Sales Commission Glossary
The terms that show up in every commission plan, explained in plain English. Each one has a short definition, a worked example and the mistakes to watch for.
- Commission Accelerator
- A commission accelerator is a higher commission rate that kicks in once a rep passes a set point, usually 100% of quota, to reward overperformance.
- Commission Clawback
- A commission clawback is a rule that takes back commission already paid on a deal when that deal later falls apart, for example if the customer cancels or doesn't pay.
- Draw Against Commission
- A draw against commission is an advance paid to a salesperson each period, which is later subtracted from the commission they actually earn. It can be recoverable or non-recoverable.
- OTE (On-Target Earnings)
- OTE, or on-target earnings, is the total a salesperson earns in a year if they hit 100% of their quota: base salary plus target commission.
- Sales Commission
- A sales commission is variable pay a salesperson earns for closing sales, usually a percentage of the deal value or a fixed amount per deal.
- Sales Leaderboard
- A sales leaderboard is a ranking of salespeople by a shared metric, such as revenue closed or quota attainment, shown to the whole team to create visibility and healthy competition.
- Sales Quota
- A sales quota is the sales target a rep or team is expected to reach in a set period, such as a month or a quarter. Quota attainment is the percentage of that target actually reached.
- Shadow Accounting
- Shadow accounting is when salespeople keep their own private records of deals and commissions because they don't trust the company's numbers.
- SPIFF
- A SPIFF is a short-term sales bonus for a specific action, such as selling a new product or closing deals before the end of the quarter, paid on top of regular commission.
- Tiered Commission
- Tiered commission is a plan where the commission rate rises as a rep's sales cross set thresholds. Tiers can be paid marginally (each rate on its own band) or retroactively (the top rate on all sales).
See these terms in action
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