Most commission models are designed for established markets with predictable pipelines, known sales cycles, and historical data. But what happens when you enter an entirely new market?
According to Nielsen, over 85% of new product launches fail. A major reason is that companies don't adapt their sales compensation to Go-To-Market (GTM) phase challenges. They simply use their existing commission model and hope for the best.
That doesn't work.
This guide shows you how to design commission models specifically for GTM. You'll learn to set quotas without historical data, structure guarantees that attract the right people, and plan the gradual transition to standard compensation as the market matures.
When you enter a new market, you lack everything that normally makes commission calculation possible: historical sales data, established customer references, known sales cycles, and predictable pipeline.
No historical data. You can't base quotas on "last year's numbers" because there aren't any. Every quota becomes an educated guess.
Longer sales cycles. Without brand awareness and reference customers, every sale takes longer. Gartner shows that B2B buying journeys are already complex with 6-10 decision-makers involved. In new markets, the complexity is even higher.
Unpredictable pipeline. In established markets, you can predict pipeline conversion with reasonable accuracy. At GTM, conversion rates are unknown and variable.
Lack of brand awareness. Potential customers don't know your brand. This means more touchpoints, longer qualification processes, and more market education.
If you use your standard commission model at GTM, typically one of three things happens:
Reps don't hit quota. Unrealistic targets based on established market performance lead to frustration and demotivation. Reps who consistently miss quota lose faith that success is possible.
Top performers avoid GTM roles. Experienced reps with track records won't risk their income on an unknown market. They prefer safe territories with predictable pipeline.
High turnover. The combination of unrealistic targets and lack of income security leads to people leaving the company. You lose not just employees, but also the market knowledge they've built.
According to Harvard Business Review, compensation structure is one of the primary factors affecting sales performance. At GTM, this is even more critical because reps operate under greater uncertainty.
Quotas are the foundation of any commission model. But how do you set quotas when you don't have data to base them on?
When there's no historical data, best practice is to set GTM quotas at 50% of established market quotas. Some companies go as low as 33%.
Example: If your reps in established markets have quarterly quotas of $300,000, consider setting GTM quotas at $150,000 or even $100,000.
This isn't lowering ambitions. It's acknowledging the realities of market development.
In established markets, many companies use 5-8x OTE multipliers to set quotas. This means a rep with $150,000 in OTE (On-Target Earnings) gets a quota of $750,000-$1.2M.
At GTM, 3x or lower is recommended. A rep with $150,000 in OTE gets a quota of maximum $450,000.
According to Bridge Group's 2024 SaaS AE Report, the average OTE multiplier for experienced AEs is around 5x. For GTM roles, you should reduce this significantly.
At GTM, annual quotas rarely make sense. You don't have data to set realistic 12-month targets, and the market may develop significantly differently than expected.
Recommendation: Use 6-month quotas with explicit understanding that they can be adjusted based on collected data.
Venture capitalist Tom Tunguz from Redpoint recommends this approach specifically for early-stage companies and new markets. Short-term quotas allow for learning and adaptation without locking reps into unrealistic annual targets.
Implement a "truth window" — a period where GTM territories build baseline performance data before targets are locked in.
How it works:
This gives you real information to base future quotas on instead of guesswork.
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With Prowi's employee app, reps get notifications every time they close a deal — even in new markets.
Book a demo →Beyond quotas, the commission structure itself must be adapted to the GTM phase.
In established markets, accelerators and decelerators make sense. They reward overperformance and correct for underperformance.
At GTM, where there's no basis for setting precise quotas, accelerators and decelerators often create problems:
Recommendation: Use a single, flat commission rate in the GTM phase. Simple to understand, pays the same rate on every deal, and creates no unnecessary frustration.
Standard pay mix in sales is often 60/40 or 50/50 (base/variable). At GTM, moving toward 70/30 or even 80/20 is recommended.
Why? Higher base salary ratio provides financial security while the market develops. Reps can focus on building pipeline and relationships instead of stressing over missing commission.
| Phase | Pay mix | Rationale |
|---|---|---|
| Established market | 50/50 or 60/40 | Predictable pipeline and income |
| GTM first 6 months | 80/20 | Maximum security in startup phase |
| GTM 6-12 months | 70/30 | Gradual transition to performance |
| GTM 12-18 months | 60/40 | Approaching standard |
The first customers in a new market are crucial. They validate market potential, provide reference opportunities, and create momentum.
Structure extra incentives for early wins:
Example: A rep gets standard 10% commission on all deals. For the first 10 customers in the new market, they receive 15% plus a $750 bonus per closed customer.
This signals that the company values early market building and compensates for the extra effort required.
Reps who take GTM roles assume significant risk. Guarantees and draws reduce this risk and make GTM positions more attractive.
A non-recoverable draw is a guaranteed minimum payout that never has to be paid back. Regardless of what the rep closes, they get at least this amount.
Advantages:
Disadvantages:
Example: A rep has OTE of $150,000 ($90,000 base + $60,000 variable). In the GTM phase, $52,500 variable (87.5% of target) is guaranteed as a non-recoverable draw.
A recoverable draw is an advance on future commission that must be paid back.
How it works:
Advantages:
Disadvantages:
For GTM, non-recoverable draws are recommended since market uncertainty is too great to place the risk on the rep.
A hybrid approach is to guarantee variable compensation for a defined ramp-up period:
| Period | Guaranteed variable |
|---|---|
| Month 1-3 | 100% of target variable |
| Month 4-6 | 75% of target variable |
| Month 7-9 | 50% of target variable |
| Month 10+ | Performance-based |
This model provides a smooth transition from security to performance-based compensation.
According to Bridge Group's 2024 report, the average ramp time for SaaS reps is now 5.7 months — up from 4.3 months in 2020.
For GTM, you need to add extra time:
| Sales type | Standard ramp | GTM ramp |
|---|---|---|
| SMB | 3-4 months | 6-8 months |
| Mid-market | 5-6 months | 9-12 months |
| Enterprise | 9-12 months | 15-18 months |
Enterprise sales in new markets can require up to 18 months before a rep is fully productive. Your compensation plan must reflect this.
As the market matures, the compensation structure should evolve. Here's a phased approach:
Focus: Learn the market. Build pipeline. Collect data.
Compensation structure:
MBO examples:
MBOs (Management by Objectives) make sense in this phase because traditional sales targets are impossible to set realistically.
Focus: Close the first customers. Validate product-market fit. Build reference cases.
Compensation structure:
Why logo-based quotas?
In the validation phase, number of customers is more important than revenue volume. 8 customers at $15,000 validates the market better than 1 customer at $120,000.
Focus: Scale sales. Optimize processes. Build playbook.
Compensation structure:
Now you have enough data to set more precise quotas. Accelerators can be introduced because targets are realistic.
Focus: The market is established. Transition to standard operations.
Compensation structure:
At this phase, the GTM territory should operate like any other established market.
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Book a demo →Companies entering international markets face additional complexity.
Each jurisdiction has its own rules for compensation, termination, and employment:
Germany:
France:
UK (post-Brexit):
USA:
Recommendation: Get legal review of compensation plans in each jurisdiction before entering the market.
According to McKinsey, companies that prioritize cultural adaptation see up to 20-30% higher revenue growth than those using a standardized approach.
What does this mean for compensation?
A 50/50 pay mix can feel risky in cultures that value stability. Conversely, 80/20 can feel demotivating in cultures with strong commission culture.
GDPR and local data regulations affect sales activities and thus commission calculation:
Ensure compensation systems comply with local data processing and storage requirements.
For international GTM, you must decide whether quotas and commission are set in local currency or USD/EUR:
Local currency:
USD/EUR:
Hybrid:
Currency fluctuations can create significant compensation volatility. Consider building currency adjustment mechanisms into the compensation plan.
Traditional sales metrics — revenue, quota attainment, average deal size — work poorly in the GTM phase. You lack baseline data, and numbers will be volatile.
Instead of lagging indicators (revenue), focus on leading indicators:
| Leading indicator | Why it's relevant |
|---|---|
| Number of qualified meetings | Shows market interest and rep activity |
| Pipeline value built | Indicates future revenue |
| Number of new relationships | Network building is critical in new markets |
| Average sales cycle | Data for future forecasting |
| Conversion rates per stage | Shows where pipeline leaks |
These metrics provide insight into whether the GTM effort is on track, long before revenue materializes.
In the GTM phase, number of customers is often more important than revenue volume:
Why?
Logo metrics to track:
Some of the most important GTM progress can't be measured in numbers:
Consider tying compensation to these qualitative milestones in the early GTM phase.
The key to successful GTM compensation is fair risk sharing. Both parties assume risk — the question is the distribution.
The company bears risk for:
These factors are outside the rep's control. The company should bear the majority of this risk through guarantees, higher base salary, and realistic quotas.
The rep bears risk for:
These factors are within the rep's sphere of influence. Reasonable quotas and ramp periods acknowledge the learning curve.
| Market type | Risk sharing (company/rep) |
|---|---|
| Established market | 40/60 |
| GTM phase 1 (discovery) | 80/20 |
| GTM phase 2 (validation) | 70/30 |
| GTM phase 3 (scaling) | 60/40 |
| GTM phase 4 (establishment) | 50/50 |
In established markets, it's reasonable for the rep to bear more risk — conditions are known and predictable. At GTM, the company should bear the majority of risk to attract talent to uncertain opportunities.
Here are the mistakes we see most often when companies design GTM compensation:
Applying established market quotas to GTM territories is the most common mistake. The result is demotivated reps, high turnover, and failed market entry.
Solution: Use the 50% rule. Set GTM quotas at maximum half of established market quotas.
Expecting full performance from day one ignores the realities of market development. Pipeline building takes time — more time in new markets than established ones.
Solution: Double standard ramp periods for GTM roles.
Companies are often impatient to "normalize" GTM territories. They switch to standard compensation before the market is mature enough.
Solution: Define clear criteria for transition between phases. Base decisions on data, not calendar time.
Using home market compensation structures directly in other countries without adaptation creates legal and cultural problems.
Solution: Get local legal and HR advice for each new market.
Without clear, written agreements about GTM compensation, disputes arise when plans change.
Solution: Document all special terms in writing. Be explicit about when and how compensation will change.
Compensation is only one factor in GTM success. Without sufficient enablement, marketing support, and executive sponsorship, even the best compensation plan will fail.
Solution: See compensation as part of a complete GTM plan, not an isolated decision.
The reps who thrive in GTM roles are a special profile. They're motivated by different factors than reps in established territories.
Opportunity to build something new. GTM reps are often entrepreneurial. They're attracted to the opportunity to shape a market, not just sell in it.
Higher upside potential. Early success in new markets can lead to larger territories, leadership roles, or equity/stock options.
Career development. GTM experience is valuable. Being able to document successful market development opens doors.
Autonomy. GTM roles often involve less micromanagement and more freedom to find solutions.
Use compensation structure actively in recruiting:
Experienced reps with track records have the most to lose by taking a GTM role. Guarantees and draws reduce perceived risk and make positions more attractive.
Messaging example:
"We offer guaranteed variable for the first 9 months, so you can focus on building the market without worrying about your income. As the market matures, we transition to performance-based compensation with attractive accelerators."
This signals that the company understands GTM challenges and is willing to invest in the rep's success.
Here's an example of what a structured GTM compensation plan can look like:
A SaaS company with $7.5M ARR enters the German market. They hire an experienced Account Executive with 8 years experience from established territories.
Pay mix: 80/20 ($72,000 base / $18,000 variable)
Variable compensation: 100% guaranteed
Goals (MBO-based):
Total compensation at target: $90,000 (annual basis)
Pay mix: 70/30 ($63,000 base / $27,000 variable)
Variable compensation: 75% guaranteed, rest performance-based
Goals:
Total compensation at target: $90,000
Pay mix: 60/40 ($54,000 base / $36,000 variable)
Variable compensation: Performance-based with 50% guaranteed minimum
Goals:
Total compensation at target: $90,000
Pay mix: 50/50 ($45,000 base / $45,000 variable)
Variable compensation: Performance-based, no guarantees
Goals:
Total OTE: $90,000
GTM compensation plans are not static. They must be reviewed and adjusted continuously.
For GTM territories, review compensation plans every 3-6 months (vs. annually for established territories).
Review questions:
Use the first 6-12 months to collect data on:
Adjust quotas and compensation based on actual results, not assumptions.
When plans are adjusted, communicate changes clearly:
Transparency in compensation changes builds trust, even when changes are necessary.
Successful Go-To-Market requires compensation structures that acknowledge the unique challenges and risks of market development.
Start with these principles:
The reps you send into new markets assume risk on the company's behalf. Your compensation plan must acknowledge and reward this effort.
Book a demo with Prowi and see how automated commission management can help you design, implement, and administer compensation plans for GTM. We help companies create structures that motivate reps and support successful market expansion.
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