A well-designed sales compensation plan isn’t just about paying reps. It’s about aligning incentives with business goals, driving performance, and ensuring scalability. Too often, companies design plans in a silo, leading to unintended behaviors, missed revenue targets, or poor rep retention.

So, how do you get it right? And who should be at the table?

1. Align Compensation with Strategy

Before structuring payouts, define your go-to-market (GTM) strategy:
✅ What are your key sales objectives? (Revenue growth, margin protection, new logo acquisition?)
✅ What behaviors do you want to drive? (Land-and-expand, multi-year deals, product mix?)
✅ What sales motions do you support? (Enterprise vs. SMB, inbound vs. outbound?)

Your plan should reinforce these objectives and not work against them. If ARR is a priority, but reps are incentivized to sell one-time deals, there’s a misalignment.

2. Bring the Right People to the Table

Sales comp impacts multiple functions, include key stakeholders:
🔹 Sales Leadership – Ensures the plan drives rep motivation & performance.
🔹 Finance – Validates cost, margins & financial sustainability.
🔹 HR/Comp Team – Benchmarks against market standards & ensures fairness.
🔹 RevOps/Sales Ops – Models plan impact & ensures smooth execution.
🔹 Marketing – If lead generation or pipeline contribution affects comp.
🔹 Product – If incentives are tied to product adoption.
🔹 Legal – Ensures compliance & clarity in plan documents.
🔹 Accounting – Confirms accruals are in place before payouts.

3. Design for Simplicity & Transparency

Comp plans should be easy to understand:
📌 Base vs. variable mix – Competitive & motivating?
📌 Accelerators – Do they reward top performers?
📌 Caps & Clawbacks – Encourage the right selling behaviors?
📌 Payout timing – Frequent enough to keep reps engaged?

4. Model & Test the Plan

Before rollout, model different scenarios:

Does it work for top, mid, and low performers?
Does it support ramping for new hires?
Are OTEs (on-target earnings) achievable based on past performance?

5. Communicate & Iterate

A great plan isn’t just launched. It’s reinforced. Train managers, answer rep questions, and monitor them for unintended consequences. Be ready to adjust based on performance data.

Final Thought: Sales compensation is a powerful tool—but only when designed with cross-functional input. The right plan ensures alignment, motivation, and long-term scalability.

What’s one lesson you’ve learned from past comp plan designs?

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