The Right Way to Use Compensation

When Mark Roberge joined HubSpot as its fourth employee, he had no sales experience but still was charged with building the sales team. His background proved to be an advantage, however: With his engineering training, Roberge brought an analytic rigor to the task. And he quickly realized that the sales compensation plan could motivate salespeople not only to sell more but also to behave in ways that advanced the start-up's evolving strategy. Each time the firm entered a new stage of growth, Roberge revised the comp plan to support its changing priorities: (1) Customer acquisition. Early on, HubSpot needed to bring in lots of customers and see how well its offer was working. So it rewarded salespeople for customers who stayed at least four months, and soon grew to 1,000 customers. (2) Customer success and retention. In the second phase, HubSpot focused on ensuring that its product fit the market. Realizing that many customers were jumping ship because they'd been given the wrong expectations, Roberge began tying commission rates to the rate of customer retention. (3) Sustainable growth. After it fixed retention, HubSpot saw that its service worked best for customers who made a commitment to it. So the firm's third plan rewarded salespeople for customers who signed up for a full year at a time. The continual adaptation paid off: In seven years HubSpot hit $100 million in sales.

• Business growth
• Employee incentives
• Sales team management
• Start-ups