have gone through a similar growth journey (start-up and scale-up leaders). We also look for the cream of the crop within this group - the best of the best. So our sample is from product-oriented tech companies with talent who've demonstrated staying power. Consider these numbers the top 20-25% of the market - which, in most cases, is exactly what you’re looking for.
Let’s dive in, shall we?
Unlike other roles (development in particular) Canada and the US have similar pay structures in sales leadership, currency notwithstanding. In both countries the average base salary is around $210K, the average commission is near 90% of base, with total comp averaging close to $410K. The salaries ranged from 235K CAD to 600K CAD.
While the gap in compensation between Canadian and American candidates remains relatively small (again, currency notwithstanding), it appears that salaries south of the border grew at a faster rate over the past year with a nearly 10% increase compared to under 4% in Canada.
Sales leaders at startup and scaling tech companies most commonly have a 50/50 split in total compensation between base and commission (i.e., 200K base, 200K commission for total on-target-earnings of 400K), which was exactly the case with our recent searches and the majority of candidates we spoke with at the VP level. This is especially true if the client is seeking a “player-coach”, where the sales leader closes their own deals against personal quotas in a addition to leading the sales org and establishing strategy.
Occasionally we talk to candidates who have a 60/40 split to their comp plan in the event that it’s a more early-stage company with early revenue, which provides that candidate with a bit more short term-cash stability. This may also be the case with sales leaders who exclusively focus on people leadership and long term strategy, vision and execution, and less on day-to-day deal ownership. While they may get pulled into “whale deals”, they’re typically hands-off.
There’s also the question of capped vs uncapped commission: Capped commission is as it sounds - the leader has a “limit” on how much commission they can make, whereas uncapped commission is unbounded. The more they or their sales organization sells, the more they make. Often accelerators are in the picture as well, meaning after the team hits their goals, they make a higher percentage of commission on each deal after that. Nine times out of ten, our clients offer uncapped commission plans to incentivize their leaders to go above and beyond targets - and the best sales leaders will demand uncapped plans.
When we discuss average Sales Leader comp with first-time founders, it can come as a big shock. Don’t fret, this is normal. What we share with them is this:
Sales leaders prove their worth in very tangible, measurable ways because comp is directly tied to a number. Spending almost $400K on one employee may seem daunting at first but remember - about half of that is dependent on them bringing you cash flow. When you snag a great sales leader they more than “prove out” their value within the first year. It is important to note here that while this also seems like the easiest role to measure, if you have longer sales cycles you will want to carefully understand pipeline metrics so that you can confidently anticipate longer-term results.
Equity is also a great lever if you are looking to conserve cash in the shorter term. Some leaders are willing to forego cash compensation for a great equity package - especially in sales, where their efforts can impact the organization’s growth value in such a meaningful way.
Individuals who are part of earlier stage companies were naturally on the lower end of the compensation range, but this group received a larger share of equity to compensate. We’ve seen this as typical for all executive-level roles in the tech industry, not just Sales. Leveraging equity as a key component of comp not only enables companies to conserve limited cash resources, but also ensures that your team is aligned around the collective success of the business as a whole. The downside of highly leveraged comp plans is the exclusion of great candidates who have fixed financial commitments that preclude them from opportunities with below-market salaries.
What’s behind the data?
Our snapshots are not typical salary surveys, as they represent only the data we’ve collected from a handful of recent searches. We find it to be pretty useful and topical information, as it represents current data from a sample of individuals who we’ve carefully selected as having credible and validated experience with successful local companies.
Each Salary Snapshot represents between 40 – 80 sources.
Each source is an individual who we deemed a promising candidate for a role within a high-growth tech company. Most are gainfully employed and many were recommended as exceptionally talented. As a result, our salary numbers might be skewed towards the top of the range.
We elected not to show compensation figures related to equity or options. Though this was a significant aspect of the comp package for many execs, it’s often tough to put an annual dollar value on equity.
Specific details that would identify an individual or their employer will not be shared for obvious reasons.
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