When sales performance falls short, or growth stagnates, one of the first things leadership teams often consider is changing the sales incentive plan.
The logic might seem sound: if our sales teams aren’t delivering the right results, surely changing how they’re rewarded will change their behaviour, right?
Sometimes it does. More often, though, digging into perceived issues with sales comp can reveal something bigger.
Sales incentive plans rarely fail because of commission rates, bonus percentages or payout structures. But they often do fail if the organisation hasn’t addressed the commercial foundations the incentive plan’s supposed to reinforce.
A compensation plan isn’t a standalone mechanism for driving sales performance. It’s one component of a wider go-to-market operating model that determines how effectively an organisation turns strategy into revenue.
And if that operating model is unclear, poorly measured or misaligned, even the most sophisticated incentive plan will struggle to deliver the desired outcomes.
Before deciding how to reward sales teams, organisations need to answer a more fundamental question: Are we clear about the behaviours, capabilities and outcomes we need to drive growth?
Here are six principles every business should consider before attempting redesign its sales incentive plan:
1. Start with business strategy, not compensation
The purpose of an incentive plan is to reinforce business priorities.
Yet many organisations begin redesign projects by discussing commission rates, quotas and accelerators before agreeing what success actually looks like.
Should the business prioritise new customer acquisition? Higher margins? Customer retention? Cross-selling? Strategic products? Recurring revenue? Market expansion?
These choices matter because every incentive plan sends a message about what the organisation values.
Reward revenue growth and sales teams may focus on volume. Reward profitability and they may prioritise higher-value opportunities. Reward customer retention and they may invest more time in long-term relationships.
None of these approaches is inherently right or wrong – but the important thing is that the incentive plan reflects deliberate strategic choices.
Before redesigning compensation, leadership teams need clarity on the commercial outcomes they want to achieve and the behaviours that’ll create them.
2. Define clear commercial roles and ownership
One of the most common issues exposed during incentive redesign is unclear accountability.
- Who owns prospecting?
- Who owns the customer relationship?
- Who’s responsible for expansion opportunities?
- How should sales, account management, subject matter experts, customer success and channel teams work together?
Many businesses develop increasingly complex commercial structures over time: new roles are introduced, responsibilities evolve and exceptions become embedded.
The comp plan then attempts to solve these issues through increasingly complicated rules: split commissions, shared targets, manual override and adjustments.
But incentives can’t compensate for unclear ownership.
An effective go-to-market operating model starts with clearly defined roles and responsibilities. Everyone should understand what they own, how they contribute and how success will be measured.
3. Build the scheme on trusted data
A compensation plan is only as reliable as the data behind it.
If CRM adoption is inconsistent, opportunity stages are poorly defined or sales and finance reports don’t align, calculating incentives becomes difficult and trust quickly breaks down.
Sales teams begin questioning whether results are accurate. Managers spend time resolving disputes, or handling manual reporting admin, rather than improving performance. Finance teams create manual processes to reconcile different sources of information.
These are often symptoms of a wider reporting challenge.
Before redesigning incentives, organisations should ask:
- Do we have a single source of truth for commercial performance?
- Can salespeople see progress against targets in real time?
- Are revenue, margin and customer metrics accurately reported?
- Can commission calculations be automated and audited?
Strong data foundations are essential for both fair compensation and effective commercial decision-making.
4. Reward the behaviours that create long-term value
People naturally focus on what they’re measured and rewarded against. That means every incentive plan creates behaviours, whether intentional or not.
A plan focused purely on revenue may encourage discounting or poor-quality deals. A plan focused only on margin may discourage growth. A plan focused exclusively on individual performance may reduce collaboration.
The challenge isn’t adding more measures. It’s identifying the few outcomes that best represent commercial success. Effective incentive plans typically balance short-term performance with longer-term value creation, and use measures that are clear, achievable and within an individual’s influence.
The right question isn’t: “What metrics can we include? It’s: “What behaviours do we need our commercial teams to consistently demonstrate?”. Define that first, and then work backwards from there.
5. Put governance before exceptions
Even a well-designed incentive plan can quickly become complicated without strong governance. Over time, organisations often accumulate exceptions:
- Special commission arrangements
- Territory disputes
- Changes to account ownership
- One-off deal approvals
- Adjustments to targets
Each decision may seem reasonable at the time. But collectively they create a system that becomes difficult to understand and administer.
Good governance prevents complexity from taking over. Organisations need clear rules around territory design, quotas, account ownership and approval processes. A successful incentive plan isn’t just designed well at launch. It’s actively managed as the business evolves.
6. Design the incentive plan last
The biggest mistake organisations make is treating compensation as the starting point. It should be the final step!
The incentive plan should sit on top of a clearly defined go-to-market operating model:
- A clear commercial strategy
- Well-defined sales roles
- Effective processes, and system design
- Reliable data and reporting
- Appropriate performance measures
- Strong governance
Once these foundations are in place, designing the right compensation structure becomes significantly easier. The organisation can then make informed decisions about quotas, pay mix, commission rates, accelerators, performance thresholds.
Without these foundations, incentive redesign becomes an expensive exercise in treating symptoms rather than solving root causes.
Is your go-to-market operating model ready for a new incentive plan?
If you’re reviewing your sales compensation, don’t start with commission rates. Start by understanding whether your go-to-market operating model is capable of supporting the behaviours you want to encourage.
My Go-to-Market Diagnostic assesses the capabilities that underpin commercial performance, including strategy, processes, measurement, reporting, governance and organisational capability.
Using a structured maturity assessment, it identifies the gaps most likely to limit growth and prioritises where improvement will have the greatest impact. Only once those foundations are understood does it make sense to redesign incentives.
If you’re planning a compensation review, the diagnostic provides an objective starting point to ensure you’re solving the right problem, rather than simply redesigning the symptoms.