How do we handle comp when a rep transfers between territories, and does their old quota still apply?
Transition comp rules: old territory quota applies for 30 days overlap, then switch to new territory quota. This prevents reps from sandbagging old territory or padding new territory baseline. The mechanics are messy; you need written policy or you'll have five reps with five different agreements.
Typical Transition Scenarios:
| Scenario | Old Quota Effect | New Quota Effect | Transition Period |
|---|---|---|---|
| Promotion (AE → Senior AE) | Waived after 30 days | New higher quota starts day 1 | 30 days |
| Territory swap (equal size) | Stays for 30 days | New territory quota day 1 | 30 days |
| Demotion (Senior AE → AE) | Waived immediately | Lower quota starts day 1 | Immediate |
| Expansion role (1 → 2 territories) | Old quota stays; new quota added at 75% | Both quotas active, weighted sum | 60 days |
| Churn/low perf territory reassignment | Old territory re-assigned; rep paid commission until handoff date | New territory quota day 1 | 45 days |
The 30-Day Overlap Window:
Why this works:
- Old territory reps finish deals. If AE moves on day 1, who closes the $200k deal that's 70% done? That rep stays to close; you credit commission to them (not the incoming rep).
- Prevents sandbagging. Rep who knows she's leaving won't hold deals back to inflate new territory baseline.
- Prevents front-loading. Incoming rep won't pull deals forward to inflate Month 1 performance.
- Handoff completeness. 30 days is enough time to transfer account relationships, pending proposals, and forecast data.
New Territory Baseline (the Hidden Complexity):
When a rep gets a new territory, management often soft-resets the quota for "fairness." This creates comp chaos:
Option A (Clean Start): New territory gets Year 1 quota of $500k. Rep hits $650k in Year 1. Earns accelerator bonus. Then Year 2, baseline expectation becomes $650k+ (they've proven capacity). Most reps expect Year 1 to be "ramp year" but finance expects it to be permanent baseline.
Option B (Market-Adjusted): New territory historical performance was $400k ACV per rep. Incoming rep's Year 1 quota: $400k × 1.1 = $440k. Year 2: $600k (2-year incumbent expectation). This requires historical territory data and is fair but complex to communicate.
Option C (Fixed Ramp): All new territory assignments use 75% Year 1, 85% Year 2, 100% Year 3. Same quota for all transfers regardless of territory. Easy to administrate; feels arbitrary to high performers.
Commission on Old Territory (30-Day Overlap):
If outgoing rep closes a deal in old territory during the 30-day overlap:
- Outgoing rep gets commission (they sourced it, they close it).
- Incoming rep gets commission only if they materially contributed (unlikely in 30 days).
- Finance issue: How do you book the $150k deal? You might credit both reps partial commission (50/50 split), or all to outgoing rep, depending on close date and who signed the contract.
Best practice: Deal closes on [date]. If [date] is within 30 days of transfer, old rep gets 100% commission. After 30 days, new rep owns all deals in that territory.
Deal Acceleration (the Moral Hazard):
Outgoing rep knows she's leaving; she accelerates deals to close them before transfer, puffing her commission and EOP bonus. Incoming rep gets lean territory. Fix: cap commission on deals closed in final 30 days before transfer at 50% (rest held for incoming rep).
Pavilion research shows deal timing becomes erratic in the 45 days surrounding transfers without this incentive management.
Red Flags:
- Rep transferred; no written policy on quota adjustment. Later, she claims she wasn't paid fairly in new territory.
- Overlap period >60 days (territory ownership gets confused).
- Old territory rep stays "on commission" for 6+ months post-transfer (creates zombie accounts).
- New territory quota isn't announced at transfer date (rep doesn't know what she's being measured against).
TAGS: compensation,territory-transfer,quota,sales-ops,cro-ops
FAQ
How long does the old territory quota apply when a rep transfers? The default rule is that the old territory quota applies for a 30-day overlap, then switches to the new territory quota. Exceptions in the scenario table include demotions (old quota waived immediately) and expansion roles (60-day transition with both quotas active and the new one weighted at 75%).
Who gets commission on a deal that closes in the old territory during the overlap? If the outgoing rep closes a deal in the old territory during the 30-day overlap, the outgoing rep gets 100% commission because they sourced and closed it. The incoming rep only earns if they materially contributed, which is unlikely within 30 days; after the 30-day window, the new rep owns all deals in that territory.
What are the three options for setting a new territory's baseline quota? Option A (Clean Start) gives a flat Year 1 quota that becomes the permanent baseline once proven. Option B (Market-Adjusted) bases the quota on historical territory performance, such as $400k × 1.1 = $440k, which is fair but complex to communicate.
Option C (Fixed Ramp) uses 75% Year 1, 85% Year 2, 100% Year 3 for all transfers, which is easy to administer but feels arbitrary to high performers.
How do you prevent an outgoing rep from accelerating deals to pad their commission? The article calls this the moral hazard: an outgoing rep accelerates deals to close before transfer, puffing her commission and EOP bonus while leaving the incoming rep a lean territory. The fix is to cap commission on deals closed in the final 30 days before transfer at 50%, holding the rest for the incoming rep.
Pavilion research cited shows deal timing becomes erratic in the 45 days surrounding transfers without this management.
What are the red flags in a poorly managed territory transfer? Red flags include transferring a rep with no written policy on quota adjustment (leading to later fairness disputes), an overlap period longer than 60 days that confuses ownership, an old-territory rep staying "on commission" for 6+ months and creating zombie accounts, and the new territory quota not being announced at the transfer date so the rep doesn't know what they're measured against.