Delaying compensation plans until after the fiscal year begins creates a vacuum where salespeople are unsure how to behave. This uncertainty paralyzes productivity and demotivates the team, wasting the energy generated by the sales kickoff (SKO).
Instead of treating high commission payouts as a pure expense, view them as a marketing asset. Actively ensuring it's known that top reps make a lot of money serves as the best possible recruiting tool, attracting other A-players to your company.
Sales compensation is the most powerful lever for changing a sales team's behavior quickly. More than training or directives, incentives tell reps what they are supposed to do and why, directly shaping their daily actions and strategic focus.
Founders and CEOs can develop an inflated sense of their contribution by focusing only on the final executive meeting. They often overlook the months of prospecting, relationship-building, and deal choreography done by the sales rep, leading to unfair perceptions about who truly 'closed the deal.'
Salespeople's biggest frustration with comp plans is being held accountable for outcomes they can't directly influence. This perceived unfairness is a primary driver of attrition, making it critical to align incentives strictly with a seller's direct responsibilities and control.
A one-size-fits-all sales role fails in consumption models. Success requires segmenting the team into specialized roles—new business acquisition, customer onboarding, and account management—each with distinct incentives aligned to their specific function, from initial sign-up to value realization and expansion.
To handle 'bluebird' deals without demotivating reps, avoid hard caps. Instead, implement a policy where commissions exceeding a high threshold (e.g., 400% of variable pay) are 'subject to review.' This protects the company from unearned windfalls while maintaining unlimited potential for legitimate efforts.
Annual plans can't predict every business need, like a new product launch or acquisition. A pre-approved budget for discretionary incentives (SPIFs) allows sales leaders to quickly motivate reps toward new, unforeseen priorities without having to disrupt the core compensation plan mid-year.