When it comes to sales, compensation isn’t just about the paycheck at the end of the month—it’s about shaping behavior. The way you structure your compensation plan can directly influence what your sales team focuses on, how they prioritize their time, and ultimately, the kind of results they produce. Get it right, and you’ll see your team hitting targets and going above and beyond. Get it wrong, and you’ll end up with a team that’s either spinning its wheels or focusing on the wrong activities.
Most companies understand that compensation needs to be competitive to attract talent. But the real challenge is creating a plan that doesn’t just reward results but also drives the kind of behavior that leads to long-term success. Let’s dig into why compensation drives behavior and how you can set up a plan that pushes your team in the right direction.
Why Compensation Influences Behavior
Let’s get one thing straight: Salespeople are motivated by money. They want to be rewarded for their hard work, and they’re often willing to put in the effort if they know there’s a clear financial reward waiting for them. But it’s not just about how much they can earn; it’s about how they earn it. The structure of a compensation plan sends a message about what the company values and what actions will be rewarded.
For example, if your compensation plan heavily rewards closing deals but doesn’t offer much for prospecting or building new relationships, guess what your team is going to focus on? They’ll spend most of their time trying to close existing leads instead of hunting for new business. And while that might work for a while, it’s not going to build a sustainable pipeline. On the other hand, if your plan rewards the effort of prospecting and engaging new leads, you’ll see a lot more new names in the CRM. The activities that get rewarded are the activities that get done—plain and simple.
The Dangers of a Misaligned Comp Plan
Here’s where a lot of companies go wrong: They create a compensation plan that doesn’t match up with their business goals. They’ll set aggressive new business targets but design a plan that primarily rewards maintaining existing accounts. So, while the company wants growth, the sales team is incentivized to play it safe, focusing on renewals and repeat customers instead of taking risks to bring in new clients.
Or, they’ll have a plan that offers the same commission for renewing an existing customer as it does for bringing in a brand-new client. Think about that for a second: if you’re a salesperson, why would you spend time prospecting, facing rejection, and chasing new business when you can earn the same amount by simply managing your existing book? It’s a recipe for complacency, and it’s a sure way to keep your growth potential stuck in neutral.
The solution? Make sure your comp plan aligns with what you actually want your sales team to do. If growth is the goal, reward the behaviors that lead to growth—prospecting, building new relationships, and closing new deals. If retention is the focus, reward efforts that improve customer satisfaction and increase renewals. The key is to design a plan that directs your team’s efforts where they’ll make the biggest impact.
Compensation and the Motivation Spectrum
Let’s talk about the difference between motivating top performers and motivating those who are struggling. Top performers want a plan that allows them to blow past their goals and earn big when they perform exceptionally well. They’re not just looking for a base salary—they’re looking for the chance to be rewarded for going above and beyond.
A great comp plan for these high achievers includes accelerators or bonuses that kick in when they exceed their targets. It’s the kind of plan that says, “If you go all out, we’re going to reward you for it.” This creates a performance-driven culture where top reps are constantly striving for more, knowing there’s a significant upside waiting for them if they hit their stretch goals.
But what about the salespeople who are struggling to hit their numbers? A good comp plan can provide motivation for them too, but it has to be designed with their development in mind. It might include tiered targets that reward incremental progress, helping them build momentum even if they’re not yet the top performer on the team. It’s about encouraging them to keep going, even when they’re not closing as many deals as their high-achieving colleagues.
Designing a Plan That Drives the Right Behavior
So, how do you design a comp plan that doesn’t just reward results but encourages the right behaviors? Here are a few principles to keep in mind:
1. Reward the Hard Work, Not Just the Big Wins
If you want your team to keep their pipelines full, you’ve got to reward prospecting and lead generation. This might look like offering bonuses for booking discovery meetings, hitting a certain number of new leads each month, or even for following up on cold leads. It keeps your salespeople focused on the activities that matter, not just the end result.
2. Make the Plan Easy to Understand
A compensation plan shouldn’t feel like a puzzle. If your salespeople can’t easily figure out how much they’ll make for closing a deal, it’s a problem. Transparency is key. Your team should know exactly how their efforts translate into earnings, so they can focus on what drives the most value—for them and for the company.
3. Include Upside for Overachievers
If you want your top performers to keep pushing, you’ve got to give them something to reach for. Accelerators, bonuses, or additional percentages on deals once they hit a certain threshold can make all the difference. It keeps your best people motivated and shows them that their extra effort is appreciated.
4. Incentivize Long-Term Success, Not Just Quick Wins
Quick wins feel great, but long-term relationships drive real revenue. If your plan is all about closing the deal but doesn’t consider how well those accounts are managed after the contract is signed, you’re leaving money on the table. Consider adding incentives for client satisfaction or for hitting renewal targets. It keeps your sales team focused on building value, not just making the sale.
5. Align Comp with Company Goals
This one can’t be emphasized enough: Your compensation plan needs to match your strategic goals. If you’re looking to expand into new markets, then new client acquisition should carry a bigger reward. If you’re focusing on upselling to existing clients, then that’s where the money should be. The closer your comp plan matches your company’s vision, the more likely your sales team will be to make that vision a reality.
The Power of a Well-Designed Compensation Plan
When you get it right, a well-designed compensation plan is like a GPS for your sales team. It guides them toward the behaviors that drive the results you want. It motivates them to push harder, reach higher, and stay focused on what really matters. And it rewards them for their efforts in a way that makes them feel valued and appreciated.
It’s not just about what your salespeople earn—it’s about what they do to earn it. It’s about creating a culture where every action, every call, and every meeting is aligned with a clear goal. When compensation drives the right behavior, success follows.
Time to Rethink How You Reward Your Team
So, if you’re a sales leader, take a hard look at your current comp plan. Is it truly aligned with the activities that will drive long-term success? Is it motivating your top performers to go the extra mile, while also helping those who need a boost? Or is it sending mixed signals, rewarding the wrong things and holding your team back?
Remember, compensation isn’t just about the paycheck—it’s about shaping behavior. And when you create a plan that motivates the right behaviors, you’re not just building a team that hits their numbers—you’re building a team that drives real, sustainable growth. And that’s what it’s all about, right?
