What to Consider in Your Sales Comp Planning Process This Year

Sales Compensation Planning Season is upon us with one quarter left to run models, gain internal alignment, and finalize everything needed for rollout. Sales comp is one of the most powerful levers you have to drive revenue. Done right, it attracts the right talent, motivates performance, and aligns behaviors with your company’s growth strategy. Done poorly, it creates friction, reduces motivation, and leads to attrition.

When we design sales comp plans, we break it into three buckets: financial metrics, structure, and behavioral alignment. Each bucket requires answering specific discovery questions that reveal how the plan should be designed.

Bucket One: Financial Metrics

This bucket is your foundation. Start by considering:

• What roles require a commission plan, and how many unique plans already exist?
  
  
• How many employees are in each role, and at what levels?
  
  
• What is the budget for the role, and does it align with current market compensation?
  
  
• What is the expected output per role, and how much revenue must each person produce to justify the compensation?
  
  
• What is the right balance between base salary and variable pay?

This bucket ensures the math works. If a rep earns $150K OTE, you should understand the quota required to break even, how that aligns with your forecast and profitability goals, the average deal size, the average number of deals closed, and ultimately how many deals each rep must close annually to stay on track. Without this baseline, everything else falls apart.

Bucket Two: Structure

Once the financials are clear, the next step is to design a structure that motivates rather than frustrates. This is where you dig into:

• How are leads generated? (self-generated, marketing-driven, or partner-sourced)
  
  
• What is the sales cycle length, and what is the average deal size?
  
  
• How many deals does each role close per year, and what does the quota look like by season?
  
  
• How long does it take to ramp a new rep to full productivity?
  
  
• Is the role remote, in-office, or blended, and does the work environment impact performance?
  
  
• How should special rules be applied: deal splits, accelerators, multipliers, caps, gates, SPIFs, or guarantees?

Seasonality matters. If quotas peak during a traditionally slow quarter, motivation drops. If the plan does not account for the length of a sales cycle, reps give up early. Structure is where you design for motivation and retention.

Bucket Three: Behavioral Alignment

Most analysts stop at buckets one and two, but this third piece is where compensation goes from good to great. Compensation plans drive behavior. If you reward the wrong actions, you will get the wrong results. Key questions include:

• What KPIs truly define success in the role?
  
  
• How is performance measured beyond quota attainment?
  
  
• Who are the target clients, and what size or profile of accounts should the role prioritize?
  
  
• Who do reps compete with, and how does that affect quota design?
  
  
• What behaviors do you want to encourage: new logo acquisition, expansion, cross-sell, longer-term contracts, or faster deal velocity?

If you’re not asking yourself: “How could a team member benefit in a way that doesn’t align with our success under this plan”, you’re in for a surprise. Example: Holding a deal that is ready to close until the next month because they already maxed out accelerators or hit a cap. Historical performance and feedback from the field are critical here. If reps feel the plan ignores the complexity of territories or discourages collaboration, behavior will shift in ways that hurt the business. If the plan rewards activity that leads to revenue growth, culture and results align.

Putting It All Together

When you answer these questions across the three buckets, you can design a sales incentive plan that works at every level. The financials justify the investment. The structure keeps people motivated through the ups and downs of the year. The behavioral alignment ensures every rep is focused on the right outcomes.