The Right Way to Use Compensation

To shift strategy, change how you pay your team 

I was the fourth employee hired at HubSpot. I’d met the two cofounders when we were all pursuing graduate degrees at MIT’s Sloan School of Management. They’re smart guys with a big mission: to help companies transform their marketing by using online content to draw potential customers to their websites—a practice known as “inbound” marketing.

My job was to build the sales team. An engineer by training, I’d never worked in sales—I’d begun my career writing code. But my background proved to be more of an advantage than I’d expected. It led me to challenge many conventional notions of sales management, using the metrics-driven, process-oriented lens through which I’d been trained to see the world. For instance, instead of hiring by instinct, I meticulously tracked data on sales, identified predictors of success, and looked for people whose traits and skills closely resembled those of our top sellers. Instead of training new recruits by having them tag along on a successful salesperson’s call, I created a regimented training program that gave them firsthand experience with our technology and then taught them to systematically work leads.

That approach worked well: Within seven years of its founding, HubSpot crossed the $100 million run-rate revenue mark and had acquired more than 10,000 customers in over 60 countries. In the fall of 2014, our company went public in an offering worth $125 million.

When I look back on the various strategies I used to grow our sales force from zero to several hundred people, I realize that one of the biggest lessons I’ve learned involves the power of a compensation plan to motivate salespeople not only to sell more but to act in ways that support a start-up’s evolving business model and overall strategy.

Whether you’re a CEO or a VP of sales, the sales compensation plan is probably the most powerful tool you have. Most of the critical strategic shifts that HubSpot made as a business were executed through changes to the sales compensation plan. In this article, I will look at how we did this and at the general principles you should keep in mind when designing your own firm’s plan.