5 Things to consider consider when designing effective sales incentive plan

Rising up the compensation ladder is an excellent motivator for the growth of any organization. When business leaders laid down the right strategy, it can boost profits, optimize performance, control spendings, and increase period-over-period outcomes.

Having an effective incentive compensation strategy in place leaves a great impact on each and every level of your organization, and hits the goals.

However, many companies in certain circumstances find it hard to implement the best practices, especially during the planning cycle. Here are some common design mistakes that many reputed firms will commit in designing sales incentives plans.

Using Old Metrics

Usually, many sales enterprises design plans on the basis of outdated metrics like the ones that only sales representatives can leverage. Instead, you should shift your focus on compensating for an exceptional customer experience. At the end of the day, treat your client the way you want to be treated. It would be even good if you can just deal with one customer at a time.

Compensating on Irrelevant Metrics

Woohoo! You might get excited when your sales representatives come back from the trade show with 50 leads in their sales bucket. The catch is, these could be cold leads. So, if you are going to give a reward for those 50 leads, you are falling for an unwanted metric. It will be a waste of your time and money.

Failing to Compensate Key Contributors that Impact Client’s Success Rate

If you only reward your high-performing hunter representatives for closing deals stupendously. You are committing a mistake here. Because ‘hunters’ wouldn’t even exist without your ‘prospectors’ who actually get you those quality leads and keep your sales pipeline full. Thus, compensate all those who are involved in closing the deals.

Compensating Too Late to Effect Change

Don’t linger on motivating your sales reps with rewards. The longer you wait, the less likely your reps will act on that compensation positively. This would even reduce their motivation to perform to the best of their abilities and this in turn, would increase the number of resignations among sales reps.

Offering Only Monetary Incentives

Definitely, money brings joy but something non-monetary adds to that joy always. In the words of Dan Pink, “Just using financial incentives creates a focus that adversely impacts performance.” Broaden your vision and emphasize rewarding your employees with ‘soft’ incentives too. For example, giving your reps the option to work outside the office, or a paid membership to a club.


To design effective sales incentive plans, you need to refrain from committing the above-mentioned sales compensation mistakes. The key to doing this is to use the data to plan and strategize the compensation processes.

By reducing errors related to compensation, you can design a powerful sales compensation strategy that not just drives your revenue but business growth as well.


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