On Target Earnings (OTE) is an important data point for sales reps, because it gives you an idea of what TOP performers are earning. Your OTE is the base salary you can expect to earn if you meet 100% of your quota.
When considering a new position, asking the following questions will give you a better understanding of your potential compensation plan and On Target Earnings:
What percentage of the current team achieved full OTE last year?
This is the most important question a rep can ask before accepting a position. If 70% of the team is at plan (full quota), does that mean 70% made their full OTE? Not always, but this baseline number is a good starting point. It will give you an idea of whether the OTE is achievable or just a ‘pie in the sky’ number sales leadership came up with to make the job look appealing.
What are the variables that factor into the full OTE?
When evaluating a compensation plan, and specifically the potential OTE, ask the sales leader you will be working to outline every variable that will make up the OTE.
These variables could be accelerators that are baked into the comp plan, such as the timing of deals, deal discounting and self-sourced deals. Monthly and/or quarterly objectives are often variables in achieving full OTE. It’s critical that you know these details before you sign.
What is the average total comp for the reps at ~70%?
If 70% of the team is at plan (full quota), and not all 70% made their full OTE, you deserve to know why and what they made. This gives you an idea of what you will likely make at full quota.
At this stage, you should also ask if you could speak with one of the reps who is at full quota. This conversation will give you a better understanding of the details of the plan, both positive and negative.
What are the decelerators in the comp plan?
It’s very important to have all the details of a comp plan upfront, but most sales leaders will not discuss decelerators unless directly asked. Example, if quota is attained monthly, and you miss a month, will that impact your ability to make full OTE? What about the quarter? In tech sales especially, it can be very hard to hit your numbers every month. Plans that are based on full quota every month/quarter may be hard to achieve 100%
What is the ramp time for new employees?
Most OTEs are based on fully ramped, annual projections. That said, if you start your new position in Q2 or Q3, what are you likely to make at the end of the current calendar year? That number is based on ramp time – the time it takes for the average sales rep to achieve 100% quota in a given time period (most often quarterly or monthly). Again, it’s important to have these details upfront, so that you know your true earnings potential.
On Target Earnings is an important number to consider when taking a new job. Asking these questions to find out the nuances behind this number will help you make a smart career decision.
For more advice on evaluating sales job opportunities, read How to Know if a New Sales Job Opportunity is a Good Fit