Don’t Let Your Comp Plan Derail Your Sales Team
Is your sales team delivering the results you need? If the answer is “no”, your compensation plan might be the culprit. You can generally count on salespeople doing what they are compensated to do. More importantly, they will typically focus on what will reward them the most, the soonest. Many organizations treat compensation as a payroll exercise. Here is how much we can afford to pay in commission. Pay them that percentage on each deal they close. Simple.
If that is how you built your comp plan, you are misusing one of the most powerful tools you can employ to align your sales team with your company strategy. When your comp plan is built intentionally, it motivates reps to focus on the right opportunities, rewards the behaviors that lead to long-term success, and reinforces the culture you want to create. When it’s not, it can unintentionally send your team in the wrong direction.
Incentives Aren’t Just About Money
Compensation doesn’t just tell your team what’s possible; it defines the path with the highest payout. A well-designed plan acts like a compass, guiding your reps toward the company priorities that drive business growth. If your plan rewards all deals equally, regardless of their impact on strategic goals or company culture, you can expect collaboration, expansion, and customer success to be overlooked. If your plan emphasizes short-term wins over account growth, you might be leaving millions of dollars on the table.
Incentives create focus. The question is: are you focusing your team on what you actually want them to do?
Align Sales Compensation with Your KPIs
Your business strategy tells you what’s important and why. Your KPIs help align activity with priorities, then measure progress. Your comp plan should be designed to incentivize your sales team to focus on what’s most important. When KPI, priorities and compensation plans aren’t aligned, your team is unlikely to stay on track. Since the average tenure of a sales rep is 2 years, sellers will typically do what benefits them most in the short run. KPIs, therefore, don’t drive sales behavior, but compensation does.
If, for example, deal size is a strategic priority, you might set your KPIs to measure cross-selling effectiveness. That’s a great start, but if your comp plan doesn’t compensate accordingly, your reps won’t prioritize it. Many companies are frustrated that their sellers aren’t team players. They don’t collaborate with marketing or other team members despite it being clear in the KPIs. If your comp plan doesn't reward collaboration, sellers will focus on finding and closing deals because that’s what pays their rent. When strategy and compensation are connected, you create consistency. KPIs help the leadership team measure success, and your comp plan rewards sellers for hitting their KPIs.
Reward the Right Transactions
When developing your business strategy or focus for the year, you may decide to prioritize new products, new industries, or the most profitable products. If your sales team is compensated equally for all sales, they will focus on the easiest and quickest sales to close. That may not align with your strategic goals. Your sellers may still hit their goals, and your company may grow, but it won’t be the strategic growth you defined.
While closing is critical to survival, closing the right deals in the right way will help you hit your long-term goals. Your sales team will only focus on the right deals if you incent them to. Offer a higher commission for more profitable products or sales to new industries.
Drive Culture with Compensation
Salespeople often earn a bad reputation because they are doggedly focused on sales. They tend to steamroll over the rest of the team, demanding everyone stop what they are doing to help them close a deal. They do this because the more deals they close, the more they are paid. The faster they are closed, the sooner they get paid. You can’t blame them for doing what you pay them to do.
If happy employees are part of your company culture, then you need to build a process and compensation plan that rewards teamwork. Being customer-focused is expected, but if that means running the rest of your team ragged, you may need to reward your sales team when they are more prepared and organized, sparing the rest of the team from staying late to finish every proposal.
The most effective comp plans are designed to reinforce the culture you want to build. Plans that reward collaboration across departments and focus on building long-term relationships, both internally and externally, tend to encourage better sales behavior. Better teamwork tends to result in more effective teams and better employee retention.
Pay Smarter, Not Just More
Throwing more money at sales problems isn’t always the best way to solve them. A better-designed compensation plan might be. Plans that are clear, fair, and aligned with KPIs driven by strategy and culture can be very effective. Create a plan that rewards the behaviors that achieve revenue and strategic goals..
Your compensation strategy can either drive alignment and motivation or undermine them. The choice is yours.