How to Maximize Earnings as a Salesperson: The Importance of OTE

BY Chip Gray
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If you want to maximize earnings as a salesperson, make sure to learn about On-​Target Earnings. OTE is a crucial factor in determining your compensation. It includes both your base salary and any incentives or commissions you may earn. Understanding OTE is essential if you want to negotiate a fair compensation package and achieve your financial goals.

In this article, we'll explore why OTE is so important for salespeople, how it's calculated, and how you can use it to your advantage. Whether you're a seasoned sales professional or just starting out in the industry, this guide will provide you with valuable insights and strategies to help you maximize your earnings and achieve your sales targets. So, let's dive in and learn how to make the most of your OTE!

How to Maximize Earnings as a Salesperson Using OTE

OTE, or On-​Target Earnings, is the total amount of compensation a salesperson can expect to earn if they achieve their performance targets. It includes both the base salary and any incentives or commissions that are tied to specific sales goals. OTE is a crucial factor for salespeople because it provides a clear picture of the potential earnings they can achieve based on their performance. Having a well-​defined OTE can also help to motivate salespeople to achieve their targets and increase their earnings.

How is OTE calculated?

OTE is typically calculated based on a salesperson's performance targets and the commission or incentive structure of their compensation package. Let’s take a salesperson with a base salary of $50,000 and a commission rate of 10%. Their performance target is $500,000 in sales which would result in an OTE of $100,000 ($50,000 base salary + $50,000 commission on $500,000 in sales).

It's important to note that OTE is not a guaranteed amount of earnings. Sales targets are often challenging, and not all salespeople will achieve their goals. However, having a well-​defined OTE can provide a clear incentive for you to work towards achieving your target and increase your earning potential.

The difference between OTE and base salary

While OTE includes both base salary and incentives/​commissions, the base salary is the fixed compensation that you receive regardless of your performance. The base salary is often used as a starting point for negotiations when determining your compensation package, but it's important to consider the OTE as well.

For example, you may be offered a higher base salary but lower commission rates, resulting in a lower OTE. In this case, you may be better off negotiating for a lower base salary with higher commission rates, which could result in a higher OTE if you meet your targets.

How to negotiate a fair OTE

Negotiating a fair OTE can be a challenging process, but it's essential if you want to maximize your earnings as a salesperson. We understand how important that is. According research conducted by SalesFuel, the inability to earn more money is a driving factor behind a sales professional’s decision to seek another position.

Here are some tips to help you negotiate a fair OTE:

Do your research

Before entering into negotiations, it's important to research industry standards and the compensation packages of similar sales roles in your area. This will give you a better idea of what a fair OTE would be and provide you with leverage to negotiate.

Understand the commission structure

Make sure you fully understand the commission structure of your compensation package, including the commission rate and any performance targets. This will help you to determine your OTE and negotiate for a fair compensation package.

Highlight your experience and skills

If you have a strong track record of sales success or unique skills that are valuable to the organization, be sure to highlight these during negotiations. This can help you to negotiate a higher OTE and better compensation package.

Consider non-​monetary incentives

In addition to salary and commissions, consider negotiating for other incentives such as flexible working hours, additional vacation time, or training and development opportunities. These benefits can add value to your compensation package and improve your overall job satisfaction.

Be prepared to walk away

If negotiations are not going in your favor, be prepared to walk away from the job or compensation package. This decision can be difficulty, but it's important to prioritize your financial goals and not settle for a compensation package that doesn't meet your needs.

When you’re negotiating for a new position, pay attention to the kind of targets you’ll be expected to meet. As C. Lee Smith, SalesFuel CEO notes, “Younger salespeople need to be wary of unsolicited job offers with substantially higher compensation levels. Many times, they will be high in OTE with unrealistic and unattainable targets.”

Strategies for maximizing your OTE

Once you have a well-​defined OTE and compensation package, use the right strategies to maximize earnings as a salesperson. Here are some tips to help you increase your OTE:

Focus on high-​value prospects

Identify prospects that are most likely to result in high-​value sales and prioritize these buyers in your sales efforts. This focus can help you to achieve your performance targets more quickly and increase your earnings potential.

Upsell and cross-sell

When working with existing customers, look for upsell and cross-​sell opportunities to increase the value of each sale. This tactic can help you increase your commission earnings.

Improve your sales skills

Invest in your sales skills and knowledge by attending training and development courses or seeking mentorship from experienced sales professionals. Improving your sales skills can help you to close more deals.

Leverage technology

Use technology to streamline your sales processes and identify new opportunities. For example, use customer relationship management (CRM) software to track sales leads and follow up with prospects more efficiently.

Network and build relationships

Build relationships with prospects and customers by attending industry events and networking opportunities. This practice can help you to identify new sales opportunities.

OTE is One Way to Maximize Earnings as a Sales Professional

OTE is a crucial factor in determining the compensation and earnings potential of salespeople. In our surveys of sales professionals, we’ve learned that the opportunity to make more money is key to staying in a position. Understanding how OTE is calculated and negotiating for a fair compensation package can help you maximize earnings. Once you accept the position, you can focus on high-​value prospects, improve sales skills and leverage technology to achieve your goals.