Sales Compensation Explained: Strategy, Templates, Best Practices & More

Let’s be honest: sales compensation is one of those things that sounds simple, until you actually have to build a plan. Suddenly, you’re juggling base-to-variable ratios, quota fairness, accelerators, decelerators, clawbacks, rep expectations, and trying to make it all align with business goals.

Sales compensation is one of the most critical drivers of revenue growth. Yet, only 21% of companies are happy with their sales compensation plans. That stat says it all: most businesses are leaving performance (and predictability) on the table.

This blog is your go-to resource for everything about sales compensation: from plan structures and real benchmarks to compliance, analytics, and what’s changing in 2025. 

Whether you’re starting from scratch or fixing a plan that’s no longer working, you’ll find strategies, frameworks, and examples you can actually use.

Let’s start with the basics.

What Is Sales Compensation?

Sales compensation is the structured pay system used to reward sales performance. It typically combines fixed salaries, commissions, bonuses, and other incentive plans. 

Companies use sales compensation to align sales behavior with revenue goals. These plans are typically quota-based and tailored to specific roles. 

Variable compensation models drive motivation and reward overachievement. These plans often include clear metrics, payout structures, and compliance rules.

Think of it as a strategic blend of base salary, incentives, bonuses, benefits, and sometimes equity, all designed to align rep motivation with company goals. For example, a SaaS company might tie compensation to monthly recurring revenue (MRR), while an enterprise software firm might reward deal size or contract duration.

Effective sales compensation plans provide stability through fixed pay and performance-based rewards through variable pay. The mix depends on your business model, sales cycle, and growth objectives.

At its core, sales compensation balances predictability for the business with motivation for the individual. When designed right, it becomes a lever for strategic growth.

Why Sales Compensation Matters in Modern Sales Organizations 

In high-growth companies, especially in SaaS and enterprise software, sales compensation isn’t just about payouts. It’s a critical driver of behavior, performance, and ultimately, revenue. A well-structured plan ensures your reps are chasing the right targets, staying engaged, and aligned with your business strategy.

Poorly designed plans, on the other hand, create confusion, churn, and misaligned incentives. In fact, Forrester notes that only 47% of B2B reps hit quota on average, which points to systemic issues, including compensation design.

Today, sales compensation meaningfully impacts not just rep motivation, but also forecasting accuracy, customer retention, and hiring appeal. For enterprise companies with long sales cycles and multi-stakeholder deals, having the right incentive structure can mean the difference between growth and stagnation.

Bottom line? If your comp plan isn’t influencing the outcomes you care about, it’s time to rethink it.

Different Types of Sales Compensation Plans 

Sales teams don’t operate in a one-size-fits-all world, and neither should their compensation plans. The structure of a sales compensation plan often reflects your business model, deal complexity, sales cycle, and company stage. 

Whether you're a SaaS startup focused on ARR growth or an enterprise juggling multi-year contracts, choosing the right plan directly impacts performance and predictability.

Here are the most widely used sales compensation models:

1. Fixed Pay

This is the most straightforward model: a guaranteed base salary, often used to provide income stability and attract top talent in early-stage sales roles.

Fixed pay is common for:

• Sales development reps (SDRs)
• Pre-sales consultants
• Relationship managers

While it offers predictability, relying too heavily on fixed pay can reduce urgency and performance motivation. Most high-growth companies combine it with variable pay to drive outcomes.

2. Commission-Based Structures

Commission-based models directly tie rep earnings to their sales performance. These plans are popular in direct sales environments where closing revenue is the rep’s primary goal.

• Straight Commission

This structure offers 100% variable pay, which means no base salary. It’s high risk, high reward.

Best for:

• Independent agents or brokers
• Roles with short sales cycles and low ramp-up needs

It’s rarely used in SaaS or complex sales due to onboarding requirements and churn risk.

• Base + Commission

The most common model in B2B and SaaS sales, this plan includes a fixed salary plus a commission based on closed deals or booked revenue.

Example: A rep earns $60K in base pay and 10% commission on closed ARR.

It balances income security with performance motivation.

• Tiered Commission

Incentivizes reps to exceed quota by increasing commission rates once certain thresholds are passed.

Example:

• 10% commission on revenue up to quota
• 15% beyond 110% of quota

Tiered models drive overperformance—ideal for teams that need to stretch beyond targets.

• Draw Against Commission

Used often during onboarding or in seasonal industries, a “draw” is a cash advance against future commissions.

• Helps reps earn income before deals close
• Can be recoverable (deducted from future commissions) or non-recoverable

3. Bonus-Based Plans

Bonuses are lump-sum payouts tied to specific milestones or behaviors. Unlike commissions, they aren’t always tied to direct revenue generation.

Examples:

• Closing a multi-year deal
• Winning a strategic account
• Driving customer renewals or upsells

Bonus-based plans often complement other structures and are common in account management and channel sales roles.

4. MBO-Based Compensation

Management by Objectives (MBO) compensation links pay to individual goals rather than quotas. Ideal for reps in hybrid or strategic roles where success isn’t always tied to closed deals.

Examples of MBO goals:

• Launching a new product
• Developing a partnership pipeline
• Driving adoption in enterprise accounts

MBO sales compensation is commonly used for non-quota-carrying roles like sales enablement or partner development.

5. Variable & Subscription-Based Plans

Designed for recurring revenue businesses, especially SaaS, these models reward reps based on metrics like:

• Monthly recurring revenue (MRR)
• Annual contract value (ACV)
• Customer retention or expansion

Common in subscription-based sales compensation, these plans prioritize long-term value over one-time wins. For instance, reps may earn commission only after a customer has stayed active for 90 days.

These models are powerful for aligning sales with customer success and long-term revenue health.

Sales Compensation Strategy: Key Elements 

Designing a sales compensation plan is about aligning every dollar spent with the outcomes that matter most to your business, whether that’s pipeline growth, customer retention, or multi-year expansion.

In this section, we’ll walk through the six critical components of a strong sales compensation strategy, from setting goals to structuring commissions.

1. Define Business Objectives and Sales Goals

Every effective sales compensation plan begins with clarity. What are you actually trying to achieve?

Common objectives include:

• Revenue growth (e.g., 40% YoY)
• New customer acquisition
• Retention and upsells in current accounts
• Entering a new market or segment

Your compensation model should reinforce these goals. For example, if expansion revenue is a top priority, your Account Managers should be incentivized with accelerators on upsells and renewals.

Clear alignment between business objectives and comp strategy is the foundation of sales compensation plan management.

2. Identify Sales Roles and Responsibilities

Sales is no longer just about closers. From SDRs and AEs to Customer Success and Channel Managers, each role influences revenue in different ways.

That’s why identifying role-specific responsibilities is key.

For example:

• SDRs should be incentivized for qualified pipeline (e.g., demo sets, SALs)
• AEs might be measured on closed-won revenue or MRR
• Account Managers could be compensated for renewals, upsells, or NRR

Mapping roles to revenue contributions ensures your plan reflects reality, and not just assumptions.

3. Set Performance Metrics and Quotas

This is where you define how success will be measured.

Relevant metrics include:

• Quota attainment
• Win rate
• Average deal size
• Sales cycle length
• Customer lifetime value (CLTV)

Metrics must be aggressive but attainable and always linked to the company’s strategic priorities. When done right, this improves sales compensation plan effectiveness and revenue predictability.

4. Decide Compensation Mix (Base vs. Variable)

How much of a rep’s earnings should be fixed vs. performance-based?

Typical mix:

• SDRs: 70/30 (base/variable)
• AEs: 50/50 or 60/40
• Enterprise reps: 40/60

Early-stage startups may lean more variable to encourage hustle. Mature companies often increase base pay for stability and retention.

The right mix balances income predictability with performance pressure and varies by sales cycle length, ramp time, and role seniority.

5. Develop Commission Plan and Bonus Structures

Commission structures should incentivize behavior, not just outcomes.

Examples:

• Multi-tiered accelerators for reps exceeding 120% of sales quota
• Bonuses for closing new logos or strategic accounts
• Clawbacks for churned accounts within 90 days

Your sales compensation design must reflect how you want your team to sell, not just how much. 

For companies managing multiple roles and plan types, Everstage’s plan builder helps you design, test, and launch commission structures without any engineering support.

And don’t forget about non-revenue triggers: bonus plans can reward product mix, sales cycle speed, or adoption metrics.

6. Align Incentives to Revenue Targets

This is where strategy becomes reality.

If your reps are getting paid to chase logos, but your business depends on multi-year contracts or product usage, you’ve got misalignment.

Key tip: Design your plan to reward reps for behaviors that influence bottom-line outcomes.

Whether it’s ACV, NRR, or account penetration, your incentive structure should push the needle on metrics that matter—not vanity KPIs.

As McKinsey notes, smart compensation model revisions can impact sales 50% more than equivalent ad spend, so it’s worth getting this right.

Sales Compensation Plan Templates by Company Type 

Designing an effective sales compensation plan requires tailoring the structure to align with your company's business model, sales processes, and growth stage. 

Below are detailed templates for various company types, incorporating industry best practices and strategic considerations.

1. SaaS Sales Compensation Plan Template

In the Software as a Service (SaaS) industry, recurring revenue is paramount. Therefore, compensation plans should incentivize not only new customer acquisition but also customer retention and expansion.​

Structure:

• Base Salary: 50%–60% of On-Target Earnings (OTE)​
• Variable Pay: 40%–50% of OTE​

Components:

• New Business Commission: 8%–12% of Annual Contract Value (ACV) for new customers.​
• Renewal Commission: 4%–6% of ACV for customer renewals, encouraging focus on retention.​
• Expansion/Upsell Commission: 10%–12% of the incremental ACV from upsells or cross-sells within existing accounts.​
• Accelerators: Higher commission rates (e.g., additional 2%–4%) for exceeding quota by 20% or more, motivating overachievement.​
• Clawbacks: Recoupment of commissions if a customer churns within the first 6 months, ensuring focus on customer success.​

Example: An Account Executive with a $1,000,000 annual quota might have a $100,000 base salary and a $100,000 variable component. If they close $1,200,000 in new ACV and achieve $300,000 in renewals, their total earnings would include base salary plus commissions calculated per the above rates, with accelerators applied for surpassing quota.​

2. Enterprise Sales Compensation Plan Template

Enterprise sales involve complex, high-value deals with extended sales cycles. Compensation plans should reflect the strategic nature of these sales and the collaborative efforts required.​

Structure:

• Base Salary: 60%–70% of OTE​
• Variable Pay: 30%–40% of OTE​

Components:

• Base Commission: 5%–7% of deal value for contracts up to $500,000.​
• Tiered Commission: 7%–9% for deal values between $500,001 and $1,000,000; 10% for deals exceeding $1,000,000, rewarding larger deal closures.​
• Team-Based Bonuses: Additional bonuses for collaborative efforts, such as $5,000 for multi-departmental sales efforts leading to closed deals.​
• Strategic Account Bonuses: $10,000 bonus for securing contracts with Fortune 500 companies or other strategic targets.​
• Long-Term Incentives: Stock options or deferred bonuses for deals with multi-year commitments, promoting long-term value creation.​

Example: A Senior Sales Executive with a $2,000,000 annual quota might have a $120,000 base salary and an $80,000 variable component. Closing a $1,200,000 deal with a Fortune 500 company would yield commissions and bonuses as per the outlined structure, potentially including tiered commissions and strategic account bonuses.​

3. Startup/B2B Sales Compensation Plan Template

Startups require agile and aggressive sales strategies to establish market presence. Compensation plans should attract dynamic sales talent willing to embrace risk for higher rewards.​

Structure:

• Base Salary: 40%–50% of OTE​
• Variable Pay: 50%–60% of OTE​

Components:

• New Customer Acquisition Commission: 10%–15% of ACV for each new client secured.​
• Milestone Bonuses: $2,000 bonus upon reaching every $250,000 in new sales, encouraging rapid growth.​
• Equity Options: Stock options vesting over 4 years, aligning personal success with company growth.
• Accelerators: Additional 5% commission for exceeding quarterly targets by 30% or more.​
• Draw Against Commission: Provision of a recoverable draw to support income stability during ramp-up periods.​

Example: A Sales Representative with a $500,000 annual quota might have a $50,000 base salary and a $75,000 variable component. Securing $600,000 in new business would result in commissions and bonuses as per the plan, with accelerators applied for surpassing targets.​

Optimizing Sales Compensation with Analytics and Technology 

Even the most well-structured sales compensation plan can fail if it’s not tracked, analyzed, and adjusted in real time. As teams grow and deals become more complex, sales compensation administration quickly becomes a bottleneck, unless it's powered by data and automation.

Modern sales teams rely on analytics, dashboards, and compensation software not just to manage payouts but to continuously improve plan design, reduce errors, and build trust.

Here’s how technology transforms the way businesses handle sales compensation:

1. Using Compensation Dashboards and Reports

Dashboards are the heartbeat of sales compensation analytics. They offer visibility into performance at every level, from individual reps to company-wide trends.

With real-time reporting, teams can track:

• Quota attainment (Who’s pacing ahead or falling behind?)
• Commission payouts (Are reps on track for accelerators?)
• Performance by region, product, or role (What’s working and what’s not?)

These insights support smarter decisions around territory adjustments, rep coaching, and comp plan refinements. Tools like Tableau, Power BI, and purpose-built dashboards in sales compensation software give leaders the visibility they need without relying on manual spreadsheets.

Platforms like Everstage offer no-code automation and BI-powered dashboards that streamline commission processing and give RevOps teams real-time visibility into plan effectiveness.

2. Real-Time Visibility and Tracking

One of the biggest complaints reps have about comp plans? Lack of transparency. If a rep doesn’t know what they’ve earned or how it’s calculated, they’re less likely to trust the process (and more likely to disengage).

With real-time tracking, reps can see:

• Earnings breakdowns per deal
• Progress toward accelerators or bonuses
• Expected end-of-month commissions

This builds accountability, reduces end-of-quarter disputes, and reinforces motivation.

It also empowers frontline sales managers to coach more effectively, using data to guide performance conversations and reward the right behaviors.

Everstage’s Payee Experience lets reps see detailed earnings breakdowns, accelerator progress, and payout timelines, helping them trust the process and stay motivated.

3. Leveraging Compensation Software & Automation 

Manual compensation tracking is not scalable. It’s error-prone, slow, and frustrating for both finance and sales.

That’s where automation tools like Everstage come in.

Features typically include:

• Dynamic plan modeling and changes
• Automated commission calculations and approvals
• Audit trails and payout histories
• Sales compensation software dashboards with rep-level breakdowns

These tools remove the guesswork, freeing up RevOps and finance teams while improving rep experience. According to Gartner, 50% of sales leaders felt their comp plans’ vulnerabilities were exposed during the pandemic, a sign that real-time, automated systems are no longer optional.

If you’re still calculating payouts in Excel, Everstage automates commission calculations, enforces audit trails, and eliminates spreadsheet errors, freeing up ops teams to focus on strategic work.

Industry Benchmarks & Trends in Sales Compensation (2024–2025) 

Understanding how your compensation plan stacks up against industry standards isn’t just a competitive advantage, it’s a necessity. Whether you're running a lean startup or managing a global enterprise sales force, keeping pace with sales compensation benchmarks and evolving trends helps ensure your plan stays effective, motivating, and scalable.

In this section, we’ll look at how companies are structuring compensation in 2024–2025, based on recent data.

1. Sales Compensation Benchmarks

Sales compensation benchmarks help organizations structure competitive pay plans that align with business objectives, drive performance, and retain top talent. 

Below are key benchmarks that guide the development of effective sales compensation strategies:

1. On-Target Earnings (OTE): OTE is the total compensation a sales rep can earn if they meet their sales targets. It typically includes base salary and variable pay (commissions and bonuses). For most roles, OTE can range between $150,000 and $250,000 depending on experience and sales role.
   
   
2. Commission Rates: Commission rates vary by role. For example, Account Executives (AEs) typically earn 8%-12% of the Annual Contract Value (ACV) on closed deals. Sales Development Representatives (SDRs) tend to have lower commission rates, focused on lead generation.
   
   
3. Quota-to-OTE Ratio: The ratio between sales quotas and OTE is typically between 3:1 and 5:1. This means for every $100K in OTE, a rep’s quota should be between $300K and $500K in sales, ensuring that quotas are achievable yet challenging.
   
   
4. Pay Mix (Base vs. Variable Pay): A common pay mix for AEs is 60% base salary and 40% variable pay. For roles with shorter sales cycles, the pay mix can be more aggressive, with a higher percentage tied to performance incentives to drive motivation.
   
   
5. Incentives for Exceeding Targets: Many organizations use accelerators to reward reps who exceed their quotas. For instance, once a rep reaches 110% of their quota, their commission rate may increase by 10%, incentivizing overachievement.
   
   
6. Quota Distribution by Role: Gartner’s survey of 145 B2B sales organizations reveals how sales compensation plans differ across roles:

• Account Executives: Primarily use Quota/Goal Plans (33%) and Commission Rate Plans (31%) with some using Hybrid Plans (27%).
• Account Managers: Commonly use Quota/Goal Plans (42%) and Commission Rate Plans (40%).
• Sales Development/BDRs: Favor Commission Rate Plans (36%) and Quota/Goal Plans (29%).
• Inside Sales: Predominantly use Commission Rate Plans (33%) and Quota/Goal Plans (24%).
• Technical/Customer Success: Utilize Quota/Goal Plans (36%) and Commission Rate Plans (32%).
• Sales Managers: Primarily use Management by Objectives Plans (28%).

By adopting these benchmarks, businesses can design compensation plans that motivate sales teams, align with company goals, and stay competitive in the market.

2. SaaS Sales Compensation Benchmarks

In SaaS, compensation models are evolving to reflect a shift from one-time deals to long-term customer value. A strong sales compensation plan in this space must balance base pay, variable earnings, and incentive design around recurring revenue goals.

Based on the latest data from The Bridge Group's 2024 SaaS AE Metrics & Compensation Benchmark Report, here are key sales compensation benchmarks for SaaS Account Executives (AEs):​

• Annual Quota: The median annual ACV quota for a SaaS AE is $800K, an increase from $740K in 2022. Quotas have risen modestly, at just a 2% compound annual growth rate, since 2012.
• On-Target Earnings (OTE): Median annual OTEs are $190K with a 53:47 base-to-variable split, up from $167K in 2022. OTEs have risen at more than 5% compounded annually over the same period. ​
• Quota-to-OTE Ratio: The ratio of quota to OTE has been reshaped due to the differing growth rates of quotas and OTEs. ​

Another benchmark is NRR-Linked Incentives. As highlighted in ICONIQ Growth’s 2023 Sales Compensation report, more SaaS companies are tying compensation to Net Revenue Retention (NRR), especially in PLG or usage-based models, to encourage reps to prioritize long-term value over short-term wins.

These benchmarks provide valuable insights into current compensation trends for SaaS Account Executives.

3. Emerging Trends in Sales Compensation

Compensation plans are becoming more dynamic, data-driven, and personalized. Here are the most significant shifts in 2024–2025:

• Performance-Based Pay Overhaul

According to Salesforce, companies that revise sales compensation models see 50% greater impact on revenue than similar investments in advertising. This is fueling a shift toward performance-based compensation tied to:

• Pipeline creation (not just bookings)
• Customer success metrics like product adoption or renewal rates
• Sales velocity and conversion efficiency

In Everstage’s 2023 Compensation Careers report, sales compensation leaders also cited retention- and usage-based incentives as rising priorities, especially in product-led growth environments.

• Expanded Use of Incentives Across Teams 

WSJ reports that 28% of companies are extending performance-based pay to non-sales teams, reflecting the broader recognition that customer-facing performance happens across the org—not just within sales.

• Compensation Satisfaction Gap 

Despite increasing budgets, only 21% of companies are satisfied with their sales comp plans as per WorldatWork. Common reasons include:

• Lack of visibility and real-time tracking
• Misaligned incentives vs. business goals
• Quotas not grounded in market potential

The Everstage report echoed these concerns, noting that poor communication and unclear payout rules were top reasons for plan dissatisfaction among sales reps and comp professionals alike.

• Variable Pay Trending Upward 

In financial services and high-performance environments, bonuses and commissions have seen significant growth. For instance, Wall Street bankers received an average $244,700 bonus in 2024, emphasizing how variable pay continues to be a major driver of earnings in certain sectors.

Variable pay is also seeing broader adoption across SaaS and tech sales teams, with companies embracing accelerators, SPIFFs, and personalized incentive tracks to drive performance without bloating base pay budgets.

• Focus on Simplicity and Transparency 

As sales roles become more hybrid and metrics more complex, companies are simplifying compensation plans to improve adoption and trust. Everstage’s report found that sales teams are demanding:

• Clearer plan documentation
• Real-time earnings visibility
• Fewer variables with more predictable payouts

The push for simplicity isn’t just about clarity, it’s about motivation. When reps understand exactly how they're rewarded, performance improves, and disputes decline.

Sales Compensation Compliance and Governance

As compensation plans grow more complex especially across global sales teams, compliance and governance have become strategic priorities. It’s no longer enough for sales compensation plans to be competitive; they must also be fair, transparent, legally compliant, and risk-managed.

In this section, we break down the major compliance challenges organizations face, why governance matters more than ever, and how to build a compensation framework that’s high-performing and resilient.

Why Compliance Matters in Sales Compensation

Compensation compliance goes beyond regulatory checkboxes. It’s about ensuring that your incentive plans:

• Treat employees fairly across gender, region, and role
• Comply with labor laws and tax requirements
• Prevent unethical sales behaviors or quota gaming
• Protect the company from reputational or legal risk

Inconsistent or opaque compensation plans can lead to:

• Regulatory fines for misclassification (e.g., exempt vs. non-exempt roles)
• Lawsuits and audits over pay discrepancies or bonus disputes
• High rep attrition, especially if perceived fairness is low

Lack of transparency and poor governance are some of the top reasons for sales compensation disputes.

1. Pay Equity and Anti-Discrimination

One of the most pressing issues in sales compensation compliance is pay equity.

• A 2024 Demand Gen report found that 33% of women in sales believe they are paid less than male counterparts for the same role.
• In multinational organizations, location-based bias or role misclassification often leads to unequal pay for similar performance.

Governance Best Practices:

• Conduct regular pay equity audits across roles, genders, and geographies
• Use benchmarking tools to validate market alignment
• Clearly document how quotas and OTEs are set, and how commissions are calculated

Proactively addressing equity reduces legal exposure and boosts retention, performance, and morale.

2. Managing Incentive Risk

Well-intentioned comp plans can sometimes encourage bad behavior. Without the right guardrails, you might see:

• Over-discounting to hit quota
• Pushing deals that are not ICP-fit
• Signing churn-prone customers to inflate ARR

To reduce incentive risk, companies are implementing:

• Clawbacks for early churn or misrepresented deals
• Commission gates tied to payment collection or customer onboarding
• Compliance clauses in commission agreements (e.g., adherence to discount policies)

A healthy compensation system should amplify value-creating behavior while minimizing conduct risk.

3. Global Sales Compensation Governance

If you operate internationally, compensation governance becomes exponentially more complex.

Common challenges:

• Variations in tax law, payroll structures, and statutory benefits
• Currency fluctuations impacting earnings parity
• Local labor laws that prohibit at-will employment or require guaranteed bonuses

Companies with global sales teams should:

• Work with regional HR and legal advisors to validate plan legality
• Localize compensation structures without compromising overall strategy
• Use global compensation platforms that handle multi-currency, localized reporting, and audit trails

4. Documentation and Audit Readiness

To maintain compliance and avoid disputes, your sales compensation plan must be clearly documented. That includes:

• Detailed comp plan documents signed by reps
• Logic for quota setting and commission calculations
• Rules for bonuses, accelerators, clawbacks, and dispute resolution

Modern sales compensation software often includes audit logs, approval trails, and real-time reporting, which not only streamlines admin but also protects against compliance risks.

5. The Role of Cross-Functional Governance

Finally, sales compensation governance isn’t just a sales or finance problem; it’s a cross-functional responsibility.

Key players:

• Sales leadership: Own strategic alignment
• Finance: Budget management, forecastability
• HR: Pay equity, compliance, retention
• Legal: Regulatory oversight, contracts
• RevOps: Plan design, systems, reporting

A formalized Sales Compensation Committee, especially in larger organizations, can align all stakeholders and make data-backed decisions on plan design, exceptions, and disputes.

Sales Compensation Best Practices for 2025 and Beyond

Sales compensation isn’t static. With changing buyer expectations, hybrid sales models, and growing adoption of AI and analytics, the rules of effective compensation are evolving. Companies that treat their comp plans as living systems are the ones gaining a strategic edge.

This section distills the most important sales compensation best practices to optimize sales compensation plan effectiveness.

1. Align Compensation with Sales Motion and GTM Strategy

Your sales comp model should reinforce how you sell, not just what you sell.

• In a land-and-expand motion, prioritize longer-term incentives (e.g., bonuses on expansion or retention)
• In product-led growth (PLG), reward usage milestones and pipeline influenced by CSMs or technical sellers
• For account-based strategies, create comp plans that reward multi-threading and deep account penetration

When compensation directly supports your go-to-market (GTM) strategy, you’ll drive the behaviors that fuel actual revenue outcomes.

2. Prioritize Simplicity and Transparency

Sales reps don’t have time for complex math.

If your plan needs a spreadsheet to explain every payout scenario, it’s too complicated.

Best practices:

• Stick to 2–3 core variables per role (e.g., quota attainment, expansion ACV, renewals)
• Use clear, consistent terminology across all plan documents
• Give reps real-time access to earnings data via a dashboard or portal

Simplicity builds trust, and trust fuels performance.

3. Revisit Plans Quarterly, Not Annually

The market shifts fast. Your comp plan should, too.

Top-performing companies now conduct quarterly plan reviews that ask:

• Are quotas still realistic?
• Are payouts still aligned with current priorities?
• Is rep behavior supporting strategic growth?

These check-ins don’t always require structural changes, but they help you adjust plan management in real-time. Companies that treat compensation as a continuous feedback loop outperform those that revise plans only once a year.

4. Introduce Flexibility for Hybrid Roles

As inside, field, and digital sales continue to blur, hybrid sales roles are emerging with mixed responsibilities across prospecting, closing, and success.

Instead of forcing these reps into a legacy model, build modular comp plans that include:

• Base pay + core commission
• Add-ons for activity-based metrics or shared team goals
• Incentives that evolve with rep focus (e.g., expansion quota once client is onboarded)

This flexibility keeps reps motivated as their roles shift, while keeping comp structures aligned with actual output.

5. Use Data to Identify and Address Gaps

Good sales comp plans are data-driven. Great ones are data-managed.

Use tools like Everstage Analytics to track:

• Commission-to-revenue ratio by segment
• Quota attainment distribution across teams
• Payout-to-performance correlation (Are top performers actually the top earners?)

These metrics help uncover whether your plan is rewarding the right reps, supporting scalable growth, and staying cost-efficient.

Regular performance audits also help eliminate hidden gaps in equity, overpayment, or rep disengagement.

6. Ensure Compliance and Governance from the Start

Reps are increasingly distributed. Regulations are tightening. The risk of non-compliance is higher than ever.

Make sure your plan is:

• Legally sound (pay equity, non-discrimination, payout timing)
• Documented and signed digitally by all reps
• Auditable, with a clear chain of logic for all payouts and accelerators

Governance isn’t just about protecting the company; it builds credibility with your sales team.

The Future of Sales Compensation: What’s Changing? 

Sales compensation is a strategic system that’s adapting to a new era of selling. As organizations embrace product-led growth, hybrid sales teams, and data-driven decisions, the traditional “set it and forget it” compensation model is quickly becoming obsolete.

Here’s what’s changing and how to stay ahead of the curve.

1. AI and Predictive Compensation Modeling

Artificial Intelligence (AI) is transforming compensation planning from reactive to proactive.

Modern compensation platforms now use predictive modeling to:

• Forecast commission liabilities based on pipeline health
• Identify reps at risk of missing quota before quarter-end
• Model “what-if” scenarios for plan changes or quota shifts

According to McKinsey, over 78% of companies now use AI in at least one business function, with compensation emerging as a top area for predictive optimization.

AI also helps RevOps and Finance simulate comp plan changes in real-time, testing how tweaks in accelerators or territory design will affect both motivation and cost.

2. Personalized Plans for Individual Reps

A one-size-fits-all compensation model no longer works, especially in hybrid sales environments.

We’re seeing a shift toward personalized sales compensation, where plans are:

• Tailored to the rep’s tenure, role complexity, or territory maturity
• Adjusted quarterly based on rep feedback and business needs
• Optimized for growth-stage companies that need agility without chaos

This level of flexibility improves performance and boosts retention and engagement, particularly for top reps who want more control over how they earn.

ICONIQ’s 2023 Sales Compensation report emphasizes that high-performing companies increasingly align comp plans to rep preferences and productivity style, especially in remote-first teams.

3. Integration with Sales Enablement Tools

Sales compensation is becoming more interconnected with enablement platforms and it’s changing how reps engage with their earnings.

Key integrations include:

• CRM-based commission previews (e.g., “how much is this deal worth to me?”)
• LMS-triggered incentives (e.g., bonuses for completing key certifications)
• Slack or Teams alerts tied to milestone payouts

When compensation lives inside the rep’s workflow, it becomes a daily motivator, not a quarterly surprise. And when integrated with enablement, it reinforces the behaviors the business values most.

Conclusion 

Sales compensation isn’t just about paying for performance; it’s a powerful lever to drive alignment, retention, and business growth. The most effective plans are simple, data-driven, and adaptable to changing business needs. 

As sales models evolve, so should your approach to compensation. Keep it transparent, tie it to real outcomes, and revisit it often. 

Whether you're scaling a startup or optimizing an enterprise team, compensation done right becomes a strategic advantage. So ask yourself: is your sales compensation plan truly working for you, or just working for now?