Sales Compensation Glossary

ARR stands for Annual Recurring Revenue, which is the amount of recognized revenue in a period. There can also be QRR (Quarterly Recurring Revenue) and MRR (Monthly Recurring Revenue).

ASC 340 is a set of guidelines established by the FASB for accounting for and reporting on certain types of liabilities, specifically deferred costs associated with certain contracts. It is part of the broader FASB Accounting Standards Codification, which is a comprehensive set of guidelines that covers all accounting and financial reporting standards in the United States. The purpose of ASC 340, like other ASC sections, is to establish a clear and consistent set of rules and principles for financial reporting, in order to ensure that financial statements are transparent and comparable across different companies and industries.

ASC 605 was a financial accounting standard in the United States that provided guidance on how to recognize revenue for different types of transactions. It was replaced by ASC 606 in 2014, which introduced a new, more comprehensive revenue recognition standard focused on identifying performance obligations and allocating revenue to those obligations.

The ASC 606 Standard is an accounting standard that states revenue should be recognized when a company fulfills its performance duty by transferring the promised goods or services to the customer.

An accelerator is a commission structure in sales compensation plans that rewards salespeople with higher commission rates as they achieve or exceed their sales targets. It is designed to motivate salespeople to exceed their sales goals and can be applied to individual sales or overall performance. It is often used in combination with a base commission rate to create a more dynamic sales compensation plan.

Achievement refers to the attainment of set targets or goals by a salesperson or a sales team within a specific period. It is the ability to effectively and efficiently convert leads into actual sales, meet or exceed revenue quotas, and ultimately contribute to the growth of a business. It requires a combination of skills, including effective communication, relationship building, product knowledge, and the ability to overcome objections and close deals. Successful sales achievement is often measured by metrics such as the number of deals closed, revenue generated, and customer satisfaction ratings.

An active user refers to a customer who is currently using or engaging with a product or service on a regular basis.

Analytics or sales analytics is the process of collecting, measuring, managing, and analyzing sales data using various tools and methods. It helps sales teams make informed decisions about customers, product lines, market potential, and team performance.

An annual bonus is a sum of money paid yearly to employees on top of their annual income. It may or may not be related to their performance.

An annual wage adjustment is a periodic change in an employee's salary or wage, often done annually. It can take the form of a cost-of-living increase, a merit-based increase, or an adjustment to keep up with industry standards. The purpose is to ensure fair and competitive compensation and to reward employees for their contributions. Specific terms vary by employer, job performance, and other factors.

At-risk pay, also known as incentive pay, variable pay, and pay-for-performance, is compensation contingent on performance.

Attainment refers to the level of success or achievement that a salesperson or a sales team has reached in terms of meeting or exceeding their sales targets or quotas. Attainment is usually measured as a percentage of the sales target or quota that has been achieved during a specific period of time, such as a month, quarter, or year. For example, if a salesperson has a monthly sales target of $50,000 and they sell $60,000 worth of products or services in that month, their attainment would be 120%. Attainment is an important metric for assessing the performance of sales teams and individual salespeople.

Basic pay or base salary is the minimum payment a person receives based on their qualifications and job posting. The sum is established by the Human Resources department's rules and does not include other kinds of remuneration, perks, or incentives.

Best practices are procedures or strategies that have been demonstrated to yield results that are superior to those attained by other means; they are frequently referred to as the standard. The best approach for salespeople and sales managers to achieve their targets and objectives is by adhering to these principles.

Typically, a sales bonus is an incentive payment that is triggered by a yes/no decision (e.g., did the sales representative meet a threshold?). If yes, then bonus payment) This is distinct from a commission, which is earned incrementally when greater levels of performance are attained (i.e. a rep may make a commission on each deal). It is essential to remember that not all sales compensation experts use these terminologies identically. Some sales compensation professionals use "bonus" and "commission" interchangeably.