Aligning sales compensation plans with the needs and motivations of the sales team is crucial.

If incentive plans fail to inspire desirable selling behaviors, quotas, and organizational objectives become more difficult to achieve.

Yet leaders identified failure to motivate reps as their most challenging issue with comp plans in our 2024 sales compensation report. The same study revealed that another 30% admitted their plans don’t motivate reps when asked directly.

Part of the challenge is that not all reps are motivated by the same incentives.

Some prefer higher commissions, while others are inspired by personal interest or recognition of accomplishments. So, how can a leader align sales compensation plans with sales rep preferences?

We’re here to help.

Read below for insights into the components sales reps genuinely desire in their compensation plans, and take the guesswork out of motivating your sales reps.

The Disconnect Between Sales Reps and Leadership

The disconnect between sales reps and leadership regarding compensation plans is common. We found that 44% of sales reps aren’t motivated by their comp plans.

This happens for various reasons.

First, they may not understand them because they are too complex. Overly complicated plans occur frequently, especially in scaling organizations. Additionally, reps may feel that plans aren’t realistic or that the incentives aren’t what they really want.

But motivation is a balancing act.

Most salespeople are motivated by a combination of intrinsic and extrinsic factors, including cash and non-cash rewards. So, it’s little wonder that a plan that only includes monetary rewards may not motivate the entire sales team.

Our study also revealed that 75% of sales reps don’t trust that they are paid fairly. This also can result from an overly complex plan but can be resolved by clear and transparent communication.

Understanding the sales team’s perspective is crucial to creating effective incentive structures that motivate your reps, inspire desired selling behaviors, and drive quota and goal achievement. The best way to do this is by having conversations about what motivates them.

You can start by asking yourself if this plan would motivate you personally. Then, gather rep feedback through anonymous surveys, one-on-ones, team meetings, and focus groups.

Essential Components of a Sales Rep-Centric Comp Plan

Then, after you’ve collected feedback from your team, you can consider including these elements in your compensation plans to make them more sales rep-centric.

Accelerators

An accelerator is a sales incentive that rewards reps for exceeding their sales goals. This compensation element motivates salespeople to sell more by awarding bonuses or other incentives for meeting or exceeding a specific goal.

This type of compensation is also attractive to candidates during the hiring process. “I look for Individual accelerators for exceeding quota rather than only team-based goals,” said Account Director Alana Dispena.

Quota Relief

Quota relief is also something worth considering.

Defined, quota relief is a limited-duration quota reduction designed to give a rep or leader a fair chance at achieving their on-target earnings.

Historically, leaders have enabled quota relief on a case-by-case basis when a salesperson or leader experiences circumstances that make achieving quota exceedingly tricky, such as illness, vacation, or family emergency.

However, we’ve noticed teams offering this more frequently across sales teams as quota relief can reduce sales pressure, boost rep retention, and improve morale.

“Scott Leese and the Qualia team introduced me to quota relief which was one of the most refreshing additions to a comp plan I’ve seen,” said Account Executive Caleb Cote. “Being able to guilt-free unplug on a trip makes a world of difference.”

Account Executive Libby Clary added, “I like the ability to adjust quota to accommodate using the unlimited PTO policy. I worked one place where we could apply for ‘quota relief’ once/year to go on vacation and not worry about not meeting goal.”

Uncapped Commissions

Uncapped commissions are also a good tactic, as long as you clearly define on-target earnings for your reps, too. Especially when you are hiring new team members, it’s crucial to provide an accurate base salary plus on-target commissions earned by the average rep, otherwise, you aren’t being fully transparent.

Overstating potential earnings or simply advertising “uncapped commissions” in sales role job postings doesn’t necessarily help you attract top talent, and it only shows that you don’t understand how to pay salespeople. Those you hire this way will likely become disappointed and demotivated if their earnings fall short of their expectations. This ultimately reduces sales performance and increases rep turnover.

Recognition and Rewards

Remember that although sales reps are motivated by money, most salespeople prefer a mix of monetary and non-monetary incentives. Average and lower-performing sales reps may be more motivated by rewards and recognition. So, including cash and non-cash rewards in your compensation plans increases its effectiveness.

Examples of non-monetary incentives include public recognition, physical items like tech gadgets or coffee brewers, professional development courses, gift cards, or activities and events like President’s Club. These incentives also inject a bit of fun into receiving rewards.

Competitive or Comfortable Base

Base pay is a set amount of money that a rep is paid consistently, that is not influenced by performance, and typically represents 50% of a rep’s pay. Base pay is a key consideration for most sales rep candidates to ensure sustainability and stability on an ongoing basis regardless of economic and market conditions.

As Elizabeth explains, “In my industry, advertising sales, the ramp-up time is lengthy,” said Elizabeth Striegel. “A healthy base salary level is important to me. Having a base that I can live comfortably without the freakout has been helpful over the years for the quarters that aren’t so great.  I’m wired to be motivated to make more, but without the lost sleep at night about how to pay bills, etc.”

Transparency and Communication

Lastly, clear and transparent communication regarding compensation plan details and performance metrics is essential to ensure sales rep understanding, buy-in, and motivation.

This drives the desired sales behaviors and quota and organizational objective achievement.

It is beneficial to distribute easy-to-understand plan documentation in various formats that include commission calculation examples, payout rules, and performance metrics.

Then, offer multiple opportunities for reps to present questions and provide feedback on the plan. Finally, documenting and gaining rep sign-off on a compensation agreement provides them with an easy reference and prevents future misunderstandings.

Help Reps Visualize Comp Plans Progress

Historically, leadership has struggled to create compensation plans that motivate sales reps.

Aligning compensation plans with the needs and motivations of your salespeople is essential to resolving this challenge.

The best way to find out what they want is to gather feedback from your sales teams to create more effective incentive structures. Then, include essential components to develop rep-centric comp plans that will motivate your team members and drive goal achievement.

QuotaPath is a compensation tool that encourages and motivates reps to better understand how they are paid and how to make the most in commissions. Start a free trial or schedule time with a team member to see for yourself.

You have a great sales team. You have a great and varied product offering. So, why are your sales not delivering the results you would expect? It may all be down to poor—or non-existent—sales performance management.

In this article, we’ll run you through sales performance management, its benefits, and how you can implement it for your organization. Without further ado, let’s dive right in.

Understanding Sales Performance Management

Sales Performance Management (SPM) is a comprehensive program designed to manage, optimize, and monitor sales performance within an organization. It includes strategies, tools, and processes that enable sales leaders to create, monitor, and assess the effectiveness of sales operations. Nowadays, it is essential in organizations of any size. 

Sales Performance Management (SPM) examines the entire sales process from all angles, identifying ways to maximize sales efficiency and effectiveness. SPM combines various techniques and technologies to align sales processes with wider business strategies and goals and, in return, increase revenue growth. 

This is a holistic management process—from sales planning to tracking performance, coaching, and incentive compensation management. The objective should be that the salesforce is motivated, informed, and able to reach their targets.

Key Components of Sales Performance Management

Let’s start by reviewing the main components of managing sales performance. Knowing these key components is important for improving your sales team’s success.

Sales Planning and Forecasting

This is all about setting realistic sales targets based on historical information, market analysis, and sales trends. 

This is where Marketing Data Platforms can also help by providing valuable data insights. MDPs consolidate historical data from multiple marketing campaigns and various points of interaction with customers to identify trends and possible goals that can be reached within a business. They also provide businesses with an in-depth analysis of the market to better understand market conditions and customer preferences.

Proper sales planning goes a long way in resource allocation and budgeting plans and also establishes benchmarks for performance.

Sales Performance Tracking

Any business has to seriously consider continuous tracking of sales activities and results. Monitoring sales performance shows just how effective various selling methods are, as well as performance on an individual level by sales team members. 

Organizations can assess what is driving results in their sales activities and what is not. This ongoing observation offers room for timely adjustments, ensuring that sales targets are met and resources are used efficiently.

Additionally, monitoring financial metrics such as Days Sales Outstanding (DSO) is essential as it reflects how quickly cash flow is generated from sales, impacting overall economic health.

Sales effectiveness involves evaluating different selling methodologies, such as online marketing campaigns, sales techniques, direct selling, and promotional events. A business can then compare the results to establish which methods yield positive results and allocate its resources accordingly.

Individual performance indicators, such as the number of calls made, the number of deals closed, and subsequent revenues, may provide insights into each sales team member’s performance. This will not only easily allow identification of top performers but also signal where to provide others in the team with support or training.

For example, as part of Sales Performance Management, you would measure metrics like sales cycle length, and use the data from sales prospecting tools to determine how well your sales reps are turning prospects into qualified leads and, ultimately, customers.

Sales Coaching and Training

Training and development programs should be continually enhanced to keep the sales force able, trained, and knowledgeable. Sales coaching can identify areas that require improvement and help sales reps achieve their full potential.

Sales methods and customer preferences change over time; hence, the updates ensure that the sales reps utilize the current techniques. These programs enhance the team’s ability, teach new skills through workshops and courses, and increase product knowledge.

Sales coaching is essential in this process. Coaches assess performance, give personalized feedback, and identify areas for improvement. They help sales reps develop skills, set goals, and provide motivation and support to achieve their best. 

The benefits include better sales performance, higher job satisfaction, and change adaptability. In other words, continual training and coaching improvement make sales teams effective and efficient.

Incentive Compensation Management

The design and management of incentives are considered core areas within Sales Performance Management. They revolve around creating and delivering incentives to motivate sales teams to be better, more motivated, and tuned into organizational goals.

The incentives provided drive sales teams, making them feel appreciated and motivated. The incentives help ensure that the sales team’s actions align with the business’s goals. That way, everyone does their work with a common interest in mind. 

A well-designed incentive program should encompass financial incentives like commissions and bonuses, and non-financial rewards like recognition and career development opportunities. 

Properly designed incentive programs lead to better sales performance, greater productivity, higher rates of employee satisfaction and retention, and a competitive edge in attracting top sales talent. 

For example, in a company that sells communication systems, incentive compensation management might look like tiered commission rates based on higher sales volumes and fixed quarterly and annual bonuses upon exceeding set targets. 

There might also be special incentives for selling high-margin products like a new IP phone system for small business, as well as team-based performance bonuses to encourage collaboration.

Data Analytics and Reporting

Leverage modern data tools to understand your sales performance better. You can scrutinize all the sales data, customer behavior, and dynamics within the market for any possible trends or patterns. These tools automatically create highly detailed reports and easy-to-read dashboards. 

You can also use B2B marketing tactics to track content engagement, email campaign performance, and social media interaction; this way, you know how all of these activities are impacting your lead generation and conversion rates.

With this information,  you can make informed decisions based on accurate information about what to do next.

Territory and Quota Management

Another key feature of an effective sales performance management system is that it should also manage territories and quotas. Sales territories need to be well defined so that a company can exploit maximum coverage in every single area or particular region without overlap or regions left out. 

Setting specific sales quotas for the sales reps motivates them to meet those targets and holds them accountable for their performance. It also increases market coverage, lessens internal conflict, and develops more productivity within the sales team. 

Regular adjustments of quotas and territories based on performance data can help adapt to changing market conditions while ensuring that company resources are used most effectively and sales targets are met consistently.

Why Is Sales Performance Management Important?

How your business brings its products or services to market is as important as the products themselves. Even high-quality products rarely sell themselves. By contrast, a great sales force supported by excellent sales techniques can sell just about anything. Appreciating this reality, top sales executives put as much emphasis on innovating their sales approach as on the products they offer. 

Sales Performance Management helps you develop and implement sales strategies affecting each stage of the selling cycle, which will influence each step of the sale. Successful management of this broad scope of sales performance will allow you to introduce new strategies and techniques to drive your sales team toward success.

Here are some reasons why your organization needs an SPM system.

Improved Sales Effectiveness

An effective Sales Performance Management system should make the sales process more efficient. With clearer goal setting, progress tracking, and ongoing feedback, sales teams can focus on activities that provide high business value and generate revenue. This, in turn, makes sales more effective and increases the number of sales closures.

Better Sales Forecasting

Accurate sales forecasting is the key to strategic planning and resource allocation. Advanced analytical capabilities and historical data used in Sales Performance Management tools help in predicting future sales trends. This enables organizations to make educated decisions and minimize risks.

More Transparency and Accountability

Sales Performance Management systems provide greater transparency into sales activities and performance metrics. This breeds accountability on the part of sales reps themselves, as they are aware of how their performance is measured. It’s also easier to tell which representatives are at the top of their game and in which area improvements need to be made.

Improved Fit With Business Objectives

Sales Performance Management aligns strategies in sales with overall business targets. By setting clear targets and KPIs, organizations may help ensure that the selling team’s efforts are set against and running parallel to the company’s growth objectives. This alignment is critical in driving sustainable business success.

Motivated and Engaged Sales Teams

Incentive compensation forms an integral part of Sales Performance Management and has a direct bearing on the motivation of a sales team. Well-designed incentive programs drive high flyers and create healthy competition, leading to a well-motivated and responsive workforce. And, in turn, this translates into higher levels of engagement and productivity.

Data-Driven Decision Making

Being data-driven is a significant advantage for any organization. A key part of this is having access to accurate and timely information. Sales Performance Management systems provide detailed analytics and reporting systems, allowing sales leaders to make well-informed decisions. This leads to better strategies and more effective resource utilization.

Continuous Improvement

Sales Performance Management is not a one-time event but a continuous exercise of evaluation and improvement. Regular performance appraisals, feedback sessions, and training programs help in identifying gaps and implementing corrective measures. This keeps a culture of continued improvement within the organization so that the sales team is always agile and adaptive to changes in market conditions.

Implementing Sales Performance Management

Implementation of the Sales Performance Management system calls for proper planning and execution. Keep reading to find out more about this.

Define Clear Objectives

It is good to start by laying down what you want from your Sales Performance Management system. What are you looking to accomplish? Is it increased sales effectiveness, better financial forecasting, or perhaps greater sales team motivation? Clear objectives will drive the entire implementation process.

Choose the Right Tools

Choose the Sales Performance Management tools that fit your business needs and objectives best. There are quite a good number of software solutions in the market that have varied features and capabilities. Look at the functionality of these tools, ease of use, and integration capabilities.

You can also consider incorporating additional tools like account based marketing platforms that can further enhance your sales strategies. With these, you can target high-value accounts, run personalized campaigns, and get detailed data insights. 

Engage Stakeholders

Engage main stakeholders, for example, the sales leaders, representatives, and IT personnel within the organization, to ensure you have their buy-in and input into the Sales Performance Management system. Conduct workshops and training sessions to help everybody within an organization understand the benefits and functionalities of the new system.

Set Up Key Performance Indicators (KPIs)

Now, decide on your KPIs to quantify sales performance. They should be well-connected to your business goals and reflect how well the sales team performs. Common KPIs include revenue, conversion rates, cost of customer acquisition, and average deal size. 

Develop Training Programs

Train your sales teams on how to use the Sales Performance Management tools and understand the performance metrics. Continuous training and development programs will keep the sales team updated with current strategies and techniques. 

Monitor and Adjust

With the sales performance management system in action, operational effectiveness can be monitored regularly. Gather feedback from sales reps and sales leadership on problem areas or potential areas of improvement. Be prepared for adjustments in the system to keep it tightly lined up with your objectives.

Key Features of Sales Performance Management Software

Sales Performance Management (SPM) software is central to empowering teams and aligning sales efforts with strategic business objectives. Here are key features to look for:

Sales Forecasting and Planning Tools: These tools allow sales leaders to set realistic targets by analyzing historical data and current market trends. Forecasting modules use AI to project future sales performance, helping businesses optimize resources.

Performance Tracking and Analytics: Tracking tools monitor sales activities, giving a clear view of team productivity, individual performance, and customer engagement. Advanced analytics help identify high-performing reps, lagging areas, and successful sales strategies.

Incentive Compensation Management: Effective SPM software includes features for designing, tracking, and distributing commissions and bonuses. This motivates reps by ensuring they understand their earning potential and how it ties to their achievements.

Sales Coaching and Development: Many SPM solutions offer coaching tools to set goals, provide feedback, and assess skill gaps. Regular coaching improves rep performance, enhances skill sets, and aligns reps with evolving sales methodologies.

Automated Reporting and Dashboards: Real-time reporting allows leaders to view metrics like conversion rates, quota attainment, and revenue trends, making data-driven decisions easier and more accurate. Intuitive dashboards make data accessible and actionable for sales reps and managers.

Territory and Quota Management: This feature allows leaders to assign territories, set quotas, and adjust targets as needed. It ensures balanced workload distribution and optimizes coverage, minimizing overlap and missed opportunities.

CRM Integration: SPM software integrates seamlessly with CRM systems (like Salesforce and HubSpot), centralizing data from lead generation to deal closure and making sales data accessible across the organization for enhanced performance insights.

How to Improve Sales Performance

Improving sales performance requires a strategic mix of technology, motivation, and training:

• Set Clear Goals and KPIs: Define measurable KPIs like conversion rates, average deal size, and quota attainment. Goals aligned with company objectives give teams a unified direction and help measure progress effectively.
• Invest in Training and Development: Regular training keeps reps updated on sales techniques, product knowledge, and customer preferences. Sales coaching sessions help reps refine skills and develop strategies for prospecting and closing.
• Enhance CRM and SPM Integration: An integrated CRM and SPM system provides visibility into the entire sales pipeline, allowing managers to track real-time performance data and making it easy to adjust strategies as needed.
• Implement Data-Driven Incentives: Design compensation plans that reward desired sales behaviors, such as cross-selling or upselling high-margin products. Data-driven incentives keep teams motivated and aligned with business goals.
• Leverage Analytics for Continuous Improvement: Use performance data to refine processes. Sales leaders can evaluate winning strategies and make improvements to weak areas, ensuring continual growth and adaptability to market changes.
• Promote a Culture of Accountability and Collaboration: Encourage reps to track their own performance and set personal goals. Sales performance transparency fosters a culture of accountability and teamwork, which drives higher overall productivity.
  

B2C vs B2B Sales Performance Management

Sales performance management differs significantly between B2C (Business-to-Consumer) and B2B (Business-to-Business) environments due to customer expectations, sales cycles, and deal complexity:

The Strategic Advantage of Sales Performance Management

There isn’t any modern sales organization that wouldn’t benefit from a Sales Performance Management tool. It offers a systematic method for managing and continually enhancing sales performance, ensuring that sales teams stay motivated, aligned with business objectives, well-prepared, and informed.

Investing in a comprehensive Sales Performance Management system is not just a strategic move; it’s a must for any organization looking to thrive amidst today’s changing business landscape. Whether you’re an SMB or a large enterprise, SPM can help you release the real potential of your sales team and achieve your revenue.

Author Bio:

David Becker – Growth Marketing ManagerDavid Becker is a Growth Marketing Manager at Leadfeeder, a powerful website visitor analytics software. He helps drive Leadfeeder’s growth strategies and demand generation with a keen focus on mental health and well-being in the workplace. David excels in creating impactful marketing campaigns, analyzing trends, and boosting customer engagement for the team.

75% of sales reps don’t trust they are paid fairly.

This isn’t surprising since 60% of reps take 3 to 6 months to fully understand how they earn variable pay from their comp plans, and 22% of sales reps have at least one commission dispute yearly.

Those who don’t understand how they earn incentives and experience errors in their pay statements are unlikely to be motivated by their compensation plans. Ultimately, this results in reps missing quotas and organizations falling short of their objectives.

Interestingly, leaders identified “too hard to execute” as their biggest challenge regarding sales compensation planning. This is because plans are too complex, unrealistic, and unattainable, according to our report.

Commissions become difficult to calculate, track, and pay, resulting in discrepancies and operational inefficiencies.

However, the same study revealed sales reps trust their compensation plans more when they use commission software. That’s in addition to the gains from leadership streamlining compensation management when they use commission software.

Sales incentive automation involves using technology and commission software solutions to streamline sales compensation management, commission calculations, and disbursement. It eliminates manual processes, increases accuracy, and boosts trust, transparency, and performance visibility.

Below, learn more about how sales incentive automation can make your job easier.

What is Sales Incentive Automation?

Sales incentive automation is the seamless integration of commission software with your sales tech stack to retrieve data required for automated commission calculations. It automates tasks like commission calculations, payout processing, and performance measurement.

Signs that it may be time to automate sales commissions include:

• Error-Prone Calculations: Are you experiencing frequent errors or inconsistencies in your commission calculations due to manual processes? This can lead to frustration and distrust among your sales team.
• Time-Consuming Process: Does calculating commissions and managing incentive programs take up a significant amount of your team’s time? Automating these tasks can free up valuable resources for more strategic activities.
• Growing Sales Team: As your sales team expands, managing incentive programs manually becomes increasingly complex and time-consuming. Automation can help you scale your incentive programs efficiently.
• Complex Compensation Plans: Do your incentive plans involve multiple variables, tiers, or commission structures? Automating calculations ensures accuracy and simplifies managing these complexities.
• Lack of Transparency: Are your sales reps confused or frustrated by the lack of transparency around their earnings? Automating incentive programs can provide real-time visibility into performance metrics and commission calculations.
• Difficulty with Forecasting: Is it challenging to forecast sales performance and commission payouts accurately due to reliance on manual data analysis? Automation can provide real-time insights for better forecasting and decision-making.
• Desire for Improved Sales Performance: Do you want to incentivize specific sales behaviors and drive overall performance? Automating incentives can ensure clear alignment between rewards and desired sales actions.

If you’re experiencing one or many of the above, you should consider upgrading from a spreadsheet.

Key Benefits of Sales Incentive Automation

Implementing automation can streamline operations, boost accuracy, and drive exceptional results.

The advantages of using compensation management software include:

Increased Accuracy in Commission Calculations

Manual commission calculations are fraught with human errors that result in disputes and wasted time. These same processes also limit transparency and rep understanding of compensation plans. Automation eliminates errors from manual calculations, ensuring fair and consistent payouts.

Streamlined Compensation Management

Automation simplifies the entire incentive management process by eliminating manual calculations for commissions, bonuses, and other payouts. Additionally, it streamlines administrative tasks like multi-level approvals for reps, managers, execs, and finance, as well as payouts and reporting, ultimately saving time and resources.

Enhanced Trust and Transparency

Sales incentive automation provides real-time visibility into earnings and performance measurement, fostering trust between sales reps and management. Quota-carrying reps gain an understanding of how they earn commissions including when and how much to expect in their paycheck. Plus, sales managers gain full visibility into their own attainment, even when team members move between teams.

Real-time Forecasting and Attainment Tracking

Compensation management automation generates real-time data insights into sales performance, allowing for better forecasting and course correction. For instance, it provides executive- and rep-level sales commission reporting on pipeline forecast and quota attainment so leadership can visualize their sales team projections. It tracks how your team is progressing to plan and allows visualizations of total earnings, average effective rate, and plan attainment by rep.

Increased Alignment to Business Goals

Automation allows you to connect comp plans to key business metrics and gives visibility to team members so they can connect their work to the overarching goals. This improves sales reps’ understanding of compensation plans for greater buy-in, motivating them to progress toward milestone achievement and drive business goal attainment.

Model and Test Comp Plans

Sales incentive automation enables you to predict how much commission plans will cost your organization according to attainment bands and test future plan changes using past performance data. Compensation reporting and modeling tools allow leaders to measure and model the business value and performance of their revenue teams’ compensation plans.  

The ability to see real-time attainment trends, recognize performance deviations and predict new plan costs allows you to optimize sales team efficiency and build confidence in incentive structures. These automations save time and are more accurate than a series of compensation spreadsheets and reports from your CRM and payroll platforms for scenario modeling.

Reporting on Compensation

Compensation data can inform future comp plans and strategy by measuring the business value and performance of the sales team’s compensation plans and performance. This allows you to confidently optimize your sales strategy, streamline sales processes, and boost performance. For instance, you can spot hidden trends, benchmark performance, identify performance gaps, optimize product strategy, maximize profitability, and reward top team members.

Implementing Sales Incentive Automation with QuotaPath

QuotaPath is a sales incentive automation solution that simplifies compensation management and offers the following benefits.

• Integration with Tech Stack: Seamless data flow ensures accurate calculations and eliminates manual data entry. QuotaPath enables you to easily pull data from various data sources to your payment processing platforms.
  • CRM integration options include HubSpot, Salesforce, and Microsoft Dynamics. Other integrations include applications such as QuickBooks, Xero, Maxio, Oracle NetSuite, and spreadsheets.
  • Easily map your data with new plans using our Mapping Managers, which enables you to build a mapping template once to save, edit, and reuse anytime you need to add a plan.
  • See earning data directly in HubSpot or Salesforce without toggling between systems.
    
• Customizable Compensation Plans: Design flexible plans that adapt to your needs and sales goals as you scale in our system with our plan builder — or use one of our templates.
  
• Optimizing Sales Performance through Automation: Automate tasks and workflows to free up time for strategic initiatives. QuotaPath enables you to surface tasks needed at the rep and admin levels to individual home dashboards and ensure accurate and on-time payouts.
  
• Measuring Compensation Plan Performance: Track key metrics to evaluate your incentive programs’ effectiveness and identify areas for improvement. QuotaPath offers reporting options, including Deal Earnings vs. Deal Value, Attainment Over time, Earnings vs. Attainment, and Top Commission Rates Per Deal.
  
• Encouraging Accountability and Performance: Real-time data visibility motivates reps and fosters a performance and sales accountability culture. For instance, multi-level approvals enable reps to sign off on their upcoming commission checks before they are finalized. This creates ownership and streamlines the approval process for those who conduct final signoffs.

Getting Started with QuotaPath

Sales incentive automation eliminates manual compensation management processes and increases accuracy, trust, transparency, and performance visibility. QuotaPath is an all-in-one sales incentive automation tool that simplifies compensation management from start to finish.

Getting started with QuotaPath is easy. Build your sales compensation plans from scratch or use a free comp plan template from our compensation plan template library. Sync your CRM or data source by selecting your integration, authenticating it, and mapping it. Then, you can invite your team members and start automating your sales compensation management. Get started with a free QuotaPath trial or schedule time with a team member to learn more.

Explore the latest review of the best revenue operations and intelligence software providers for commissions.

Criteria for Comparing Revenue Operations Software Providers

Consider the following criteria when selecting Revenue Operations and Intelligence commission automation software tools.

Commission Management Features

• Commission Structure Configuration: Can the software handle complex commission structures with tiers, bonuses, and territory rules?
• Adaptability: How does the platform support changes as your team scales?
• Automated Commission Calculations: Does the software automate commission calculations based on pre-defined rules and sales data?
• Real-Time Commission Tracking: Can salespeople track their commission potential and progress in real time?
• Reporting and Analytics: Does the platform offer reports and analytics on commission payouts, team performance, and quota attainment?
• Integration with CRM & Payroll Systems: Does the software seamlessly integrate with your existing CRM and payroll systems, streamlining data flow?

Revenue Operations Integration

• Data Integration: Can the software integrate with other RO&I tools like forecasting, pipeline management, and deal tracking solutions?
• Unified Sales Performance Management: Does the platform offer a unified view of sales performance, combining commission data with other key metrics?
• Improved Sales Visibility: Does the solution enhance sales leadership’s visibility into team performance and commission payouts for informed decision-making?
• Workflow Automation: Can the software automate tasks related to commission calculations and approvals, improving efficiency?     
• Scalability for Growth: Is the solution scalable to accommodate your growing sales team and evolving commission structures?

Additional Considerations

• Ease of Use: How user-friendly is the commission software for both salespeople and sales management?
• Security and Compliance: Does the platform meet your security and data compliance requirements?
• Customer Support: What level of customer support does the software provider offer for implementation, training, and ongoing issues?
• Pricing Model: Does the software offer transparent pricing that aligns with your budget and sales team size?   
• Free Trial or Demo Availability: Does the provider offer a free trial or demo to allow you to test the software’s capabilities before committing?

Next, let’s compare each vendor based on the above considerations.

QuotaPath

Capterra 4.5 / G2 4.7 / TrustRadius 8.6

QuotaPath’s commission tracking and sales compensation management software creates ownership and accountability across RevOps, Finance, and Sales while managing and tracking variable pay. Described by customers as “easy to set up and use,” QuotaPath’s smart UX ensures admins can quickly adjust sales comp as business needs change. This also empowers reps to reference deals for commission, forecast potential earnings, and see quota attainment progress, motivating them to close that next deal.

Fit for sales compensation plans of all complexities and companies of all sizes, QuotaPath has no minimum user requirements.

Commission Features (reporting, modeling, and testing)

QuotaPath’s compensation reporting and modeling tools enable leaders to measure and model the business value and performance of their revenue teams’ comp plans.

See real-time attainment health, identify performance anomalies, and predict new plan costs in one place to optimize your team’s success and gain confidence in your compensation structures.

Custom reporting provides analytics and insights that facilitate data-driven decisions while plan performance modeling simplifies sales optimization to improve outcomes.

Integrations

QuotaPath’s self-serve integrations enable you to add and edit technology connections essential to your commission process, including data warehouses, spreadsheets, business intelligence, and payment and ERP systems.

For instance, CRM integration can be established with platforms like HubSpot and Salesforce as well as data sources such as Excel, Google Sheets, Stripe, and Chargebee.

Onboarding and Ease of Use

QuotaPath is known for fast and easy onboarding plus ease of use. Implementation timeframe estimates are listed on QuotaPath’s website along with transparent pricing.

Reviewers on sites like G2 stated that “Deployment was so easy that I was able to get around 99% complete with minimal support. The integration with Salesforce is extremely easy to understand and complete we were up and running within just a couple of hours of work from myself.” And, another reviewer stated, “The product team has made onboarding simple.”

Plus, “The ease of use of the platform is excellent…Their customer support is top-notch. I know I will always get my questions answered. They also have great resources available to help guide our comp strategy and decision making.”

Workflow Automation

QuotaPath’s workflow automation tools facilitate incentive payment calculations on multi-year deals, renewals, demos, specific products, and users. Sales commission automation in QuotaPath tags sales reps involved in each sale, tracks commission earnings, provides transparent sales commission reporting to sales reps and allows them to forecast their future earnings.

Additional QuotaPath automation tools include in-app compensation question and dispute resolution, deal approval, scheduled payments, and payout eligibility rules. And commissions amortization, pipeline and earnings forecasts, real-time attainment and effectiveness rates, and team leaderboards.

Support

QuotaPath’s support staff consists of Customer Success and Account Management agents available to guide implementation and provide best practices at key milestones. Live chat, an in-depth knowledge center, and monthly training webinars are available as part of QuotaPath’s highly-rated customer support model that continues throughout the customer’s entire engagement.

Help designing commission structures for a new team or compensation plan is easily accessible through QuotaPath’s ungated resource Compensation Hub, featuring a library of adjustable sales compensation plan examples.

Reviewers on sites like Capterra, G2, and TrustRadius reported, “When I needed customer support, their chat feature within the application with one of their reps was incredibly helpful.”

Pricing Model & Free Trial

QuotaPath lists transparent tiered pricing for a range of business sizes from startup to enterprise on its website, clearly stating what is included. Plus, QuotaPath offers a 14-day free trial is available enabling organizations to try the platform before becoming a customer with no credit card required.

Spiff

Capterra 4.7 / G2 4.7 / TrustRadius 8.8

Spiff commission software enables finance and sales operations teams to self-manage complex incentive compensation plans with ease. The Spiff platform is designed to build trust across organizations, motivate sales teams, increase visibility into performance and earnings, and ultimately drive top-line growth.

Commission Features (reporting, modeling, and testing)

Spiff enables organizations to generate custom reports incorporating metrics imported from business intelligence platforms or to use pre-configured reports, then visualize them on dashboards. These analytics and insights support data-driven decisions for modeling effective comp plans. The Spiff platform also allows the testing of new compensation plans against historical performance data confirming they won’t break the budget.

Integrations

Spiff offers CRM integration options as well as ERP, payroll, HCM, and other systems for real-time updates. Integration options include Salesforce, HubSpot, and Excel.

Onboarding and Ease of Use

Although most reviewers felt that Spiff was easy to use, some reported that “the initial setup and configuration are complex.” Another reviewer stated that “Improving the onboarding experience with more comprehensive tutorials or dedicated support resources could help alleviate this challenge and ensure a smoother transition for new users.”

Workflow Automation

Spiff streamlines workflows and automates complex commission structures. They offer real-time visibility for sales teams to drive performance. Spiff facilitates in-app compensation questions and dispute resolution communication and collaboration. Approval workflow automations and prescheduled reports are also possible with Spiff.

Support

According to Spiff’s website, there are additional fees for anything beyond basic support.

Spiff’s support received mixed reviews on review sites. Reviewers were either very happy with the customer support they received or reported that it was slow, with one reviewer reporting “they took over two weeks to attend to my ticket.”

Pricing Model & Free Trial

There is no pricing model or rates posted on Spiff’s website. Our research revealed that they offer a one-size-fits-all rate plan and no free trial.

Everstage

Capterra 4.9 / G2 4.8 / TrustRadius 9.4

Everstage is a Sales Commission Software that helps drive business outcomes and profitable growth through incentives and streamlined commission administration.

Commission Features (reporting, modeling, and testing)

Everstage’s commission features include standard and custom reporting to inform data-driven decisions. The Everstage platform allows organizations to model commission plans before publishing them using historical performance data. Then it enables potential comp plan testing to ensure they meet budgetary requirements.

Integrations

Everstage offers accounting, database, HR platform, and CRM integration options including Salesforce, HubSpot, Quickbooks, and Chargebee.

Some reviewers cited that “sometimes the data gets outdated and stuck, especially at the end of the month and the data sync with Salesforce and Everstage gets delayed.”

Onboarding and Ease of Use

Everstage is user-friendly and easy to set up and implement according to reviewers.

Workflow Automation

Everstage provides sales teams with real-time visibility of their quota attainment and earnings through reporting, forecasting, and leaderboards to motivate results. Reporting streamlines performance tracking by delivering analytics and insights for sales optimization. Everstage also automates commission calculations, approvals, user management, and compensation query and dispute resolution.

Support

According to the Everstage website, support includes a dedicated implementation team and 24×5 multi-channel support. No negative reviews were found concerning Everstage’s support.

Pricing Model & Free Trial

No fee structure or pricing was found on the Everstage website and there is no free trial offered.

Palette

Capterra no reviews / G2 4.9 / TrustRadius no reviews

Palette automates sales commissions, preventing errors, and provides sales teams with real-time visibility into commission accruals and payouts. Built to handle even the most complex commission plans, Palette enables businesses to trigger commission payouts based on customer payments and product usage thresholds.

Commission Features (reporting, modeling, and testing)

Palette offers reporting to inform data-driven decisions for sales optimization and compensation modeling. The platform enables testing of compensation plans to visualize their potential impact on cash flow and business objectives.

Integrations

Palette offers Billing, Database, and CRM integration options including Salesforce, HubSpot, QuickBooks, Chargebee, Google Sheets, and Excel.

Onboarding and Ease of Use

Reviewers report that Palette is easy to use and to implement.

Workflow Automation

Palette provides sales teams with real-time access for sales teams to personalized performance dashboards. The platform automates commission calculation and payouts, and generates monthly commission statements for team members. Palette also facilitates in-app dispute resolution, approval routing, and performance monitoring.

Support

Support includes initial training on how to effectively use the Palette application and training on new features as they are introduced. A limit of 3 one-hour admin training workshops per year is offered to onboard new Admins.  After initial onboarding, fee-based support for Professional Services is required for support such as training new users and assistance with comp plan creation.

Pricing Model & Free Trial

Palette offers a tiered subscription model based on business size. No pricing is published on their website and there is no free trial.

Qobra

Capterra 4.8 / G2 4.7 / TrustRadius no reviews

Qobra automates commission calculation, validation, and sharing while reducing errors and increasing sales motivation with real-time visibility to improve sales performance.

Commission Features (reporting, modeling, and testing)

Qobra enables reporting to help with data-driven decisions for compensation modeling and allows the performance of plan simulations and tests in a sandbox environment on the platform.

Integrations

Qobra offers data warehouse, financial, HR, and CRM integration options including Salesforce and HubSpot.

Onboarding and Ease of Use

Although there are a limited number of reviews on review sites, there are currently no negative reviews about setup and onboarding and a few reviewers mentioned that Qobra is easy to use.

Workflow Automation

Qobra offers sales teams real-time visibility to quota attainment through dashboards. The platform automates commission calculations, approvals, and dispute resolution.

Support

We couldn’t find any details concerning support services on Qobra’s site. However, reviewers reported positive and timely support experiences.

Pricing Model & Free Trial

No pricing model, rates, or free trial is offered on Qobra’s website.

Top Revenue Operations and Intelligence Commission Software

As we compare Revenue Operations and Intelligence commission automation software tools, all brands have similarities. However, QuotaPath offers the greatest flexibility and is the most adaptable commission system for businesses ranging in size from startup to enterprise as they scale.To learn more schedule time with a QuotaPath team member or start a free trial today.

RevOps tools FAQs

What is revenue operations software?

Revenue operations (RevOps) software is a platform that aligns sales, marketing, and customer success teams by streamlining processes, data, and analytics to drive predictable revenue growth. It helps organizations automate workflows, track key metrics, and improve forecasting by integrating with CRMs, commission tracking tools, and financial systems. By centralizing revenue data and optimizing operations, RevOps software enhances efficiency, eliminates silos, and ensures teams work toward shared business goals.

How does rev ops software fit into my sales/marketing tech stack?

RevOps software acts as the central hub that connects and optimizes your sales and marketing tech stack. It integrates with CRMs (like Salesforce and HubSpot), commission tracking tools (like QuotaPath), marketing automation platforms (like Marketo), and financial systems to ensure accurate data flow and streamlined processes. By automating reporting, pipeline forecasting, and compensation tracking, it eliminates silos between sales, marketing, and finance, ensuring that all teams work toward shared revenue goals. With RevOps software, companies gain better visibility, improved efficiency, and data-driven decision-making across their entire go-to-market strategy.

What should I look for in a rev ops solution?

When choosing a RevOps solution, look for seamless integrations with your existing CRM, commission tracking, and financial systems to ensure smooth data flow. Prioritize automation features for reporting, forecasting, and compensation management to reduce manual work and improve accuracy. Finally, choose a platform with clear visibility into pipeline performance and revenue metrics so sales, marketing, and finance teams can align on shared goals.

What is the best rev ops software?

The best RevOps software depends on your needs, but top options include QuotaPath for commission tracking, Clari for forecasting, and Salesforce Revenue Cloud for revenue management. The ideal platform integrates with your CRM, automates key processes, and provides clear revenue visibility. Choose a solution that scales with your business and aligns sales, marketing, and finance teams.

The best way to ensure smooth pipeline management is to know exactly how to optimize it.

That means understanding every last step closely so you always know how to approach and respond to people at all stages of your sales funnel, including separating sales suspects from prospects.

This guest blog from Databricks walks you through the main ways to differentiate between the two after covering why it’s so important to do so in the first place. First, however, we’ll show you what both sales suspects and prospects are so the difference becomes clearer.

What is a sales suspect?

Your sales pipeline often begins with strangers who have never heard of your company and might not have even considered buying the types of products you sell. You’ll pick out the most promising group to eventually become customers from these people.

Sales suspects, or leads, are the ones that fall into this more promising group.

A sales suspect is someone who might, at some point, be interested in your products. For example, if you’re a retailer selling swimwear, you might include holidaymakers in your list of leads.

Incorporating recognizable business names into your marketing strategies, possibly in the form of co-marketing campaigns, can also attract attention from these suspects, as recognizable brands often inspire trust and curiosity.

However, it’s important to avoid common website design mistakes that confuse or deter these sales suspects, such as poor navigation or slow load times, ensuring a smooth transition from initial interest to actual engagement.

The key here is that your sales suspects have indicated some passing interest–but no more than that.

If they’ve subscribed to your email list but haven’t followed up on any of your email promotions or offers, they count as sales suspects. And that’s going to be a lot of your email list subscribers because most companies see very low email open rates:

Characteristics of sales suspects

Typically, a sales suspect will be a member of one of your target demographics. For example, if you’re a software developer providing tech-based solutions to customers, a sales suspect might be interested in different machine learning model types and their uses.

A sales suspect needs further targeting to become a customer or even a sales prospect (more on this shortly). Someone who has already put a few items in their shopping cart and has progressed to the checkout stage is no longer a sales suspect.

At the same time, sales suspects can’t be completely uninterested. If you sell furniture to homeowners, a student living in rented accommodation that comes pre-furnished is highly unlikely to be a serious buyer at any point, so they won’t be a sales suspect.

When (and How) to Shorten Sales Cycles

Explore when it’s appropriate to incentivize shorter sales cycles (and when not).

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What is a sales prospect?

If a sales suspect is someone who might be interested in your products, a sales prospect is actively interested.

Sales prospects represent the next stage in your sales pipeline after suspects. They have a genuine interest in your products, and alongside this, they’re likely to want to make a purchase.

Knowing how to identify a sales prospect can shorten sales cycles. This group of prospects contains all the people who will eventually become your customers. So, by targeting them more specifically, you can make more sales and identify your buying customers more easily.

Characteristics of sales prospects

A sales prospect has to have demonstrated clear interest–something more concrete than simply following you on social media, for example.

They might do this by filling up their cart but not quite making a purchase yet. They could also repeatedly click on a specific product and spend time on its dedicated page. Both of these examples involve a sales suspect going above the level of casual interest that comes with the ‘suspect’ label and heading into ‘prospect’ territory.

Prospects are also part of your target demographics. More specifically, they’re likely to belong to two or more target groups, which helps ensure your product is tailored to their wants and needs.

Why differentiate between sales suspect vs prospect?

We’ve alluded to the importance of separating sales suspects vs prospects since this distinction helps you optimize your pipeline management.

But how?

Below are some of the main reasons why it’s such a good idea to draw a line between your sales suspects and prospects actively. They are presented in no particular order.

Proper targeting

A major aspect of pipeline management is knowing exactly how to target leads at different stages of the funnel. Getting this just right means interacting comfortably with potential customers every time, improving relationships, and fostering a positive brand image.

Implementing standardized SOPs or work instructions helps ensure that these interactions are consistently effective and align with overall sales strategies.

Proper targeting is much easier when you know your target group. By effectively differentiating between sales suspects and prospects, you can tailor your approach to each group’s needs and preferences, leading to higher customer retention rates and a more positive brand image.

Sales suspects need content that will help get them engaged and interested. Giving them promotional codes won’t be helpful, as they’re still unsure whether they even want your products in the first place. What they need is information.

On the other hand, sales prospects need that last bit of incentive to encourage them to make the purchase. Promotions do help here, while information won’t be very helpful, as they already know they’re interested in your products.

An online business coach can provide personalized guidance and strategies to improve sales teams’ targeting and engagement with these groups, ultimately enhancing pipeline efficiency and effectiveness.

Improved efficiency

When everyone in your sales department understands exactly how to approach every potential new customer, they’ll become more productive. This makes both commission management and pipeline optimization much easier.

The end result is a more efficient sales process and sales personnel spending all their time in the best possible way.

It also means turning more sales suspects into prospects, which in turn helps drive up total conversions. When you can convert more leads into buyers, you can directly improve your bottom line, which helps everyone in the company.

Making use of the data

If you know the answer to questions like what is Apache Hive used for, you probably know that it’s important to collect lots of data on your customers.

But that data is only useful when you’re making the most of it. Otherwise, it’s just information that sits there doing nothing.

Instead, you should use the data you have on customers to map and understand their behavior. Incorporating KYC (Know Your Customer) practices, such as verifying customer identity through official documentation, conducting background checks, and maintaining continuous data validation, helps ensure that the data collected is accurate and deeply informative, allowing more tailored and effective customer interactions. 

This will help you determine whether they’re a prospect or suspect, informing your approach so you’re always taking advantage of the resources at your disposal. 

7 ways to separate sales prospects and suspects

Next, we’ll share how you can separate sales prospects from suspects. These will help you determine which type of lead you’re dealing with and how to proceed so you can get the most out of every interaction with them.

1. Purchase intent

When you gather data on your customers, you can learn all about what their actions mean. That means you can gauge what they’re planning to do and whether they’re planning to become a customer based on the information you collect.

In other words, you can separate your sales prospects from suspects using data on purchase intent.

Monitoring purchase intent also lets you notice when someone starts to show signs of graduating from a sales suspect to a true prospect. That way, you can flexibly adjust your strategy and approach so you’re always ready with the right materials at the right time.

2. Tailored offers

Sending specifically personalized offers to a sales suspect vs. a prospect will yield different results, just as both groups call for different types of personalization.

Where a suspect will likely be interested in offers that let them sample just a little bit of your merchandise, such as ‘tasters’ or smaller versions of products, a prospect will often be after discounts. The prospect already wanted to buy, so a discount can be an incentive.

Additionally, strategically planned online campaigns focused on generating online sales can further enhance the attractiveness of these offers, encouraging quicker conversions from prospect to customer.

Sending out these tailored offers can also help you transition suspects into becoming full-fledged prospects. If they love your sampler, they’re more likely to be interested in the full product.

Plus, if your prospects don’t respond to any offers or promotions, they are likely mislabeled as true prospects. They will have needed more than a nudge to become customers, making them closer to suspects than prospects.

3. Sales team feedback

The people who work the most closely with your leads are the ones who know the most about them. This makes your sales team–or, if you’ve undergone plenty of business growth, your whole sales department–a highly valuable source of information.

Your sales team can tell you which specific leads have shown lots of promise. They’ll be able to explain what led them to that conclusion and tell you how sure they are of their assessment.

In the long run, this also helps you inform your approach when you’re separating sales suspects from prospects, as your sales team will help you identify differentiating trends. That means you’ll get more accurate in distinguishing the two types of leads the longer you spend listening to your sales team and trusting in their expertise.

4. Tracking behavior

We’ve already mentioned purchasing intent, but that’s not the only kind of data that gives insight into leads’ likelihood of becoming prospects.

It’s worth checking who’s visited your landing pages and how often. Someone who took a quick look at one of your product pages for a minute is far more likely to be a lead suspect, for example, whereas someone who spends a long time on a given product page multiple times over is almost definitely a sales prospect.

Tracking behavior also helps you determine what kinds of content to target your leads with. For example, a prospect that’s shown interest in multiple products would need different targeting than one that’s very dedicated to a single item.

5. Reaching out

Sales suspects and prospects alike can benefit from having direct contact with your brand.

For example, a prospect might want to know about any limited or time-sensitive offers. They might also like to hear about your customer care approach so they’ll know that you’re there for them once the purchase is made. Either way, Vonage voice calls will help you build a stronger connection and gently encourage these promising leads to bear fruit.

Sales suspects, meanwhile, very often have questions. They’re not as closely familiar with your brand or products, so they might not even know how you can help them. That means reaching out offers you an excellent opportunity to explain how you can address their pain points and give them what they’re looking for, which helps convert them to prospects.

6. Creating customer profiles

Once you know what your ideal customer looks like, it’s so much easier to match suspects to those profiles and see who fits. That way, you can qualify leads and pick out sales prospects in less time and with greater accuracy.

Multiple ideal customer profiles are a great idea here. That’s because you’ll likely have a variety of people who are interested in your products, so you should also know how to recognize those types of people.

Your prospects should also, in turn, influence your customer profiles. If you keep encountering prospects that share common characteristics, you can add those to existing profiles or create new ones accordingly so you can identify prospects among suspects with greater accuracy.

7. Getting help from AI

Lastly, enlist the help of generative AI platforms. These can process large volumes of data and draw insights for you, which will help separate suspects from prospects.

Also, sales-specific AIs, in particular, can create bespoke suggestions for you to help you maximize your ROI for investments made into sales suspects. This will let you create more prospects without wasting effort on suspects who are not interested after all.

Since machine learning algorithms improve the more they’re used, you can get better results from any AI by simply involving it in your sales separation processes.

Final thoughts

To maximize your sales team’s productivity, ensure everyone knows the exact differences between a sales prospect and a sales suspect. This will help them interact appropriately with both groups of potential customers so they can drive sales and improve your brand’s reputation.

While the intricacies of a sales suspect vs prospect can seem confusing, it’s actually quite simple. Briefly put, a sales prospect is someone who’s looking to make a purchase, while a suspect is someone who might, at some point, want to become a customer.

With our handy list of key differentiating factors, you’ll separate the two groups quickly.

Attracting and retaining top sales talent in a competitive market is challenging, especially in the rapidly evolving SaaS market. To win the attention of the best candidates, you offer them flexibility, great pay and benefits, growth and advancement opportunities, and an appealing company culture.

Finding the ideal candidate for a SaaS sales position is another matter.

The best candidates thrive in a fast-paced, innovative, and rapidly evolving environment while finding satisfaction in contributing to the company’s growth. Adding a highly complex enterprise comp plan to the mix increases the hiring challenge, potentially hindering understanding and trust.

Compensation benchmarking is crucial for large sales teams to make informed incentive decisions.

It ensures the development of fair and logical incentive packages that remain competitive. This enables businesses to attract and retain top talent and accurately budget for all compensation plan components without any unpleasant financial surprises.

What is Compensation Benchmarking?

Compensation benchmarking is the process of gathering, analyzing, and leveraging data that defines the costs associated with salaries and other compensation plan elements.

Sales compensation benchmarking insights enable organizations to remain competitive as industries and markets evolve to attract and retain top talent. Sales compensation components to benchmark include elements like base salary, commission rates, bonuses, and benefits.

How to do Compensation Benchmarking

Follow these four steps to effectively benchmark compensation and create a competitive incentive package.

Step 1: Identify Your Benchmark Group

Define your ideal sales rep profile including tenure, skill set, and industry.

For instance, reps with more experience may qualify for a higher salary and a richer incentive package than less experienced team salespeople.

Additional factors to consider include company size, geographic location, sales methodology, and sales cycle length. Benchmark against similar businesses for the best results or adjust the data according to things like geographic differences such as cost of living.

Step 2: Gather Data

Utilize reliable compensation benchmarking tools such as:

• Pavilion’s 2024 B2B Compensation Benchmarks report
• Betts 2024 Compensation Guide
• Betts 2024 Executive Compensation Guide

Consider conducting surveys of similar companies in your industry or leverage job boards and salary comparison websites such as Indeed and ZipRecruiter. When referring to job boards and websites, always consider how well-aligned the company and role are with the factors you are benchmarking. Otherwise, you risk skewing your data and negatively impacting your results.

Step 3: Analyze the Data

Review the data you’ve assembled. Examine factors beyond base salary, such as commission structures, bonus potential, and benefits packages. These are important elements for attracting and retaining top talent.

Look for trends and median figures within your defined benchmark group. These are key factors to prioritize as you progress to the next step of creating your compensation package.

Step 4: Develop a Competitive Compensation Package

Use your analysis to design a compensation package attractive to top sales talent while remaining financially responsible. Test the new plan against historical data to ensure it doesn’t break the budget.

Consider offering a mix of base salary, commission, and bonuses to incentivize performance that drives organizational goal achievement.

5 Compensation Benchmarking Practices Specific to Large Sales Teams

Large sales teams should complete additional steps during the benchmarking process. These best practices will further enhance your results.

• Account for Team Dynamics and Specialization: In large sales teams, roles can become specialized. Benchmarking should consider specializations such as SDR, BDR, and Account Executive and their unique contribution to the sales cycle. Analyze data for specific roles within your team structure to ensure competitive compensation for each level.
• Factor in Performance Variability within a Large Team: Large teams naturally experience a wider range of individual performance. Consider segmenting your analysis within the benchmark group to account for top performers, average performers, and those requiring improvement. This allows you to design a compensation structure that rewards high achievers while providing a baseline for development within the team.
• Analyze Quota Attainment Rates Across Similar Teams: Quota attainment is a key performance metric in sales. Benchmarking should not just focus on compensation but also on quota attainment rates within the benchmark group, specifically for teams with similar sizes and structures. This allows you to assess the achievability of your quotas and ensure your compensation plan incentivizes reaching those goals.
• Leverage Internal Data for Segmentation and Targeting: Large teams often generate a wealth of internal sales data. Utilize this data to segment your team based on performance metrics like revenue generated, deals closed, and meetings scheduled. This allows for targeted compensation adjustments within your team, addressing performance gaps and motivating improvement.
• Consider Retention Rates and Competitive Counteroffers: Employee turnover can be disruptive for large teams. Analyze data on retention rates within your benchmark group, particularly for top performers. Understanding counteroffer trends in the market can also be valuable. Use this information to develop competitive compensation packages that incentivize your top talent to stay.

Additional Considerations for Large Sales Teams

These additional compensation best practices will help you remain competitive and continue attracting and retaining the best talent in the marketplace.

• Ensure compensation packages are internally aligned based on experience, performance, and territory.
• Clearly communicate compensation structures and how performance translates to rewards.
• Regularly review compensation benchmarking data and adjust salary ranges and structures as needed.

Compensation Benchmarking For Large Sales Teams

Compensation benchmarking is important for businesses with large sales teams. It facilitates informed, financially prudent incentive package decisions.

Pay benchmarking helps ensure industry and market competitive incentives that attract and retain top talent. This comparative process ensures internal fairness in comp plans across an organization and ultimately drives sales performance to achieve organizational goals.

Offering competitive compensation packages helps attract top talent. These incentives also boost team morale, create a high-performance culture, and increase sales productivity.

Start benchmarking your compensation package by leveraging the above tools and adapting the outlined steps to your specific needs.

To learn more about the compensation resources QuotaPath offers, schedule time with a team member.

91% of sales teams missed quota last year, according to our 2024 Compensation Trends Report. Leaders attributed those misses to factors such as market conditions, misaligned sales activities, unstructured sales processes, lack of motivation, and unrealistic quotas or sales goals.

Understanding quotas and commissions in the tech industry is important for employers and potential employees alike. This knowledge is valuable when ensuring targets are attainable for employee motivation and retention and ensuring quotas align with and drive key business goals.

A thorough grasp of quotas and commissions also supports accurate forecasting. It enables smart sales strategy improvements by recognizing signs revealing broken or proven sales processes so they can be addressed or invested.

Read on to expand your knowledge of the industry standard for quotas and commissions.

Understanding Sales Compensation in Tech

Base salary, commission, quota, and commission structure are fundamental to understanding sales compensation in tech. This section reviews these terms, their role in compensation, and common compensation plans to consider. 

• Base Salary vs. Commission: Base salary plus commission is the most common sales compensation structure in SaaS. It offers salespeople some financial security while also motivating more sales activity.

Base pay is a pre-determined monetary biweekly or monthly payment to the employee regardless of their performance.

A commission is a financial incentive paid to sales reps for completing specific business activities. For instance, a salesperson may earn a commission for selling specific products or closing a multi-year deal.

The typical split between base salary and commission in tech sales is 50/50 or 60/40.

• Quota: A sales quota is an objective an individual sales rep or team is intended to achieve within a set period. The amount of quota attainment influences the commission rate of variable pay for a given deal. For instance, the closer a salesperson is to hitting quota, the higher the commission rate. Quotas are typically set based on historical data, market trends, and the company’s overall sales objectives.

After analyzing essential information, apply these best practices for setting sales quota:

1. Sales reps must pay for themselves. Their quota must represent a multiple of their On-Target Earnings (OTE) to cover the salesperson’s base salary, benefits, and other expenses to ensure profitability. The industry standard multiplier ranges from 3x OTE to 8x OTE to calculate an annualized quota. However, many factors influence which multiplier is best for you. That’s where our Quota:OTE Ratio Calculator comes in. Use this handy free tool while setting quotas to identify the best multiplier to use.

2. Consider sales cycle length, average sales price, and company stage.  These three factors help you set a quota frequency of monthly, quarterly, or annual. Our research indicated that companies typically rely on average sales price and sales cycle length, and preferred quarterly quota cycles. The company stage can mean a longer, annual quota period for an older, more established company, or a shorter, monthly quota period for startups to create urgency for their reps.

3. Confirm that reps can achieve their sales quota. Regardless of the amount of analysis and planning invested in setting quota, if your salespeople feel it’s unattainable, they may feel demotivated and frustrated. That’s not to say that 100% of your reps should hit quota, however, if nobody has ever achieved it, that is a bad quota. A good rule of thumb is that 80% of reps hit quota each month. Then, top performers will compensate for bottom performers and the overall organization will achieve quota.

• Commission Structures: The most common commission structures in tech sales are single-rate commission, commission with accelerators, and a milestone bonus on exceeding quota. The single-rate commission plan is easy to understand and pays the same rate on every deal. Commission with accelerators is a great way to reward overperformance since incentives increase in tiers as reps work toward and beyond quota attainment. The milestone bonus encourages consistent performance by rewarding quota achievement. This makes it an excellent addition to the single-rate commission plan.

Base salary plus commission is the most common sales compensation structure in tech. Sales quotas tied to the right commission structure motivate reps to excel.

Tech Industry Standards

These tech industry averages will give you perspective as you build your compensation plan.

Average Commission Rates

The standard commission rate for sales is typically between 20% and 30% of gross margins. However, it can vary depending on factors such as industry, total sales volume, seniority and experience, and product complexity. According to our research, average commission rates for different tech sectors like software, hardware, and SaaS are:

• Telecommunications: 5–20% of the total sale value
• Insurance: 5–15% of the total premium amount
• Advertising: 5–20% of the total advertising spend
• Manufacturing: 2–10% of the total sale value
• SaaS: 10–30% of the total sale value
• Automobile: 1–5% of the total sale value

Quota Attainment Rates

Our research found that 91% of companies fail to achieve our suggested attainment of 80% or more of their quota targets as a team.

Quota attainment and sales commissions typically rise and fall together. Meeting or exceeding quota can lead to higher commission rates, bonuses, and rewards. On the other hand, falling short of quota can mean lower commission rates or reduced incentives.

Leverage Industry Standards

Gaining a clear understanding of quotas and commissions in the tech industry can help you attract, motivate, and retain top talent while supporting accurate forecasting and intelligent sales strategy improvements.

Now you know the difference between base salary and commission, the relationship between quota and commissions, how to set a quota and the best commission structures in tech sales. Combined with the industry standards for average commission and quota attainment rates, you are armed with what you need to establish your tech company’s compensation plans.

See how QuotaPath supports tech businesses as they set fair and logical quotas that challenge and motivate your organization while driving targets. Schedule time with a team member or start a free trial today.

Managing multiple sales channels and territories in a growing SaaS company has its challenges.  Competition and confusion can arise when different sales channels, such as inside and outside reps, target the same customers or prospects.

Goals and incentive structures may not be fully aligned across all teams, creating conflicting priorities and a lack of collaboration. Territory management issues can result in an unbalanced workload where some territories or channels have a greater concentration of leads or larger deals.

Clear alignment with business goals and collaboration across all teams is crucial to achieving sales goals and, by extension, company targets.

If you’re struggling with any of these challenges, we’re here to help. This blog focuses on common SaaS sales structures, best practices for management, and incentive strategies for different teams.

What’s a recommended sales team structure for startups?

Your startup’s sales structure selection affects all aspects of sales, including lead generation, conversion rate, and speed to close.

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Common SaaS Sales Structures

SaaS companies typically adopt the following three sales structures. Read on to learn their defining characteristics and their pros and cons.

Inside Sales vs. Outside Sales

What’s the difference between inside sales and outside sales?

Inside sales reps (ISRs) focus primarily on inbound lead qualification. ISRs use various forms of digital communication, such as email, messaging apps, social media, video conferencing, and phones, to engage prospects.

By contrast, outside sales reps (OSRs) focus on outbound prospecting, in-person meetings, conferencing, networking events, and closing deals.  

The advantages of inside sales are that it is less costly, more efficient, and easily scalable, enabling businesses access to a greater talent pool. On the other hand, outside sales facilitates relationship building and offers the opportunity for more focused engagement with the entire buying committee all at once.

Inside sales is an excellent choice for SaaS sales, where outside sales benefits businesses offering physical products, enabling prospective buyers to personally experience the product during a demo.

Hybrid Sales Model

A hybrid model is a blend of inside and outside sales. Hybrid reps work remotely at least a percentage of the time, leveraging multiple channels to engage prospects, such as email, text messaging, social media, phone, and Zoom calls. Remote salespeople also visit potential clients based on customer preferences.

Hybrid sales increased in popularity during the COVID pandemic and is said to be the future of B2B sales, according to McKinsey.

There are benefits to adopting a hybrid model. For instance, it helps businesses minimize costs. It enables former outside reps to increase customer engagement while accommodating the 40% of customers who prefer to buy from a sales rep they’ve met in person.

Hybrid sales can also facilitate gathering the entire buying committee to help build consensus. Yet the remote aspect of the model allows more data to be gathered throughout the buyer’s journey.

Account Management vs. New Business

Account managers (AMs) focus on existing customer relationships and upselling opportunities to retain and grow these essential client accounts. Accomplishing this is typically done by helping the customer achieve their goals for using the product or service they procured from your company.

On the other hand, new business reps focus on acquiring new customers. They engage with inbound leads and potential prospects to nurture and guide them through the sales process until, ideally, they become a paying customer.

Account managers and new business reps can work together to maximize customer lifetime value. It starts with new business reps prioritizing leads and prospects who match the ideal customer profile (ICP). These are the prospects likely to benefit the most from your product and remain as customers in the long term.

Then, new business reps and account managers collaborate for a smooth customer handoff where essential customer information is shared, facilitating a superior onboarding experience. This sets the customer up for greater success with your product as the account manager works to retain and grow the customer.

Best Practices for Managing Multiple Sales Channels and Territories

Leverage these best practices to more effectively manage multiple sales channels and territories.

Clear Channel and Territory Definition

Clearly defining each sales channel and territory is crucial so sales reps can function efficiently. When there is confusion or miscommunication of sales channels and territory, reps can become unsure of which specific customer segments or regional areas they are responsible for. This can ultimately result in finger-pointing and weaker sales results.

Strategies for segmenting territories include leveraging factors like customer size, industry, or geographic location.

Alignment and Collaboration

Alignment across revenue-generated teams around shared goals gets the team pulling together to achieve organizational objectives. Fostering communication and collaboration between different sales teams facilitates the attainment of targets.

Sales collaborate with various teams to reach their goals. Examples of collaboration practices include joint lead nurturing by sales and marketing, effective handoff processes from sales to account management, and team selling efforts involving AEs and SEs to advance deals.

Performance Management

Set clear performance metrics tailored to each channel and territory to gauge sales performance and identify adjustment and coaching needs. These metrics help sales teams track progress toward goals, prepare and plan for growth, and build compensation plans.

Relevant metrics vary based on role. For example, ISR metrics include the number of calls, meetings, or deals closed, and OSR metrics include the number of demos, meetings, and proposals. By contrast, AM metrics include customer retention, lifetime customer value, and account growth. New business rep metrics include the number of opportunities created, demos completed, meetings, and calls.

Feedback and coaching are essential strategies that help boost sales team performance. To be effective, these practices must take place on a routine basis. Focused 1:1 and team sessions are both effective ways to improve techniques and progress toward goals. Remember not to overload an individual rep with too much feedback in one session. Instead, prioritize one area and work on that before advancing to another. This ensures consistent improvement.

Technology and Tools

Leverage CRM and marketing automation tools to streamline team communication and data sharing. This improves alignment and collaboration across teams while boosting efficiency and results.

Utilize sales forecasting tools to improve territory and quota planning. These platforms deliver up-to-date metrics that enable data-driven decision-making and scenario modeling for greater success and results.

Incentive Strategy for Different Sales Teams

Using these strategies will help you successfully create and communicate incentive plans.

Aligning Incentives with Goals

It is essential to design incentive plans that motivate reps to achieve specific goals relevant to their channel and territory. This ensures rep buy-in while driving the achievement of organizational objectives.

Quotas, commissions, and bonuses can be structured to motivate goal achievement based on the specific role and territory.

For instance, ISRs, OSRs, and new business reps can be incentivized by a commission-based bonus, which is triggered when the rep exceeds the quota. Tiered commissions for these same reps pay increasing percentages as specific targets are exceeded, such as 10% commission for 100% and 15% for 120%.

Account managers, on the other hand, are incentivized based on metrics like customer retention rate, upsells and cross-sells, and CLTV. An example of an account management bonus structure might include renewal bonuses for exceeding customer retention goals, with the bonus triggered at a 95% renewal rate. They may also receive an expansion bonus for increasing average revenue by a designated percentage through cross or upsells to existing customers.

Balancing Individual and Team Performance

Create incentive plans that reward both individual achievement and team collaboration. Team incentives or challenges foster healthy competition and promote cross-departmental relationships and teamwork while driving goal achievement.

Team-based bonuses or contests to encourage collective success include competitions that involve territories, verticals, or small groups facing off against each other to boost sales. These contests are especially productive when combined with individual SPIFFs to achieve goals.

Transparency and Communication

Ensure clear communication of incentive plans and how performance translates to rewards. Reps will not be motivated if they don’t understand how they’re compensated. Consequently, they will fall short of their targets, hindering organizational objective attainment.

Incentive plans are not static instruments. It’s crucial to regularly review and update compensation plans to adjust for performance, market conditions, and changes to organizational objectives.

Manage and Align Multiple Sales Channels and Territories

Managing and aligning multiple sales channels and territories in SaaS has its challenges. Boost your success by implementing the best practices and incentive strategies we’ve discussed.

Remember to clearly define channels and territories to avoid confusion. Create alignment across revenue-generating teams and foster a collaborative culture to improve results. Set clear performance metrics tailored to each channel and territory and consistently provide feedback and coaching to individual reps and the collective team.

Leverage technologies and tools like CRM, marketing automation, and sales forecasting tools to streamline communication and data sharing while enabling data-driven decision-making and plan modeling.

Then, incentives will be aligned with goals to drive organizational goals by structuring quotas, commissions, and bonuses in a way that motivates goal achievements. Balancing individual and team performance through rewards to encourage collaboration and cross-departmental relationships. Transparency and clear communication are essential for rep buy-in and motivation to achieve goals and drive organization objectives.

Sales structures and incentive strategies require ongoing adaptation and improvement based on performance, market conditions, and organizational goals.

See how QuotaPath supports complex teams and compensation plans. Schedule time with a team member or start a free trial today.

Learn more about sales management with additional resources like HubSpot and communities like Pavilion and Women in Sales.

Compensation plans are used to incentivize selling behaviors and impact the bottom line.

This is true regardless of an organization’s stage, size, or industry.

However, the components of a comp plan should vary according to how large a sales team is and the business’s key goals.

For instance, we often design compensation plans for startups to attract talent, take risks, and drive rapid growth. These might include bounty bonuses or logo commissions, rewarding reps for winning top accounts from a specific industry or region. We also see startups implement single-rate comp plans as their first ones for simplicity and lack of available historical data. 

But for high-growth and larger sales teams, comp plans are modeled off lots of data tied to previous years’ performances and financial forecasts. 

These comp plans are methodical, emphasize predictable revenue, tie in various metrics beyond annual recurring revenue (like customer lifetime value), and define clear divisions and pay scales between reps’ skill levels and roles within their teams. 

Overall, compensation plans for larger SaaS sales organizations are more sophisticated, data-driven, and focused on achieving long-term, sustainable growth.

They’re more complex. And those complexities can become so overbearing that they actually deter from your compensation strategy versus support it. 

So, to keep those complexities in line, we came up with five comp plan best practices. 

5 Comp Plan Best Practices for Larger Sales Teams

1. Don’t copy and paste a plan from an existing org. 

First, no matter how tempting, do not bring a comp plan that worked well at your previous organization into your new one. 

Sure, bring in certain elements that apply at scale, like accelerators and multi-year contract bonuses. But copying and pasting a complete comp plan from a different business will cause a lot more headaches than the shortcut you took in place of developing a unique plan. 

Establish your business’s key business objectives, then, build a plan that aligns to these goals and drives selling behaviors that push these objectives. 

The best compensation plans are living documents. They should be reviewed and adjusted regularly to reflect changes in the market, your business goals, and your sales team’s needs. By establishing a culture of continuous improvement and data-driven decision-making, you can ensure your compensation plan effectively attracts, motivates, and retains top sales talent.

2. Implement tiered commission structures

As much as we love the single-tier, flat-rate commission structure for startups or plans that support a new product or territory, avoid using these for more established teams.

Instead, implement comp plans with multiple commission tiers based on performance levels to incentivize high achievers. You might also recognize the term “accelerator” for this. 

The more volume sold, the higher the commission rate paid.

For example, a rep earns 10% on the first $100,000 in sales, 15% on the next $100,000 in sales, and 20% on any sales exceeding $200,000 — no cap.

You could also consider adding cliffs or commission floors to your account manager/customer success roles and leadership compensation plans, which set a minimum performance threshold before commissions are rewarded.

3. Build a transparent communication plan

Since larger sales teams typically have more complicated compensation plans (splits, team volatility, draws, multiple products, etc.), your communication plan when rolling out compensation plan changes is paramount. 

This includes gathering feedback from reps during plan design, introducing early on that changes are incoming, dedicating team meetings specific to comp plans (and supported by 1:1s), accessible documentation, and a source of truth for all things sales compensation.

Multiple Communication Channels: Don’t rely on a single announcement. Utilize a variety of channels like town hall meetings, team huddles, email communication, and an internal knowledge base to ensure everyone receives the information.

Focus on Benefits: While outlining the details is important, emphasize the positive aspects of the changes and how they benefit the sales team. Highlight potential earning opportunities and incentives to keep reps motivated.

Openness to Feedback: Encourage questions and feedback from your sales team. Schedule one-on-one meetings or open forums to address concerns and ensure everyone feels heard. By fostering a two-way dialogue, you can identify potential areas for improvement and refine the plan as needed.

Remember, even with its complexities, a well-communicated compensation plan can maintain or build trust with your team and motivate your sellers.

4. Leveraging technology for goal setting and tracking

To help with all of this — recruit the help of technology.

Today’s software offers can streamline these compensation processes and empower both sales reps and leadership when implemented correctly.

Tools like QuotaPath, for instance, can enhance goal alignment by giving everyone a place to check the organizational-wide goals and their contributions toward those goals. 

Plus, this real-time visibility and insight allows reps and managers to adjust their deal approaches on the fly to coach, motivate, and support where needed. Another benefit of this is the accountability it creates to give reps ownership over their earnings.

Lastly, compensation performance data can help you identify flags with your compensation strategy, underperformers (and over performers), outlier deals, and more so that you can adjust and allocate resources where necessary. 

By leveraging technology for goal setting and tracking, you can empower your sales team to take ownership of their performance, hold themselves accountable, and ultimately achieve greater sales success.

5. Adjust your plans throughout the year

Additionally, remember comp plans rarely succeed for the entire year if they stay the same. 

Businesses operate in dynamic environments. Market conditions can shift, competitor strategies can evolve, and your sales goals might need adjustments. To ensure your compensation plan remains effective, be prepared to adapt it throughout the year.

Here are some data points to monitor:

• Hit Rates: Are your reps consistently achieving or exceeding their quotas? Extremely high or low hit rates might indicate quotas that are too easy or too difficult, requiring adjustments to ensure a healthy challenge and achievable goals.
• Average Deal Size: Is the average deal size meeting expectations? If reps are consistently closing smaller deals than anticipated, commission structures might need to be reviewed to incentivize pursuing larger deals that contribute more to overall revenue goals.
• Sales Cycle Length: Is the sales cycle taking longer than expected? This could indicate a need for additional sales enablement or adjustments to the compensation plan to incentivize faster deal velocity.
• Employee Turnover: High turnover rates within your sales team could be a sign that your compensation plan is uncompetitive or doesn’t adequately motivate reps. Analyze data and conduct exit interviews to identify areas for improvement in your plan’s structure and offerings.

By regularly monitoring these data points and incorporating feedback, you can maintain a dynamic compensation plan that adapts to changing circumstances and optimizes sales performance throughout the year. This ensures your plan remains a valuable tool for attracting, motivating, and retaining top sales talent.

How to Motivate Sales Team 

70% of RevOps, Sales, and Finance leaders said their comp plans motivate reps. What about the other 30%?

Take Me to Blog

Bonus Best Practices

While the core elements discussed above provide a solid foundation, here are some additional best practices to consider:

• Alignment is Key: Ensure your compensation plan directly aligns with your overall business goals. This creates a clear link between rep performance and achieving company objectives. 
• Motivate Through Incentives: Go beyond base salary and commission. Consider implementing sales contests and incentive programs to motivate your team and drive specific sales behaviors. Strategic use of contests can be a powerful tool for boosting performance. 
• Strategic Spiffs: Supplement your core compensation plan with strategic spiffs (Sales Performance Incentive Funds). These targeted rewards can incentivize specific actions that support your sales goals. 
• Feedback is Essential: Don’t operate in a vacuum. Regularly gather feedback from your sales team on the effectiveness of your compensation plan. This feedback allows you to identify areas for improvement and ensure the plan remains relevant and motivating. 

By incorporating these additional best practices, you can create a truly effective sales compensation plan that attracts top talent, drives exceptional performance, and contributes to achieving your overall business objectives.

Align Your Compensation Plans Now

Aligning compensation plans with company goals can be a complex tightrope for large companies. 

Setting goals that balance short-term wins (like quarterly quotas) with long-term objectives (building customer loyalty and recurring revenue) can be tricky. Traditional commission structures that reward only new sales might discourage reps from investing in existing accounts, hurting renewal rates. 

Additionally, ensuring fair and adaptable plans can be challenging with complex sales teams and ever-changing markets.

That’s where QuotaPath comes in. 

By leveraging data and analytics, QuotaPath helps build compensation plans that incentivize the right behaviors. It can track performance against multi-faceted goals, including customer lifetime value metrics. This allows companies to reward reps for upselling, renewals, and other actions that drive long-term growth, aligning their efforts with company objectives.

QuotaPath also fosters transparency and fairness by providing clear commission structures and performance dashboards to drive sales performance. With QuotaPath’s help, large companies can bridge the gap between compensation plans and company goals, motivating their sales teams for long-term and consistent success.

Talk to Sales today to learn more. 

Sales forecasting is one of the most essential yet challenging aspects of business. However, having an accurate estimate of revenue through a sales forecast can shape your success.

Everything from developing budgets to planning production capacity relies on this forecast. That’s why accurate insights are crucial. 

The solution? Demand forecasting. Here, we’ll explore why this process is so beneficial and strategies to implement.

What is demand forecasting and why is it important?

Demand forecasting is the process of estimating future sales of your products or services by using relevant data to predict demand. The aim is to remove the guesswork by gaining a more accurate view of predicted revenue streams to help better manage budgets and sales cycles.

Why is this important? One aspect is streamlining. Accurate forecasts allow you to anticipate fluctuations in demand to better allocate resources. Determining stock levels helps avoid understocking inventory or product obsolescence. It’s also beneficial for avoiding lost sales opportunities. 

All of this has a knock-on effect on operational efficiency and, consequently, brand awareness. It ensures you’re always able to meet customer demand. This, in turn, can increase your company’s profitability, protect your brand reputation, and ensure steady business growth. 

Key benefits of accurate demand forecasting

As we mentioned, demand forecasting offers numerous benefits, from resource allocation to sales opportunities. Let’s dive into these in more detail.

Inventory management

Demand forecasting in supply chain and inventory management is essential for maintaining optimal stock levels throughout the year. 

Rather than guessing what you need and when, you can use forecasts to reduce the potential of stockouts, improve ordering efficiency, optimize revenue management, and save on the cost of storage. By ensuring a healthy fill rate, you can meet customer demand consistently while minimizing the risk of understocking or overstocking inventory. You could even save on transport costs by spotting ways to consolidate orders.

Resource allocation

Anticipating demand equips you with the knowledge to better plan and allocate resources. Whether it’s production capacity, manpower, or marketing budgets, you can approach allocation strategically to be more effective during times of high demand and scale back during quieter periods.

Budgeting and planning

Demand forecasting gives you some of the best insights to plan budgets. This can help you decide how much to spend on areas like marketing, hiring, or product development, depending on what resources you will need and how much revenue you anticipate coming in.

Utilizing budgeting software can streamline this process further by automating data analysis and providing real-time insights into budget allocation. With budgeting software, you can efficiently track expenses, identify areas for cost-saving, and make informed decisions to maximize your resources and optimize financial performance.

You may even be able to spot investment opportunities. Automation is becoming increasingly prevalent in businesses today, so you may free up the budget for click to call dialer software to support your sales team’s outreach efforts or customer service chatbots to improve conversion rates.

Risk management

Demand forecasting helps identify potential risks and uncertainties related to sales performance. This way, you can be better prepared to manage challenges.

For example, if your demand forecast indicates a potential downturn in sales during a specific season, you can adjust inventory levels or implement targeted email marketing campaigns to give sales a boost.

Improved decision-making

Any forecasting model replaces guesswork with reliable information specific to your business and customers. With that information, you can make more informed decisions about future sales trends. 

For example, if your forecast indicates a surge in demand for a particular product, you can adjust your pricing strategies. This could mean offering promotions or increasing sales incentives during peak demand periods to capitalize on increased customer interest.

Understanding cross-channel demand patterns, particularly in the context of omnichannel ecommerce, becomes crucial for effectively allocating resources and maximizing sales across multiple sales channels. 

5 steps for effective demand forecasting

While demand forecasting can benefit your company, it’s important to do it correctly if your strategy is to be successful. We’ve broken it down into five easy steps.

1. Collect data relevant to your goals

Begin by collecting and analyzing relevant data available that aligns with your sales and business growth goals. This information could include any or all of the following: 

• Historical data: Past sales data can tell you a lot about what might happen in the future. Pull data from sources like your CRM, inventory management software, call center reporting tools, customer forms, and even other departments. Review previous demand, looking out for patterns, trends, and seasonal fluctuations that are likely to repeat. 

• Market research: Gather information about your target customers, including their preferences, buying habits, and what influences their purchasing decisions. This could be done through surveys, interviews, or analyzing existing market studies. 

• External factors: Industry trends and competitor activities can impact your forecast. But it’s also worth gathering data on economic conditions and socio-political factors like regulation changes or consumer sentiment. For example, a new competitor entering the market might affect demand for your products, or a change in government policy might influence consumer buying behavior.

2. Implement your chosen forecasting methods

Once you have the data, you must analyze it to draw conclusions. You can do this manually or with the help of automation. Let’s explore a few options.

Statistical models

Statistical techniques like time series analysis and regression analysis are useful for creating forecasting models. 

Time series analysis looks at patterns in historical data over time, such as increases or decreases in sales during certain months. 

Regression analysis identifies relationships between variables. It considers how factors like marketing spend, promotions, and economic conditions have impacted sales.

Conducting an in-depth analysis of large data sets manually can be challenging. However, machine learning algorithms make this process more efficient and can help identify complex patterns, resulting in more accurate predictions.

Forecasting software

As with many business processes, software can make forecasting much smoother. If you choose the right model, it can help to automate data collection and analysis and generate reports for you.

But it’s crucial to choose the right solution for your business needs. You should also understand how that solution creates the forecasts so you can make better decisions. 

Remember that your existing software such as your ERP system may have built-in forecasting capabilities. Or you may need a customized program for your specific industry. 

Collaborative forecasting

Technology isn’t always the answer. Bring together different departments to share insights and perspectives to help shape your forecast. 

For example, a software company launching call script software might get input from their sales team on customer demand and predicted sales. The marketing team would provide campaign insights, while the finance department could offer financial projections.

3. Segment your market

Market segmentation can refine your sales forecast by accounting for demand drivers and behavior variations across different segments. 

After segmenting your audience or products, you can develop separate forecasts for each category. This allows you to account for demand drivers and behavior variations across different segments. 

Here are two ways you might segment your market.

Customer segmentation

Narrow your wider target market into smaller groups based on different characteristics that influence purchasing patterns. This could be:

• Demographics: Age, gender, income
• Psychographics Lifestyle, values, interests
• Geographic location
• Buying behavior

Product segmentation

Categorize your products based on their attributes, such as price, functionality, and lifecycle stage. This helps you tailor your forecasting approach to the different characteristics of each product category.

You might forecast higher-priced products differently from budget items or adjust forecasts based on a product’s lifecycle (e.g., introduction, growth, maturity, decline).

4. Monitor sales performance and make adjustments

Tracking sales performance is crucial to improving the accuracy of your forecast. This allows you to make changes when needed and stay responsive to changing market dynamics.

Keep an eye on key performance indicators (KPIs), sales metrics, and market trends. How do they compare with your forecasted values? If your actual sales drop below what you forecasted, it could be a sign that you need to adjust your strategy or allocate resources differently to adapt to changing market conditions.

Remember that while it’s great to have a demand forecast in place, there are some things you can’t predict. So, it’s essential to remain agile in response to new information or unexpected events that may impact demand. 

It’s likely that you will need to revise forecasts, reallocate resources, or adjust marketing strategies along the way. For example, a competitor launching a similar product could unexpectedly reduce your demand, meaning you need to consider scaling back production.

As part of this step, establish a feedback mechanism. Gather regular insights from frontline employees, customers, and partners about their experiences and perceptions. Their feedback can provide valuable information about changing customer preferences, market trends, or other factors that may influence demand.

5. Review and repeat

After making forecasts, it’s essential to compare them with actual sales data to identify discrepancies and understand their root causes. You may need to change your data collection tactics or forecasting methods in the future.

Forecasting isn’t a job you can do at the start of the financial year and forget about. It’s an ongoing process that needs continuous refinement. Regularly review and refine your forecasting models based on stakeholder feedback, performance metrics, and learnings from past forecasting experiences.

Consider building a scenario analysis into your forecasting process, too. This involves preparing for the potential impact of various scenarios or events on your sales forecast. For example, you might consider what would happen if there’s a recession, if you launch a new product, or if a competitor starts a price war. 

Imagining these scenarios and their potential effects on sales helps you better prepare and make plans to respond effectively.

Demand forecasting: Unlock powerful insights to drive sales

While we can’t see into the future, demand forecasting could be as close to a crystal ball as it gets. 

Accurate sales forecasts help businesses make more informed decisions and plan strategically. The ability to anticipate future demand means you can make the right adjustments to everything from stock levels and manpower to meet customer needs. 

This not only contributes to a more efficient business model but also reduces inefficiencies and reduces costs, leading to a more profitable business and satisfied customers.

A sales rep based in Colorado earned $100K in commissions that the company didn’t pay because he left before they collected the cash from the customer. Their compensation policy states that commissions are paid on cash collection.

Did the company make the right call or cheat their rep?

In this case, not only did the company cheat their rep, but they broke the state law, dictating that employees should be paid their outstanding earnings within a specific timeframe. Although there are no federal laws about the payment of commissions following employment termination, most states have laws requiring the payment of earned commissions according to the compensation agreement.

However, even if the law had not mandated it, we think the company should have paid the commissions based on what the rep sold, regardless of what the agreement says. Reps should receive the commissions they earned.

Period.

This blog provides best practices to honor commissions when a rep leaves.

Let’s get started.

5 Best Practices When It Comes to Paying Commissions After a Rep Leaves

Should you find yourself in a position where a rep leaves before collecting commissions earned on recent deals, we recommend leveraging these five best practices to properly honor their commissions.

5. Know the State Laws

Laws dictating commission payouts and transparency differ from state to state, according to the Commission Payment State Law Survey. However, some states have very strict policies on commission payouts. For instance, Colorado, Hawaii, Kansas, Maryland, New Jersey, New York, Ohio, Texas, and Virginia prohibit commission withholding after termination.

Arkansas requires employers failing to pay employees all due wages within seven days of the next payday to owe the employee double the wages. Don’t let the term wages confuse you here. The survey revealed that most states recognize commission as wages except Ohio and Alabama.

Although most states have established policies on commission payouts after termination, these policies are typically in effect in the absence of a signed sales rep’s compensation agreement. States indicate that policies on commission payouts after termination should be clearly explained in a signed agreement.

When it comes to the debate of when commissions are deemed earned, most states, except Florida and Georgia, have a general definition that applies in the absence of a commission agreement. Additionally, Delaware and Michigan recognize the procuring cause, where commissions are earned when an order is procured and accepted unless a signed agreement states otherwise.

Download our customizable commission policy template

4. Establish a Crystal-Clear Commission Policy

A commission policy, or a compensation agreement, is a legal document designed to help the company and employee avoid future compensation disputes. It helps commissioned employees better understand your compensation structure and serves as an easy reference if questions arise. You can write your own or download one of our free commission policy templates.

Every commission policy should include a detailed explanation of the following: 

• On-target Earnings (OTE): Salary plus commissions when achieving 100% of quota for the year.
• Quota Amount: A sales objective an employee should achieve within a designated period.
• Quota Frequency: How often progress toward quota attainment is measured. Typically, quarterly, but maybe monthly or annually.
• On-target Commissions (OTC): The amount the employee will earn when they hit quota for the year.
• A Commission Table:  A table containing commission rates tied to progress toward a quota.
• Additional Comp Plan Elements That Impact Commission Rates: For example accelerators and decelerators.
• Payment Terms: An explanation of how commissions will be calculated. When a sale is considered eligible for commission, and when your organization will pay the commission.
• SPIFs: Additional short-lived contests, incentives, or bonuses during slow periods to drive product line revenue or other exceptional reasons.
• Clawback provision: An explanation of how and when a rep must pay commission back to the company if a customer cancels a contract or fails to pay after the employee has been paid for the sale.
• Dispute Resolution: The process for resolving commission disagreements between employees and the company.
• Accrual: A rule that designates employment status requirements to qualify for a commission or bonus payout.
• Commission Payout Upon Termination: A payout clause that covers paying out earned commissions to a departing sales rep.
• Signature: When an employee signs off on the commission policy, they are acknowledging understanding of their plan.

Getting rep signatures on these policies also creates alignment and transparency in the compensation process. More importantly, the plan verification process gets employees to re-read their commission policies and ask clarifying questions before signing. Once reps have signed off on the policy, ensure they can access these documents at any time to deepen their understanding of it.

3. Differentiate Earned vs. Unearned Commissions

It’s crucial to clearly define the difference between earned and unearned commissions to avoid confusion or misunderstandings.

For instance, earned commissions are commission payments for which the rep has already met all requirements to receive them, such as closed deals within the earning period. However, Unearned Commissions are commission payments for which the rep hasn’t yet met all requirements to receive them, such as a deal closed but outside the earning period.

Clearly defining these terms in your compensation agreement is fair to both parties in several ways. It ensures the rep receives the compensation they’ve rightfully earned for their completed work and the company doesn’t pay out for work not yet complete. Plus, it builds employee trust and morale by having a transparent and fair outline of the rules.

2. Communicate Clearly With Existing & Departing Reps

Proactive communication throughout a rep’s employment and during their departure is essential to build transparency and trust. As a result, you prevent frustrations, poor morale, and misunderstandings. Your commission-related communications should include:

• Review Policy Terms: Review the relevant commission policy terms with the departing rep to ensure they understand their entitlements.
• Discuss Payout Timeline: Communicate the timeline for a payout of earned commissions.
• Address Concerns: Openly address any questions or concerns the rep may have regarding their outstanding commission.

1. Lead with Fairness.

Establishing fair and equitable policies helps foster trust within the organization so employees know what to expect and what is expected. It supports the company’s reputation in the market and helps attract top talent.

There are various ways to incorporate fairness into your commission policies. For instance, communicate effectively, ensure equal pay for equal skills, experience, and contributions, and offer quota relief. You can also periodically conduct market research to ensure you’re offering market-competitive compensation and request employee feedback concerning their commission plan.

We believe that paying departing reps on what they sold, regardless of the agreement, since they should be paid what they earned instead of what we legally owe them.

Honor Commissions

Do the right thing and honor commissions when a rep leaves. Leveraging our best practices will help you achieve this goal. Know the state laws, establish a clear commission policy, and differentiate earned from unearned commissions. Then practice clear communications with existing and departing reps and establish fair and equitable compensation policies.

QuotaPath partners with leaders to develop fair and equitable compensation plans and policies and make compensation management processes more efficient through our technology. Schedule time with a team member or sign up for a free trial to see for yourself.

Strategic partnerships can lead to up to 30% revenue increases. 

It’s no wonder SaaS companies are heart-eyed toward this function. 

But compensating for this role can be tricky. 

Much like compensation plans for other go-to-market roles, your partnership compensation plans will depend on your organization’s maturity, target market, and goals. 

Are you an early-stage startup forging your first partnerships or a well-established player with a robust partner ecosystem?  Who are you trying to reach with your partners? Understanding their needs and behaviors will dictate the most effective partner compensation approach. Are you aiming for rapid market penetration or building long-term, strategic partnerships that deliver recurring revenue?

By carefully considering these factors, you can design a partnership compensation plan that aligns incentives, motivates your team, and ultimately drives sustainable growth for your SaaS business.

Below, learn about the rise of channel partners and a few ways to consider compensating your in-house partnerships team. 

What is a channel partner?

First, what is a channel partner?

Reaching your target market and achieving consistent growth can be a challenge.  This is where channel partners come in, acting as a powerful extension of your go-to-market (GTM) strategy.

Channel partners are external companies collaborating with you to sell your SaaS product or service. They leverage their established industry relationships, market knowledge, and expertise to reach a broader audience and generate leads on your behalf. 

Essentially, they act as an additional sales force, expanding your market reach, and brand awareness while enhancing your organization’s credibility and reducing your sales and marketing costs.

The most common types of channel partners in SaaS fall into two categories:

• Technology: Technology partners have deep product knowledge and integrate your offering with their services to deliver enhanced customer value (E.g., HubSpot and QuotaPath).
• Resellers: Resellers act as intermediaries, purchasing your software licenses wholesale and then reselling them to end-users at a markup. They focus on distribution and sales volume.

By building a strategic network of channel partners, you add another avenue to increase pipeline and further define your ideal customer profile. 

How to Tell if You’re Ready For Partnerships

Despite the clear benefits of adding partner channels, not every organization will be ready to activate this lever immediately.

Here are some scenarios that indicate your business should add a partnerships vertical:

By recognizing these scenarios, you can identify if a partnership vertical makes sense. 

Rise of Channel Partners

Securing tech partners is a sales play and retention play; the stronger the partnership, the more benefits there are for both. This philosophy has become increasingly clear to businesses in recent years, fueling a dramatic rise in the importance of channel partners within the SaaS landscape.

For instance, according to Glassbox VP of Partnerships Alex Richards, a whopping 85% of SaaS companies acknowledge the critical role strategic partnerships play in their growth trajectory.

Meanwhile, 65% of SaaS companies actively partnered with another organization in the past year, highlighting the shift towards a collaborative approach to market expansion.

For real-time data, search “SaaS Partnerships jobs.” Thousands of roles are open, with about 300 at the executive level. 

These statistics paint a compelling picture: partnerships are not just a trend but a strategic imperative for driving growth and success in today’s competitive SaaS landscape.

2024 Channel Partner Trends 

So, what’s next for channel partnerships? 

Techaisel compiled a list of 10 Channel Partner Predictions, three of which we’ve pulled for you below.

1. Shifting Margins: Partners Embrace Customization

Shrinking margins are pushing partners to move beyond basic reselling. Success lies in offering customized solutions that combine multiple products with high-value services like integration and support. However, striking the right balance is crucial. Partners need to avoid overly generic offerings that get commoditized, while also keeping the cost of highly customized solutions manageable. This shift demands expertise in modular solutions and a flexible approach that adapts to evolving customer needs.

2. AI: Friend or Foe? Partners Adapt to the New Landscape

AI is transforming IT, impacting both partner value propositions and the buying landscape. Channel partners need to embrace AI to stay relevant, offering solutions that leverage its benefits for faster business results and efficiencies. However, a proactive approach is key to avoid being disintermediated by vendors who develop their own AI-powered sales tools. Partners must carefully evaluate trends and invest in capabilities that align with their business goals.

3. From Push to Pull: Partners Embrace Ecosystems

Customer demand for hybrid solutions is driving a shift from traditional channel models to collaborative ecosystems. Partners must adapt by developing strong multi-party collaboration skills and integrating around data-driven solutions. This means focusing on customer needs, not just selling products. Building successful ecosystems will be essential for partners to stay competitive.

Partnership Compensation Plans

With these insights into the partnership landscape, let’s explore compensation plans that incentivize the behaviors and drive the results predicted for successful channel partners.

Think of partnership compensation plans in the same way you would business development: it’s an investment.  

Just like you incentivize your sales team to close deals, a well-designed partnership compensation plan motivates your partners to promote your product or service actively, ultimately driving growth for your entire ecosystem.

Remember that how you structure reseller partners’ compensation will differ from that of referrals from technology partners.

“If it’s a referral, you’re paying the partner something,” said Graham Collins, QuotaPath Head of Partnerships. “So, you might end up paying a collective 20% to honor 10% for the referral from the reseller and another 10% to your sales rep who closes the deal.”

Other things to keep in mind from Graham:

• The base:variable pay split is normally in the 65:35 range for in-house Partnership roles
• The commission rate will vary because it depends on how much of your revenue stems from partnerships
• When paying the referral fee, it’s best practice to keep the commission rate for your sales rep the same (versus lowering it for this scenario)
• Resellers will earn a higher commission rate because the commission stack is lower (you’re not involving sales reps from your side)
• Pay them consummate with the work they are doing for it

New Partnership Team Comp Plan

First, we have a comp plan structure for a new partnership team. 

In our experience, new partner organizations earn compensation according to the number of new partners they get. This could take form based on new partners signed or new partners submitting their first lead. 

Example: Single-rate Bonus (flat fee)  X$ per partner

The New Head of Partnerships receives $500 per partner with a target of adding five partners per month. Again, this could be based on the Head of Partnerships singing them on as a partner or timed with the action of a new partner submitting their first lead to your organizaiton. 

Mature Partnership Team Comp Plan

Once your partnership team matures, it’s time to base their bonus on a pipeline component. This could be according to the number of demos booked via your partner channels.

After that, you’d move to revenue generated from partner channels. 

Add pipeline component – no. of demos booked, then move to revenue generated

“As the partner org. matures even further, and you figure out what good customers and partners to create these with. That’s when you measure revenue sourced/influenced by partners,” said Graham.

Getting in on Partnerships

Crafting a successful partnership compensation strategy requires a careful balance of motivation, alignment, and measurement. 

By understanding your organization’s unique goals and the dynamics of your partner ecosystem, you can design a compensation plan that drives growth and fosters long-term partnerships.

Consider leveraging specialized tools and expertise to maximize the effectiveness of your partnership compensation strategy.

QuotaPath offers comprehensive solutions for managing complex compensation plans, including partnerships. Our platform provides the data, insights, and commission automation needed to optimize your partner incentives and drive exceptional performance.

Let’s connect to discuss your specific needs and explore how QuotaPath can help you achieve your goals.