Revenue Builders Podcast: “Comp Plans for Consumption-based Businesses”

Date: December 14, 2025
Hosts: John McMahon, John Kaplan
Guest: Jose Fernandez (ex-Google, ex-MongoDB, now CEO at East Coast)

Overview

This episode dives deep into the complexities and opportunities of building compensation plans for sales teams in consumption-based business models. The conversation, led by industry veterans John McMahon and John Kaplan with guest Jose Fernandez, explores how shifting from traditional SaaS or licensing models to consumption fundamentally changes both the go-to-market approach and the sales incentive structures. Real-world examples from Google Ads and lessons learned at top tech firms provide tangible takeaways for sales leaders and individual reps navigating this new landscape.

Key Discussion Points & Insights

1. Transitioning from SaaS Licensing to Consumption Models

[00:33–02:10]

• Many companies copy old compensation plans without adapting them to the unique strengths of consumption models.
• Three key advantages of the consumption model:
  • Lowered entry barriers: Customers can start using a product with minimal upfront commitments.
  • Value-driven expansion: Customer spend grows as they realize and perceive greater value.
  • Product-led growth (PLG): Sales efforts are complemented (and occasionally outpaced) by organic, product-driven adoption.

Notable Quote:

"When companies transition from a SaaS licensing model to a consumption model, they take a bit too much inspiration from the old model instead of thinking what are the advantages that this new model brings to us and how do we develop a go-to-market strategy and compliance that amplify those advantages."
—Jose Fernandez [00:41]

2. The Google Ads Blueprint: Role Segmentation & Incentives

[01:20–04:43]

• Team Segmentation:
  • New Business Sales: Paid for first three months of spend by new advertisers.
  • Onboarding: Incentivized on successful integration, analytics setup, and demonstrating ROI to new customers.
  • Account Management: Compensated for influencing longer-term customer spend and for significantly changing customer trajectory (expansion).
• Forecasting:
  Demand planning in consumption is highly analytical, so forecasting shouldn't fall solely on sales reps.

Notable Quotes:

"When you got a new advertiser, you got paid for the first three months of that spend... because we had to reduce the barriers to entry, the customer didn't need to agree to spend money. They just had to sign a paper that said I will start an advertising campaign by this date."
—Jose Fernandez [02:10]

"Forecasting in a consumption model is an analytical exercise, it's not fair to ask an account executive to forecast a number if it is an analytical exercise."
—Jose Fernandez [03:53]

Memorable Moment:
Jose describes an account executive landing an unknown e-commerce brand that spent $15 million in three months, earning the rep a massive payout. [04:36]

3. Behavioral Changes for Sales Teams in Consumption Models

[05:33–10:30]

• Traditional Models:
  • Perpetual license sellers had little involvement post-sale.
  • Subscription introduced churn risk; reps now had to care about customer satisfaction and renewal.
• Consumption Dynamics:
  • Customers may leave after a week if not satisfied.
  • Reps are now responsible for ensuring “burn-down” of committed spend (e.g., credits).
  • Quotas and compensation might hinge on actual consumption pace—not just upfront commitment.
  • Creative strategies: Starting small (“Just give me a credit card for a thousand bucks”) to drive adoption and scale later.
  • PLG motions mean sales might get involved only after initial organic product use, complicating credit and compensation.

Notable Quotes:

"...with consumption, that customer could be using that product for a week. And if they're not happy, they turn it off. It's like a light switch...Now the compensation plans are holding you responsible for burning those credits down."
—John McMahon [06:32]

"This is where consumption can get really like hairy for salespeople...the sales reps are putting themselves out there, really supporting the account in addition to selling it."
—John McMahon [09:33]

4. Challenges with Forecasting and Clawbacks

[07:45–10:30]

• Compensation sometimes paid in advance is vulnerable to clawbacks if customers churn early.
• Forecasting customer consumption is complex and increasingly modeled analytically.
• Both company and rep must balance risk—building relationships and driving usage versus protecting against reversals and lost revenue.

Notable Quotes & Timestamps

• Jose Fernandez on adapting to consumption models:
  "Three key advantages of a consumption model are: it reduces barriers to entry, spend is directly proportional to value, and growth can be product-led." [00:55]

• On multi-team approach at Google:
  "They were paid on points for helping the customer set up Google Analytics, helping the customer run a first really successful campaign and helping the customer understand the ROI that they were getting from the product." [02:55]

• On rep impact:
  "If you manage to get the right customer through the door, you can make a lot of money." [04:38]

• John McMahon on new pressures:
  "With consumption...the sales reps are on the hook to make sure that customer is burning the $1.2 million down." [06:42]

Important Timestamps

• [00:33] – Jose Fernandez introduces the unique advantages and challenges of consumption-based compensation.
• [02:10] – Detailed breakdown of Google's team roles and compensation motives.
• [04:36] – Anecdote about massive sales windfalls under the right circumstances.
• [05:33] – John Kaplan and John McMahon discuss the evolution of sales skill sets and expectations.
• [06:32] – The heightened risk and responsibility under consumption models for salespeople.
• [09:33] – Practical implications: supporting accounts post-sale and risk of compensation clawbacks.

Tone & Language

The conversation is candid, practical, and brimming with first-hand experience, blending high-level strategy with tangible sales advice. Both hosts and guest cut through theory to deliver real-world stories and tested frameworks.

Closing Takeaways

• Moving to consumption requires a fundamental rethinking of compensation—don't just tweak old models.
• Align go-to-market roles, incentives, and forecasting to actual customer value realization and usage.
• Expect sales jobs to evolve: ongoing customer engagement is now part of success.
• Companies must balance upfront sales incentives with clawbacks and analytical forecasting to manage risk.

For sales teams and leaders navigating this shift, the episode is loaded with practical advice—and cautionary tales—on designing comp plans that sustain real growth.