Choosing the right compensation management software is essential for aligning sales performance with business goals while ensuring accurate and transparent payouts.

With a growing number of solutions available, businesses need tools that not only automate commission calculations but also provide flexibility, reporting, and seamless integrations.

This guide evaluates five leading platforms—QuotaPath, Xactly, Spiff, CaptivateIQ, and Performio—based on their usability, key features, and effectiveness in streamlining sales compensation processes. Whether you need real-time reporting, AI-powered intelligence, or intuitive commission tracking, this comparison will help you find the best fit for your organization.

What Is Compensation Management Software?

Compensation management software is a tool used by organizations to plan, manage, and administer employee compensation packages. These packages may include salaries, bonuses, and other incentives. The software helps ensure fair and competitive pay structures aligned with organizational goals while adhering to compliance regulations. Compensation tools also help organizations make informed decisions about employee compensation based on data-driven insights. 

What To Look For In A Compensation Management and Planning Tool

The global sales compensation tools sector is projected to triple in value by 2033 compared to 2022.

Although the market is becoming increasingly competitive, choosing the best salary benchmarking tools for your business can be straightforward if you know what factors to look for during the selection process.

Here’s what to consider when choosing the best compensation management software for your organization.

Sales Commission Reports in QuotaPath

QuotaPath’s sales compensation reporting helps you measure the business value and performance of the GTM team’s compensation plans and performance.

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Sales commission reporting

Your solution should produce executive- and rep-level revenue forecasts and quota attainment reports. Choose compensation analysis tools that automatically generate accurate estimates using CRM data, allowing leadership to view their sales team’s projections.

Compensation plan modeling

When it’s necessary to modify or develop new plans, your platform should enable you to outline a plan proposal and evaluate it using historical sales data.

Ensure that your chosen compensation tool gives you autonomy to build and edit plans without the need of Support. “I’m really impressed that we can build our comp plans ourselves in QuotaPath and have full ownership of the process. Having that understanding and control is a huge factor for us,” said Hadley Kornacki, VP of Operations at Edgility Consulting. 

Plan effectiveness tracking

Adjusting incentive plans based on their effectiveness and market conditions is a standard practice. Choose a tool that supports compensation plan performance monitoring to assess a compensation plan’s success. This type of platform provides insights into team performance and displays sales metrics such as average effective rate, plan attainment, and total earnings by salesperson.

ASC-606 compliant

The compensation tool you select should enable your accounting team to monitor audit trails and recognize commission expenses to simplify compliance with the new ASC 606 regulations.

Easy support access

Choose a vendor that is easy to contact after you sign up. 

Seek continual customer support services with short response times for creating and adding new plans, adjusting comp plans, or running payouts.

Rep motivation

Identify a solution that Finance, RevOps, and your Reps will enjoy using. The software you choose should have an intuitive interface that’s easy to navigate. It needs to help reps to understand their comp plans by providing them with reporting and dashboards to easily view goals, accelerators, and bonuses and monitor milestone achievement progress.

Meet the Industry’s First AI-Powered Compensation Plan Builder

Speaking of intuitive… have you heard about QuotaPath’s AI-Powered Plan Builder to configure your comp plans to QuotaPath with ease?

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In-app communication

Team collaboration features in your selected platform help streamline the compensation discrepancy dispute resolution process. For example, look for features that enable reps to escalate disputes through the software, where Finance and Accounting can quickly respond.

Top 5 Compensation Management Tools

We’ve gathered insights about the five best salary benchmarking tools to aid in your selection process.

QuotaPath

QuotaPath is a commission tracking and sales compensation management software. It simplifies and automates processes across RevOps, finance, and sales teams, integrates with CRM and finance systems, and offers resources for compensation plan design and implementation, suitable for various organizations. 

Key Features:

• Performance Plan Modeling and Forecasting
• HubSpot and Salesforce visibility directly in those apps
• Multi-level payout approvals 

Best Used for: cost-effectiveness, ease of use, and ability to improve commission visibility and confidence among sales teams, with strong customer support, seamless tech stack integration, and robust plan modeling and forecasting capabilities 

G2 Rating:  4.7 out of 5 

Xactly

Xactly streamlines incentive compensation plans to align sales rep behavior with revenue goals. It cuts admin time, boosts quota achievement, and ensures accurate payouts. Integrating with CRM, ERP, and other systems, it provides a full view of program effectiveness and aids strategic decisions.

Key Features:

• Compensation configurator
• Customized incentive statements
• Real-time reporting and dashboards 

Best Used for: excellent customer support, ease of configuration, and accurate commission calculations. 

G2 Rating: 4.3 out of 5

Spiff

Spiff software integrates the simplicity of spreadsheets with comprehensive commission automation, allowing finance and sales operations teams to effectively manage complex incentive compensation plans. It enhances organizational trust, motivates sales teams, and provides performance visibility for enterprises of various sizes.

Key Features:

• Advanced Reporting & Analytics
• Advanced Team Management
• Powerful Testing Capabilities 

Best Used for: visibility into commissions, ease of use, and intuitive navigation 

G2 Rating: 4.7 out of 5

CaptivateIQ

CaptivateIQ is an adaptable commission management solution that combines the simplicity of spreadsheets with sophisticated automation tools. It enables organizations to efficiently design, compute, and oversee intricate incentive compensation programs. This software facilitates teams to swiftly adapt, reduce errors, and obtain real-time insights, thereby ensuring alignment with evolving business objectives.

Key Features:

• SmartGrid™: ELT & Calculation Engine
• Assist: AI-Powered Intelligence
• Enterprise Workflow Automation 

Best Used for: highly customizable, user-friendly, and effective for clear reporting and commission calculation transparency, supported by a strong customer service team 

G2 Rating: 4.7 out of 5

Performio

Performio software is an incentive compensation management tool for automating and managing sales commission calculations. It enables businesses to create complex compensation plans, monitor sales performance, and simplify the calculation and distribution of commissions to sales teams.

Key Features:

• Native data integrations
• Pre-built incentive automation
• Robust reporting capabilities 

Best Used for: Ease of use and navigation, plus commission tracking ease

G2 Rating: 4.4 out of 5

Partnering with the Best Compensation Planning Software

The growing complexity of compensation structures, a focus on revenue performance, and the rise of remote work have made compensation analysis tools essential. Choosing the best compensation management software is crucial for optimizing sales performance and ensuring fair, transparent, timely, and accurate payouts.

There are advantages of leveraging compensation tools such as increased payroll accuracy and efficiency, earnings transparency, sales rep motivation, and cost savings.

QuotaPath provides a user-friendly interface with straightforward updates and transparent, low professional service fees when compared to major competitors. The platform includes free native, real-time integrations, a free trial period, quick implementation, and dedicated support.

Multiple native CRM integration options, visible pricing, short implementation times, and compensation plan modeling make QuotaPath different than other compensation management tools.

As you work through the compensation management software selection process, seek:

• Easy and accessible sales compensation reporting
• Compensation plan modeling and testing capabilities
• Plan effectiveness tracking
• Streamlined commission payouts
• ASC-606 compliance capabilities
• Driving sales performance
• Support access
• A platform your reps will use and enjoy
• In-app team collaboration features

QuotaPath fulfills these requirements and more, making us the top compensation management software.

Discover why QuotaPath is the best option. Explore QuotaPath with a free trial or schedule time with a team member today.

FAQs

How does compensation management software work?

Compensation management software consolidates data through integrations with various platforms enabling plan administrators to create, calculate, and manage employee compensation packages. Such a platform automates processes, ensuring fair and competitive pay while adhering to budget constraints and market trends. It typically includes features for compensation analysis, benchmarking against industry standards, and reporting to facilitate informed compensation decisions.

What are the benefits of using compensation management software?

The benefits of leveraging compensation management tools include efficiency, accuracy, improved sales, motivation, transparency, and a single source of compensation information.

This software helps eliminate errors in payroll calculations, reduces the time needed to prepare payroll, and gets all teams on the same page through access to the same compensation data.

Employees also gain a greater understanding of how they earn and can track their earnings, motivating them to pursue and achieve greater results to drive organizational goal attainment.

Can compensation management software integrate with other tools?

Yes, compensation management software can integrate with other tools fundamental to the commission process. Integrations include CRMs, data warehouses, spreadsheets, business analytics, and payment and ERP systems. This facilitates smoother data flow and more accurate compensation calculations by pulling relevant employee data from multiple sources. These integrations also enable robust reporting, enabling informed strategic decision-making.

What types of compensation can these tools manage?

Compensation management tools can manage a variety of compensation types. For instance, compensation tools administer base salary, bonuses, commissions, incentives, stock options, merit increases, performance-based pay, benefits, paid time off, and other types of employee incentives. These platforms also enable adjustments based on individual performance, market data, and company budget.

Sales commissions are a strategic tool for sustained business growth. An effective sales compensation plan aligns incentives to business goals, motivating the right behaviors to achieve business objectives. This, in turn, improves the quality and quantity of deals and customers.

In fact, companies that focus on employee motivation and engagement realize 27% higher profits, 50% higher sales, 50% higher customer loyalty levels, and 38% above-average productivity.

Additionally, a strong sales commission structure drives business goal achievement and facilitates recruiting and retaining reps. The facts speak for themselves. The Sales Happiness Index showed that 51% of sales reps would be motivated to leave for higher pay. Plus, a Sales Management Association study revealed that companies with effective sales compensation programs had a 50% higher employee retention rate than those with weak programs.

Let’s break down a typical sales commission structure, review best practices, and share some compensation plan examples.

What Is A Typical Sales Commission Structure

Before we discuss the various types of compensation structures, let’s review the common frameworks and elements used to build a typical sales commission structure.

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Read the ungated report to learn the most commonly implemented SPIFs and accelerators in 2024 and the average commission rate increase for multi-year contracts.

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Types of Sales Commission Structures

Now, let’s look at some commonly used typical sales commission structures.

Single-Rate Commission
An easy-to-understand plan that pays the same rate on every deal. A single-rate plan is an excellent “first” compensation plan. It works well for a Startup, early-stage company, new product, or new territory when you don’t have historical data to leverage when developing your compensation strategy. It is also the easiest plan to execute and suit various industries.

Commission with Accelerators

This tiered commission structure is an effective way to reward overperformance. However, it can become costly if your entire team overperforms. This plan is typically adopted by SaaS companies that are confident in their quota and target calculations.

Commission with Accelerators & Decelerators

A 3-tiered sales commission structure is commonly used by SaaS, offering products that aren’t impacted by seasonal shifts in buyer behavior. However, we don’t recommend this compensation plan if you’re in ecommerce. This plan is well suited for mature companies confident in their targets and seeking to contrast the top performers from the underperformers.

Commission with Accelerators & Milestone Bonus

This plan effectively incentivizes consistency with high-velocity, lower contract-value sales. However, watch out. This plan can lead to sandbagging.

Commission with Accelerators & Cliff

This plan establishes a minimum threshold before reps qualify to receive commissions, protecting the business from paying reps who aren’t performing up to standard. However, this structure is more commonly used in leadership plans as it can lead to sandbagging and unhappy reps.

Tips for Sales Team Commission Structures

There is no one-size-fits-all typical sales commission structure. It takes research, analysis, reiteration, and refinement. However, the rewards are worth the effort. Remember the following best practices to help you create an effective incentive structure for your sales teams. (NUMBERED)

1. Align with Business Goals.

An effective commission structure supports company objectives by incentivizing behaviors that drive business goal achievement—for instance, motivating reps to increase customer lifetime value or expand into new markets.

2. Keep it simple.

Your commission structure needs to be easy to understand. This enables reps to know what they need to do to earn incentives and are motivated to take action to drive the desired results. Otherwise, you risk reducing performance, increasing rep turnover, and falling short of organizational objectives.

3. Set fair and realistic quotas.

Analyze your sales team’s quota attainment record to find the balance between ambitious and achievable quotas. The sweet spot is between 60 and 100 percent. Less than 60 percent of achievement reveals too high of a quota, whereas 100 percent means the quota isn’t high enough. Setting fair and realistic quotas motivates reps and drives business goal achievement. However, establishing unattainable quotas typically leads to demotivated reps and employee attrition.

4. Communicate Effectively

Introduce your compensation plans promptly, especially if you make mid-year changes to your commission structure or plan elements. Start with leadership providing an overview of the plan. Then, share various formats of support materials, such as videos and print material, including plan documents and examples of how to calculate commissions, with all team members. Discuss changes and why they are occurring. Review the plan with your team as well as in 1-on-1 meetings.

Ensure reps understand the changes, the reasons for them, and how the company will support them under the new plan. Provide multiple channels where reps can get answers to their questions. Confirm reps understand their plan by having them sign off on plan verification.

5. Research market OTEs.

As base salaries for sales reps consistently change yearly, you must do market research as you create or update a typical sales commission structure. This helps you attract and retain top talent with a competitive incentive plan as competitors and industries evolve.

6. Use a Sales Commission Calculator: 

A platform like QuotaPath can help you accurately calculate commissions and analyze the impact of various structures on your sales team’s earnings and your company’s bottom line. This type of software also enables sales reps to run what-if scenarios with new plans, boosting plan understanding, motivation, and buy-in.

Free Sales Commission Calculator Template

A free spreadsheet to simplify the commission tracking process. Track what you or your team have earned in 4 inputs.

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7. Repeat and Adjust 

Lastly, a comp plan isn’t set in stone and should be reviewed and updated at least once a year but no more than twice a year. Evaluate commission plans for effectiveness by identifying what is working and what isn’t. Adjust based on these observations, organizational goals, marketplace, and economic shifts.

Typical Sales Manager Commission Structure

Sales manager compensation plans differ from sales rep plans in focus, pay mix, and metrics.

For instance, sales rep structures are tied to individual performance, such as deal size, quota achievement, and activities, such as the number of demos or meetings scheduled.

Conversely, a typical sales manager commission structure is tied to team performance elements like team development, coaching effectiveness, and collective quota achievement.

The pay mix typically differs between sales rep and manager compensation structures. For example, reps often receive a 50/50 mix of base and variable pay, while managers receive higher base pay plus bonuses.

Key performance indicators (KPIs) used to gauge achievement are also a central area where typical sales rep and sales manager commission structures differ. For instance, sales rep incentives are often tied to closed/won deals and activities metrics. By contrast, manager incentives are commonly tied to team attainment, team growth, and retention.

Below are three typical sales manager commission structure options to consider as you build yours.

Single Rate Sales Manager Commission Structure

Sales managers’ quotas are usually based on the combined quotas of their team members. However, this is not always the case. Sometimes, a “buffer” of 10-20% is applied when calculating a sales manager’s quota, allowing for a potential shortfall in team quota attainment. For instance, a sales manager has six reps reporting to them, each with a $150k quota. The manager’s quota is 90% of that sum. So, instead of $900k (6*$150k) it is $810k ($900k*90%).

The sales manager’s compensation based on the deals their reps close enables them to focus their efforts on coaching their team members to close more deals. 

Single Rate Sales Manager Commission Structure example:

Quota: $945k per quarter (based on a team of 6 reps at a $175k/quarter quota, held to 90%)

On-Target Earnings: $200k per year

Base Salary: $100k per year

On-Target Variable: $100k per year

Commission Structure: 2.65% of all deals their reps close

Notes: This simple structure utilizes a single rate commission. That means that the manager earns the percentage on all deals their team closes, despite their team quota attainment. This type of plan is commonly adopted because it is easy to understand, implement, and build on as a company grows.

Sales Manager Commission Structure: Commission with Accelerator

The plan is a typical sales commission structure that is commonly adopted for sales managers. 

In this compensation plan, the manager receives a fixed commission rate for each sale made by their team. After the team exceeds 100% of its quota during the quota period, the manager’s commission rate increases for each additional deal.

The commission rate should be adjusted as the team’s size changes. Failing to do so can substantially impact the manager’s income potential.

Including a “cliff” in this plan is typical, protecting the company from rewarding underperformance.

Sales Manager Commission Structure Example: Accelerators

• Commission Tiers:
  0-100%: Base rate: 3.1%
  100%+: 1*5 base rate 4.63% (non-retro)
• Annual OTE: $200,000
• Base:variable: $100,000 / $100,000
• Pay mix ratio: 50:50
• Annualized Team Quota: $3.6M Annually
• Quarterly Team Quota: $900,000
• Manager Buffer: 90%
• Manager Quota: $3.24M Annually

Sales Manager Commission Structure: Bonus

This final sales manager commission structure example includes bonuses as incentives.

This structure designates managers receiving a pre-determined bonus for each attainment point linked to their team’s overall quota achievement.   

The Sales Manager’s bonus percentage for this compensation plan is based on their team’s quota attainment percentage. For example, if the team achieves 93% of their quota, the Sales Manager will receive 93% of their bonus (calculated at $250 per percentage point), regardless of the quota size.

This structure also incorporates a manager buffer of 10% to account for a potential shortfall.

However, regardless of team size, the manager’s bonus remains consistent within this sales leadership compensation plan. While the team may grow or scale back, the per-attainment bonus remains unchanged. 

Sales Manager Compensation Plan Example: Bonus

• Single-rate bonus: $250 per percentage point of attainment
• Annual OTE: $200,000
• Base:variable: $100,000 / $100,000
• Pay mix ratio: 50:50
• Rep Quota: 150,000 Quarterly
• Annualized Quota amount: $3.6M Annually
• Quarterly Team Quota: $900,000
• Manager Buffer: 90%
• Manager Quota: $810,000 Quarterly
• Manager Quota: $3.24M Annually

Typical Sales Commission Structures — Final Thoughts

A typical sales commission structure facilitates sustained business growth. It aligns incentives with business goals, motivating the right behaviors to achieve business objectives while boosting revenue and loyal customers. An effective compensation plan also helps attract and retain sales talent, further stabilizing company growth.

One size does not fit all when it comes to building compensation plans. Select a structure and consider our best practices as you create your plans.

See how QuotaPath streamlines compensation plan creation and administration. Schedule time with a team member today.

FAQs About Sales Commission Structures

How much should I pay in commissions?

The percentage of total compensation that is commission impacts on how much the employee can potentially earn. One size does not fit all when determining how much commission to pay. Factors to consider when making this decision include the type of sales role, the company’s sales goals, the person’s experience and performance, and industry benchmarks.

How do commissions affect my bottom line?

An effective sales commission structure positively impacts a company’s financial health. By aligning sales goals with company objectives and incentivizing desired behaviors, you can increase sales productivity and revenue. A competitive commission plan also protects your bottom line by boosting employee retention, reducing turnover costs, and increasing sales force stability.

What’s the difference between OTE and base salary?

On-Target Earnings (OTE) refers to the total amount an employee can potentially earn in a year if they meet all their sales targets. This figure includes their base salary and incentives. By contrast, the base salary is the fixed amount of money an employee receives regardless of their performance. Therefore, OTE represents the employee’s total potential earnings while base salary is the guaranteed minimum pay.

When managing any organization, efficient payroll is essential.

Handled correctly, you can ensure that staff are consistently paid on time. But all too often, bottlenecks occur, slowing the process. This can lead to employees feeling frustrated and less motivated in their roles.

Of course, the larger your organization, the more complex the payroll process becomes. 

That’s why businesses are turning to cloud-based solutions to improve the payout accuracy. This technology centralizes employee data into a unified space. The software can automate manual tasks from here and guarantee regular and error-free staff payments.

On an even bigger scale, the cloud can transform organizational efficiency, boost employee satisfaction, and cut costs with the right approach. In this article, we’ll explore these robust solutions in more detail.

We’ll also show how to transition from outdated legacy systems to a cloud-based approach. 

Benefits of cloud-based solutions for payout accuracy

There’s no denying that cloud-based solutions represent the next step for payroll. But what benefits does the technology bring to the department? We’ve explored some of the top advantages below. 

Enhanced data management and real-time processing

Cloud-based payroll solutions simplify data management thanks to real-time processing. This technology processes data as soon as it becomes available. It can then be outputted to systems that require time-sensitive responses. 

Real-time processing enables cloud-based payroll systems to calculate employee wages and taxes as they are earned. This is as opposed to making a manual calculation at the end of each payment period. This guarantees that employees can have quicker access to their hard-earned wages. 

Ultimately, an employer that pays staff more quickly will always be preferred to a slower alternative. In this way, cloud-based payroll can also be a factor in reducing staff turnover and maintaining good employee relations.

Automation and reduced human error

Automation is a key aspect of all cloud-based solutions. Consider the different manual processes involved in payroll. In addition to the basic wage, additional factors such as allowances, expenses, and bonuses add complexity. By carrying out this process manually, not only are mistakes more likely, but so are delays, which can lead to employee frustration.

With all this complexity, mistakes can creep in at any stage of the process. Cloud-based solutions will automate and standardize a wide range of processes, from invoice processing to tax calculations, removing manual activity and cutting out the risks. There’s no danger of mistakes, as the software will carry out tasks as programmed, consistently and accurately. 

The same goes for external contractors and freelancers that you work with. If they’re not already, they should be encouraged to use invoicing software to automate and manage their invoicing process, reduce the risk of errors, and ensure they are getting paid on time. 

Scalability and flexibility in financial operations

The more employees your organization takes on, the more difficult the task of the payroll team becomes. Each new staff member requires paperwork and onboarding. All wages must also be logged for financial accountability. 

Without cloud-based software, your payroll team must also scale up. You’ll need additional employees to handle the rise of manual tasks. Conversely, if you scale down your employee base, you’ll need fewer payroll staff. 

Cloud-based solutions make scalability much simpler. Most software is extremely flexible, allowing you to choose the features you need. You can pay to scale up alongside the growth of your organization. What’s more, this approach is usually more cost-effective than hiring a larger team. You don’t need to worry about training or onboarding, as cloud-based tools work straight away. 

Key cloud-based technologies for payout accuracy

There are many clear benefits to using cloud-based technologies for payroll. But which tools are most useful for boosting accuracy and guaranteeing efficient payout? We’ve explored some top examples below. 

Data analytics and AI integration

It’s useful to know what your payroll numbers are and what they mean for your business. That’s why payroll analytics software has been incredibly useful not only in determining where improvements in the HR process can be made but also for employee insights that boost performance, such as when individuals or departments are due a raise. 

Listed below are some of the main ways data analytics can provide useful payroll insights: 

• Identify savings – Software enables you to keep a close eye on costs, and spot areas where savings can be made. 
• Predict trends – Using AI-powered machine learning, analytics can predict future payroll trends. For instance, you can forecast periods where you’ll require additional employees. This way, you can more effectively budget for the future. 
• Spot fraud – Analytics can help you identify inaccuracies within your payments. You can spot mistakes or fraudulent activities before they become too costly. 

Smart contracts and automation tools

AI-powered contract automation tools allow us to create ‘smart contracts’. These contracts are automated and run on a blockchain. They’re programmed to carry out certain actions once predefined tasks have been completed. Payroll teams can use smart contracts to automatically send payments to employees once they have completed a set amount of hours. 

Smart contracts present a much more efficient alternative to traditional contracts. Instead of paying employees on a set date, staff are paid once work is complete. Employees will be happier as this means they can get access to their earnings more quickly. 

Secure cloud storage and data encryption

Managing data securely is now more critical than ever. To keep the trust of employees, and remain compliant with emerging data legislation, businesses must keep payroll information secure. 

Using a cloud-based platform helps to keep your data safe. These solutions offer data encryption, making sure that information is only available to those with access. Cloud platforms are also designed to be compliant with data laws. With data stored on the cloud, there’s less risk of incurring costly fines. 

Steps to transition from legacy systems to cloud-based solutions

What if your payroll team is still using outdated legacy systems? Stick to the following steps to bring your software up-to-date. 

Assess current systems and define objectives

The process should begin with thoroughly assessing your existing systems and budget. It’s logical to upgrade your payroll alongside carrying out a wider overhaul of your HR systems, but this requires careful planning.

Use your accounting software to forecast your cash flow and create reports that will help you make strategic decisions. With a clear budget and objectives, you can monitor costs and analyze how this transition to a cloud-based solution has benefited your business over time.

Once you’ve determined your budget, you should list and review all the critical areas in your payroll systems. Which are in most need of an upgrade? To measure current performance, you could track systems against payroll KPIs. For instance, you might look at the volume of data input issues or calendar length (the length of time it takes to complete an average payroll run). 

Select the appropriate cloud solution

With so many cloud-based payroll solutions available, it can be difficult to know where to start. The ‘best’ choice will depend on the unique needs of your business. As a broad rule, look for the following features: 

• Software that is recognized by your local tax authority. 
• Varied functionality that allows you to manage payslips and other employee documents. 
• The ability to scale payroll requirements alongside a growing workforce. 
• The option to share documents and easily collaborate with other payroll or HR staff. 
• Integration with HR and other business tools. 

Carry out data migration and system integration

It’s important that you can smoothly migrate data from your legacy systems to the cloud. Luckily, most cloud-based software offers a simple setup with minimal steps. Your provider should assist you with a step-by-step guide for a simple and smooth migration. 

In general, you’ll need the following details when migrating to a new system:

• Employee details (full name, address, start date of employment, etc). 
• A list of year-to-date earnings and deductions. 
• Employer year-to-date information (e.g. an employee’s net pay). 
• Details relating to pension schemes and providers. 

Customize and optimize your tools

Once you’ve set up your cloud-based system, it’s important to tailor it to your needs. Cloud solutions adopt standardized processes. As mentioned, though, the best solutions allow you to configure these so you can make sure that your organization’s needs are met. 

To begin, consider the best dashboards to allow you to present your payroll analytics. These should include performance against your KPIs and other measures that help you manage your processes and deliver maximum effectiveness. Look for cloud solutions that offer easy-to-digest visualizations that allow staff to track performance and support strong data analysis. 

Alongside this, consider access to your cloud data. Are appropriate levels of access assigned to the right people? Consider division of responsibilities to guarantee integrity. Are important documents stored correctly, and are you on top of version control? 

There are many areas where the right configuration choices will boost performance. By optimizing your tools, you can make sure you’re getting the most out of your cloud solution. 

Deliver staff training and change management

As we’ve explored, introducing cloud-based payroll systems brings many benefits. The transition, though, represents a change for your staff. Some employees, particularly those who have worked for you for a long time, may be apprehensive about this change. To reduce concerns, highlight the benefits of cloud automation before an upgrade. Explain how the transition will help to make employees’ lives easier. 

Once systems are in place, be sure to offer training and ‘show the ropes’ to your team. Payroll training services can provide expert knowledge and insights. If you have any employees with previous experience, it may also be wise to appoint ‘champions’ to provide additional assistance to teammates who are struggling. 

Lastly, create a space on your LMS or HR platform so that staff can access learning materials. These resources should be accessible on the go so that staff can learn in an environment that suits them.  

Key takeaways

The rise of cloud-based technologies represents an exciting opportunity for payroll teams. It’s a chance to reduce error, cut out manual work, and pay employees more quickly. 

Here, we’ve explored some of the key cloud-based technologies to enhance the payout process. Thanks to AI-powered analytics, teams can gain greater insights into their payroll data. With smart contracts, you can guarantee faster payment. Most importantly, the cloud provides a secure space to protect sensitive employee data. 

So, why not embrace the future? Follow our steps and switch to a cloud-based payroll system today. 

A variable compensation plan drives performance by improving employee motivation and retention and creating alignment between employees’ day-to-day tasks and business goals.

We love a variable comp plan, because when they’re well done, they boost employee motivation.

Linking financial rewards to performance encourages employees to invest more effort and achieve greater results. This increased motivation ultimately leads to improved performance and better outcomes for the organization.

Variable compensation plans also play a crucial role in enhancing employee retention.

Offering incentives such as stock options and performance-based bonuses helps employees feel valued and acknowledged, reducing the likelihood of them exploring other job opportunities. Furthermore, these plans align employee efforts with company goals, fostering greater commitment.

What Is a Variable Compensation Plan

A variable compensation plan is typically salary plus performance or growth-based pay. Variable pay structures link incentives directly to company goals and fluctuate based on employee performance. This method motivates greater productivity and aligns individual and team efforts with organizational goal achievement.

Although there are different types of variable compensation, all types result in employees earning more pay when they meet or exceed targets or when the company achieves its growth goals.

Profit-sharing plans: A portion of a company’s profits distributed to employees, typically paid on a quarterly or annual basis, cultivating a sense of ownership and shared success. (Read more on a profit-sharing based comp plan.)

Stock options and equity-based incentives: Stock options give employees the right to purchase company stocks at a pre-determined price, whereas equity-based incentives grant employees company shares. Both incentives align employees’ interests with those of the investors.

Watch: Equity 101: Understand What Equity, Stock, and Options Really Are

The median employee stock option program (ESOP) is typically 13-20% of company equity, according to Carta. These forms of company bonuses are popular with 58% of companies including equity in their variable compensation plans according to Alexander Group’s 2024 survey.

Variable Compensation Plan Examples

How do you translate these incentives into compensation plans for different roles in your organization?

These variable compensation plan examples will help you get started.

Account Executive Sample Plan

Quota: $200,000 of ARR per quarter
On-Target Earnings (OTE): $150,000 per year
Base Salary: $80,000 per year
On-Target Variable: $70,000 per year
Commission Structure: 10% commission on all ARR sold until quota is reached, then 15% commission on all ARR above quota

Notes: This plan includes a straightforward accelerator to reward over-performance. The sales rep earns a flat commission rate until they hit their quarterly quota. Once the quota is achieved, the commission rate increases for any revenue generated beyond the quota. Importantly, the higher commission rate only applies to the incremental revenue above the quota, not retroactively to the revenue earned earlier in the quarter.

Customer Success Rep Comp Plan

Quota: 85% customer retention rate per quarter + $50,000 in expansions per quarter

On-Target Earnings (OTE): $100,000 per year

Base Salary: $70,000 per year

On-Target Variable: $30,000 per year

Commission Structure:

• Retention Goal: Achieving 85% retention secures one-third of the variable pay ($10,000 per year or $2,500 per quarter).

• Expansions: A 10% commission on expansion ARR until the expansion quota is met, then a 20% commission on expansion ARR above quota to incentivize growth.

Notes: This plan combines retention and growth to align with the dual focus of Customer Success teams. Hitting the retention goal secures a reliable portion of the variable pay, while commissions on expansions offer significant earning potential through accelerators. The higher commission rates on expansion ARR above the quota encourage the rep to prioritize upsell and cross-sell opportunities, driving both individual and company growth.

 VP of Sales Variable Compensation Plan

Quota: $2.5 million of new business ARR, broken down quarterly based on the financial model

• Q1: $350k
• Q2: $550k
• Q3: $750k
• Q4: $850k

On-Target Earnings (OTE): $450,000 per year

Base Salary: $270,000 per year

On-Target Variable: $180,000 per year

Commission Structure:

• $400 per attainment point of quota: For every percentage point of quota achieved, the VP earns $400. For example:
  •   If they achieve 92% of their Q1 target, they earn 92 × $400 = $36,800.
  • If they achieve 105% of their Q2 target, they earn 105 × $400 = $42,000.

• $15,000 quarterly bonus for hitting financial target: The VP earns a flat $15,000 bonus if the quarterly financial target is met. This bonus is not prorated for partial attainment and does not increase for over-attainment.

• 1.5% equity vested over 4 years: A long-term equity incentive to align the VP’s interests with the company’s growth and performance.

Notes: This VP of Sales compensation plan is structured to incentivize over-performance with a “per attainment point” bonus structure, rewarding incremental progress toward and beyond the quota. The quarterly quota increases over time to reflect business growth goals. The flat bonus for hitting financial targets encourages focus on broader strategic outcomes, and equity provides a meaningful long-term incentive to stay aligned with the company’s overall success.

Variable Compensation Plan Template

Still need more help? Our free templates will help you build your new variable compensation plans.

•  Account Executive Compensation Plan Templates
•  Account Manager Compensation Plan Templates
•  Sales Development Reps Variable Plan Templates

Variable Incentive Compensation Plan Best Practices

The following best practices will help you build and maintain an effective variable incentive compensation plan.

1. Clearly Define Goals and Metrics

Aligning incentives with key performance indicators (KPIs) makes the plan easy to understand, minimizes confusion, and facilitates tracking performance and success.

Measurable goal examples include a 20% increase in monthly sales revenue, a specified quarterly customer retention rate target, and a designated quarterly average Net Promoter Score (NPS) goal. Not only should goals be measurable, but it’s also essential that they be specific, measurable, achievable, relevant, and time-bound (SMART).  

2. Balance Simplicity and Flexibility

Overly complex plans can confuse employees and reduce motivation. Plans must be easy to understand and transparent, boosting employee buy-in, participation, and outcomes. Plans are not static so flexibility is crucial for routinely adapting to changing market or business conditions.

3. Incorporate Accelerators and Thresholds

Accelerators, higher payouts for overachievement, can motivate employees to exceed targets. By contrast, using thresholds ensure minimum performance levels are met before payouts begin. Accelerators and thresholds can work together to by rewarding salespeople who exceed quota while protecting the business from paying reps who are underperforming.

4. Regularly Review and Update the Plan

Periodic reviews are essential to ensure the plan remains relevant. Regularly gather employee feedback to identify pain points or improvements, giving them careful consideration when making plan changes. And adjust plans in response to business changes, such as new products or market shifts.

5. Ensure Fairness and Transparency

Clear communication of the plan builds trust and reduces disputes. When employees understand the rules, expectations, and incentives, their plan will motivate desired behaviors and boost employee engagement and satisfaction. Fairness in metrics is essential to avoid perceived favoritism or inequity. Goals must feel attainable, relevant, and equitable.

Tips for communicating variable compensation plan changes or updates effective include: 

• Workshops led by leadership, reviewing plan changes.
• Explanations of why the changes are being made.
• A review of the incentive calculations with leadership and in a reference document.
• Resources and enablement support to help achieve new business goals.
• Feedback loop channels where employees can ask questions.

6. Tie Compensation to Both Individual and Team Performance

Rewarding individual achievements while encouraging collaboration with a combination of individual and team performance incentives strengthens team dynamics and fosters teamwork.  For instance, hybrid structures that incentivize personal performance and team success include both individual variable compensation plan elements and team bonuses.

7. Use Technology to Track and Automate Compensation

Leverage tools like QuotaPath and CRMs for tracking performance and automating calculations. Manual commission calculations are error-prone and reduce transparency, leading to disputes and inefficiencies. Automation removes these errors, ensuring accurate and consistent payouts.

Compensation automation also streamlines incentive management by automating calculations, approvals, and reporting, saving time and resources. Sales incentive automation enhances trust by providing real-time insights into earnings and performance.

Allowing reps to track their commissions and progress toward their goals increases their understanding of how they earn incentives, boosting their motivation, and driving greater rep performance.  Real-time visibility also enables managers to monitor performance and identify coaching opportunities.

8. Monitor Plan Effectiveness

Measure the plan’s success through metrics like revenue growth, employee satisfaction, and rep turnover rates. Revenue growth shows how sales commissions impact revenue growth and business goal achievement.

Gathering feedback from quota-carrying sales reps helps ensure compensation plans align with their motivations and drive success. And sales rep turnover rate, which reveals the rate at which salespeople leave the organization, reflects how well compensation plans motivate and retain talent.

Market data helps to benchmark salaries and incentives against industry standards, ensuring you can attract and retain top talent with fair and competitive pay. This research also helps you identify emerging compensation trends and new incentive or benefit types.

Regular reporting to leadership to assess ROI of the incentive plan is advantageous to ensure profitability, relevance, and market alignment.

Frequently Asked Questions About Variable Compensation Plans

What roles are best suited for variable compensation?

Variable compensation is especially effective for roles like sales, customer success, and marketing where the connection between employee performance is clear and easily measured. For instance, at a software company, various teams contribute to revenue growth. The sales team drives revenue by engaging leads and closing deals, marketing attracts and nurtures qualified leads, and customer support fosters positive experiences to retain customers.

How do you balance fixed versus variable pay?

Finding the right balance between base salary and variable pay helps attract, retain, and motivate employees while driving business goal achievement. The balance varies based on several factors including role type, company goals, employee experience and performance, and marketplace benchmarks. Consider these factors to determine the best balance between fixed and variable pay as you build your variable compensation plans.

Can variable compensation plans work in non-sales roles?

Yes, variable compensation plans are effective for sales and non-sales roles alike. These incentives can be tied to a variety of goals such as achieving sales targets, meeting project deadlines, or reaching specific financial metrics. Rewards go beyond commissions and include profit-sharing plans and retention or recognition bonuses that could apply to any role.

How do you handle disputes or miscommunication about payouts?

Payout dispute resolution should be initiated promptly by an employer. Start by reviewing the calculation process and clearly explaining the rationale behind the payout to the employee. Provide the employee with easy access to relevant performance metrics and openly communicate while addressing any concerns. Ensuring transparency throughout the dispute resolution process is key to maintaining employee trust and minimizing further issues.

Compensation planning has always been a critical yet complex process, demanding precision, flexibility, and alignment with unique business goals.

Today, we’re excited to introduce QuotaPath’s AI-Powered Plan Builder, the industry’s first AI solution to easily create, customize, and optimize compensation plans faster than ever within a commission tracking platform.

Generate plans in QuotaPath directly from existing documents or natural language. Organize plan components from an extensive library with drag-and-drop functionality and accurately streamline quota management in one intuitive platform. 

This isn’t just another tool with AI slapped on it—it’s practical and applicable to simplify the entire compensation planning process. 

“I’ve been blown away by the impact of AI-Powered Plan Builder on the plan-building experience and the reactions from early customers,” said QuotaPath Chief of Product Wyndham Hudson. “We’ve taken an inherently complex problem and made it easy for anyone to build plans. Even if you’re starting from a complex formula, you can plug that in, and we’ll instantly create a plan you and your team can easily understand.” 

AI-Powered Plan Builder helps teams develop, manage, and deliver plans that effectively support their company’s goals while eliminating complexity in the plan creation process when automating commission management. 

Drag and drop components within the plan structure to seamlessly establish or change structure hierarchy and visualize plan elements such as shared quotas and dependencies. Take pre-existing plans and use the AI prompt to add new tiers, adjust quotas, or modify commission rates to reflect your current goals and strategies.

With our AI-Powered Plan Builder, deploy compensation strategies that drive selling behaviors that align with your business goals—and deliver them in record time.

“This a great use case for AI,” said RevOps Co-Op Founder and CEO Matthew Volm. “It’s giving someone a head start with a comp plan, a key part of every revenue operator’s day-to-day, and it does it on the first try. You can’t really ask for anything more than that.”

Read more below.

Sample Use Cases

We get it. Seeing is believing. So, here are a few examples of how we’re using AI in sales compensation design within the QuotaPath platform. 

Scenario 1: Translating Your Existing Plan into QuotaPath

New to QuotaPath, you begin building your first comp plan using the sales commission software. Instead of jumping on a support call, you type out a brief plan description in the AI window.

Prompt:
“Quota for my reps is $480k ARR per year or $40k ARR per month; i pay commissions on a monthly basis and want to average a 10% commission rate, but i want a tiered comp plan with 3 tiers to get there, where the first tier pays out at 7.5%, the 2nd tier at 10% and the 3rd tier at 12.5%; the 3rd tier should be uncapped.”

How AI-Powered Plan Builder Helps:

Custom Plan Creation: The AI generates a draft plan with a $480K annual quota, monthly quota of $40K, and three multi-tier commission rates that average 10% and set to 7.5% payouts on all deals under 100% attainment, 10% on all deals between 100-150% attainment, and 12.5% on all deals above 150% attainment uncapped.

Flexible Adjustments: Edit rates or quotas, use the AI to add a SPIF or milestone bonus, or drop in either from the Component Library.

Scenario 2: Refreshing Last Year’s Plan

You’re starting with last year’s plan but need a refreshed structure for your Account Executive (AE) team that will reward for overperformance. 

Prompt:
“I want to refresh last year’s plan for my AE team. Set a quota at $50K. For commissions, let’s do 5% below quota and 10% for anything above.”

How AI-Powered Plan Builder Helps:

Custom Plan Creation: The AI generates a draft plan with a $50K quota and two commission tiers: 5% for earnings under $50K and 10% for earnings exceeding that amount.

Flexible Adjustments: Fine-tune the rates, quotas, or add additional components directly in the plan builder interface.

Scenario 3: Building a CS Team Plan Rewarding NRR and GRR

You’re looking to incentivize upsells and renewals and need help creating a customer success compensation plan. However, you need a plan that incentivizes net revenue retention (NRR) and gross revenue retention (GRR). You leverage QuotaPath’s AI-Powered Plan Builder for ideas and advice. 

Prompt: “A compensation plan for a CS team that rewards GRR and NRR tied to a quarterly book. This includes a commission floor requiring 60% of quarterly bookings before earning commissions.”

How AI-Powered Plan Builder Helps:

Custom Plan Creation: The AI generates a draft plan set to a 1% commission rate on any upsell amount and another 1% for standard renewals. 

Flexible Adjustments: Increase or decrease the floor. Adjust the weight of the quotas. For example, if you want the team to focus more on GRR, the quota should be higher – 70/30 – and the commission rate. 

These are just a few examples of how you can use our AI-Powered Plan Builder to get started in QuotaPath with your unique compensation plan.

Start Using Your Comp Plans to Drive Selling Behaviors

Your compensation plan is more than just a must-have document. It’s one of the most powerful tools for driving performance, engagement, and growth. 

And now, we’ve made creating dynamic compensation plans in commission software nearly effortless. Streamline your end-to-end commission process with AI-Powered Plan Builder. 

By simplifying plan creation, automating commission management, and aligning incentives with your business objectives, AI-Powered Plan Builder empowers your team to focus on what matters most: achieving and exceeding goals.

Turn compensation into a growth engine with AI at your side.

To learn more, schedule time with our team. 

Welcome to 2025!

With the start of a new year, go-to-market leaders can align their sales teams with fresh goals and incentives. 

Many RevOps and Sales leaders will continue to finalize their compensation plan rollouts to unveil at their annual kickoffs. But that doesn’t mean you can’t start off the year with some fast-start bonuses or SPIFs to ignite motivation ahead of the new plans. 

After all, a strong start can set the tone for the entire year.

That’s where strategic SPIFs come in. 

These short-term bonuses drive urgency, competition, and focus among your sales reps. Whether rewarding the first to close new logos or incentivizing early pipeline building, SPIFs can generate momentum — and revenue.

Below, we outline five actionable SPIF ideas tailored to jumpstart your team’s performance this quarter. 

Let’s get started.

1. First to 3 new logos SPIF

What it is: Reward the first rep to close three new customer accounts (“logos”) in Q1 with a bonus or special prize, such as a cash reward, a tech gadget, or a weekend getaway.

Why it works: Encourages fast action and prioritization of new business development. This creates friendly competition among team members, motivating everyone to identify and close new opportunities early in the quarter.

Example:  $1,000 cash bonus or equivalent (e.g., a high-value tech gadget like an Apple Watch or noise-canceling headphones).

2. SPIF on all deals c/w by Feb. 15

What it is: Offer a bonus on every deal closed by a specific date, such as February 15. For example, add a flat bonus per deal (e.g., $500 per deal) or a percentage of deal value (e.g., an additional 5% commission).

Why it works: Drives urgency and focus during the critical early weeks of the year, ensuring deals in the pipeline move quickly through the sales cycle. It helps build momentum for the team and sets a strong foundation for hitting quarterly and annual targets.

Example:  $300–$500 per closed deal or an extra 3–5% commission on deal value

3. Pipeline Builder SPIF

What it is: Reward reps for building a strong sales pipeline early in the year. Offer a bonus for sourcing and qualifying a set number of new viable opportunities by the end of January or mid-February.

Why it works: Encourages prospecting and ensures a steady flow of leads to set up success for the rest of the quarter.

Example:  $50–$100 per qualified new opportunity added to the pipeline, capped at 10–20 opportunities.

Note: We recommend setting clear guidelines so reps don’t game the system. For instance, demo occurred might be a good rule to enact.

4. Upsell or Cross-Sell SPIF

What it is: Incentivize reps to upsell or cross-sell to existing customers. For example, offer a bonus for adding additional products or services to existing accounts by March 1.

Why it works: Helps grow revenue from your existing customer base while showing customers the value of your broader offerings.

Example:  5–10% of the upsell value as a bonus, or $250 per successful upsell.

5. Team Challenge Bonus

What it is: Create a team goal where everyone gets rewarded for hitting a collective target by the end of the first quarter. For instance, if the team collectively closes $X in new business or reactivates Y dormant accounts, they all receive a bonus or special experience (e.g., a team lunch, gift cards, or a fun outing).

Why it works: Fosters collaboration and motivates underperforming team members to contribute to the group’s success.

Example: $500–$1,000 per team member if the collective goal is met, or a shared group prize like a team outing worth $2,500.

Deploy & Manage SPIFs with QuotaPath

As you kick off the new year, remember that a well-structured compensation plan can be the catalyst for driving early success. 

Whether through innovative SPIFs, strategic bonuses, or team-based incentives, starting the year with a flurry of sales can set the tone for sustained performance throughout the remaining quarters.

QuotaPath offers a seamless way to adapt your compensation strategies to align with shifting market demands, seasonality, or even short-term motivational boosts for your reps. 

With features like the flexible Plan Builder and AI-driven component suggestions, you can quickly refine and deploy compensation plans and temporary bonus paths that resonate with your team and drive the proper outcomes. 

Automate complex calculations and adjust components such as quotas and accelerators with QuotaPath to ensure your comp plans remain dynamic and effective.

Stay agile and let QuotaPath take the complexity out of compensation management so you can focus on inspiring your sales team and achieving your revenue goals. 

Here’s to a strong Q1 and an even stronger 2025.

To learn more, schedule time with our team today. 

Check out our latest report, The SPIF Report: Accelerators That Drove $7.3M in Sales Commissions Paid in 2024. 

Based on QuotaPath platform data, we built this report to highlight how revenue teams leverage SPIFs (Sales Performance Incentive Funds) and accelerators to align sales behaviors with key business goals.

SPIF Q1 Micro Report

After automating commission payouts of more than $7M in short-term incentives and accelerators for our customers, we unpacked what incentive types are most widely adopted, when, and why.

View Report

What’s Inside

Throughout 2024, QuotaPath customers paid out $7.3 million in SPIFs and accelerators alone, demonstrating these incentives’ strategic role in modern compensation plans. 

This report analyzes data to surface actionable trends revenue leaders can adopt to refine their sales strategies.

Here’s a preview of our findings:

• Multi-Year Accelerators Drive Results: Represented in 15% of plans, these incentives generated 25% of total revenue, showcasing their power in promoting long-term deals.
• Popular SPIF Categories: From rewarding quick wins to celebrating consistent performers, we identified the top four SPIF structures in 2024.
• Commission vs. Bonus Structures: An overwhelming 95% of SPIFs on our platform were structured as commissions, emphasizing their effectiveness over flat bonuses.

Why It Matters

SPIFs and accelerators aren’t just perks—they’re strategic tools for aligning sales behavior with your company’s North Star metrics. When thoughtfully implemented, they can energize teams, build momentum, and maximize revenue potential.

What’s Next

This report is just the beginning.

We’ll continue to publish regular insights based on platform data to help you design compensation strategies that drive measurable results.

Ready to discover how these tools can work for your team? Dive into the full report here.

Sales teams are navigating a culture of overwork, with burnout rates near 67% and turnover reaching over 40% within a year. 

But what if a more thoughtful approach to compensation and coaching could make the difference? 

In a recent webinar hosted by QuotaPath and Ambition, industry leaders tackled this pressing issue, sharing actionable strategies to boost sales performance without exhausting teams.

Mark McWatters (VP of Sales, Ambition), Ryan Milligan (VP of RevOps and Sales, QuotaPath), and Christina Brady (Co-Founder and CEO, Luster) brought expert insights on how well-designed comp plans and targeted coaching can drive motivation, align teams, and ultimately create healthier revenue growth.

The Psychology of Sales Motivation

To create a sales culture that supports lasting motivation and well-being, it’s essential to understand the types of motivation driving performance—amotivation, intrinsic, and extrinsic.

Mark emphasized that the most effective motivation strategies blend recognition, rewards, and performance coaching. This allows organizations to tap into intrinsic drivers like professional growth alongside extrinsic rewards.

Mark noted that focusing solely on extrinsic incentives like pay can fall short if not balanced with intrinsic rewards. Recognizing the importance of employee satisfaction and personal growth can drive sustained engagement, helping to counteract the high burnout rates in sales roles.

Designing Effective Compensation Plans

Tackling the Complexity of Comp Plans

Understanding the nuances of motivation helps lay the groundwork, but effective compensation plans are the next critical step in transforming motivation into measurable performance.

Compensation planning can be complex and emotionally charged. 

Both Mark and Ryan noted that reps often dread comp plan rollouts. 

Ryan explained, “Your comp plan is one of your best tools when paired with training, coaching, and enablement. It should be motivating and crystal clear, letting reps see exactly how much they’ll make based on the deals they close.” 

For example, if reps know they’ll earn more for a multi-year contract with an Ideal Customer Profile (ICP) client, they’re more likely to prioritize high-quality deals aligned with business goals.

Additionally, both leaders emphasized simplicity in comp plans, advocating for plans with only two or three key “bonus” or “acceleration” points. 

Ryan illustrated this with a hypothetical scenario: when it’s late on a Friday and a rep has multiple deals in the pipeline, a well-structured comp plan would clearly guide them toward deals with higher commission potential, such as those with multi-year terms or ICP clients. This clarity in earnings can significantly impact rep motivation.

Key Metrics and Targets in Comp Plans

One of Ryan’s standout pieces of advice was to tailor comp plans to target top revenue-driving metrics, such as Average Selling Price (ASP) or Gross Revenue Retention (GRR).

For instance, he recommended accelerating commission rates for account managers who secure early renewals or longer-term contracts, thus directly aligning compensation with revenue retention goals. 

This targeted approach ensures reps are incentivized to pursue deals supporting sustainable business growth.

Christina echoed this, stressing that misaligned comp plans can inadvertently create misaligned behaviors. 

She shared her experience in insurance, where incentives sometimes pressured sales reps to prioritize immediate revenue over customer needs, ultimately harming retention. 

She argued that a well-designed comp plan aligns rep motivation with the customer’s timeline, enhancing customer satisfaction and long-term revenue.

Coaching Strategies that Support Compensation Plans

Creating a Coaching Structure

A well-designed compensation plan can align goals and drive performance. 

However, consistent coaching is essential to helping sales reps develop the skills and confidence needed to reach their goals.

Mark stressed the importance of structured coaching sessions beyond pipeline reviews. 

Regular one-on-one meetings give managers time to focus on skill development and goal alignment, helping reps identify gaps and work toward concrete improvements.

 In fact, a proactive “coaching operating rhythm” can establish consistent feedback and accountability across the team, ensuring that comp plans remain aligned with everyday sales activities.

Just-in-Time Learning: Christina also discussed the importance of “just-in-time” learning, a practice in which managers coach reps on immediate skill gaps. 

She explained that this approach boosts the retention of new knowledge by encouraging reps to apply skills in real-time scenarios. 

Ryan, too, shared an example of this in action. 

He worked with a rep struggling to set next steps after demos. Setting a target for the rep to secure follow-ups in three out of four upcoming demos provided a concrete, measurable goal that allowed for real-time performance tracking and improvement.

Aligning Compensation and Coaching with Business Goals

Now, combine the two.

When compensation and coaching work harmoniously, they create a powerful framework that motivates sales reps and equips them to succeed.

Using Comp Plans to Bridge Departmental Silos

A standout theme from the webinar was the potential for compensation plans to break down silos between sales, marketing, and customer success. 

Christina recommended using shared incentives, such as multi-touch attribution. This ensures that everyone involved in the lead journey shares in the revenue success. 

As Ryan noted, this cross-functional alignment also helps organizations streamline customer experience by aligning compensation with long-term value.

Case Study: QuotaPath’s Approach to Long-Term Contracts

QuotaPath’s own evolution offers a compelling case for comp plan alignment. 

Ryan explained how QuotaPath shifted from monthly to long-term contracts by using accelerated commission rates to incentivize longer commitments. 

This strategy helped secure more sustainable revenue streams and encouraged reps to lead with a two-year contract offer as the best practice. By directly embedding this goal into their comp plans, QuotaPath aligned rep motivation with the company’s growth objectives.

Closing Thoughts

Bringing together these strategies—thoughtful compensation plans, effective coaching, and aligned goals—creates a sales team that’s motivated and fully equipped to drive meaningful, long-term success.

For more resources on optimizing your compensation strategy, explore QuotaPath’s comprehensive tools and insights or schedule a demo today. 

Schedule time with our team here. 

This is a guest post on sales content ideas.

Sales teams thrive on competition, and a well-designed sales contest can ignite their drive and improve performance. To inspire motivation and engagement, you need to go beyond the typical “who can close the most deals” challenges. Creative and varied contests not only boost results but also energize your team. 

However, it’s essential to recognize that sales contests do more than just spur competition; they foster camaraderie and teamwork, promoting a collaborative spirit among team members. Additionally, contests can be tailored to focus on specific areas of improvement, such as customer engagement or product knowledge, ensuring that your team’s growth aligns with broader business objectives.

This article will explore 12 unique sales contest ideas that will help elevate your team’s performance. But first, let’s start by understanding the basics of sales contests and why you might choose to use them.

What is a Sales Contest?

A sales contest is a structured competition among sales representatives to motivate and reward specific behaviors or achievements. These contests are typically short-term and focus on driving particular outcomes, such as boosting sales or improving customer satisfaction.

Sales contests leverage the competitive nature of sales professionals to encourage performance improvements. The contest’s structure often includes clear rules, defined timeframes, measurable goals, and desirable rewards like bonuses, trips, or recognition. Some contests focus on individual performance, while others may encourage teamwork. The dynamic nature of these competitions helps align team efforts with broader company objectives.

With the support of a sales intelligence solution, these contests can become even more effective. By using data-driven insights, sales teams can identify the best leads, target key accounts, and fine-tune their approach during competitions, ensuring the most productive outcomes.

Why Hold a Sales Contest?

Many companies turn to contests to re-energize teams that may be struggling with engagement or failing to hit sales quota expectations. When reps fall short of their quotas, it can be due to a lack of motivation, unclear goals, or misaligned efforts. 

A well-structured contest can be a game-changer for your business because it can:

• Increase Motivation and Focus: Sales contests create urgency and excitement. With clear goals and rewards, they inspire teams to push beyond their usual limits.
• Encourage Specific Sales Behaviors: Whether you want more calls, better upselling, or increased lead generation, contests can target and incentivize these behaviors.
• Boost Team Morale: A well-structured contest makes everyday tasks more engaging and rewarding, fostering team camaraderie.
• Improve Skill Development: Contests centered around learning-based elements offer a fun and competitive way to develop key skills.
• Drive Revenue and Performance: When the right activities are incentivized, sales contests can significantly impact your revenue growth and overall performance.

12 Creative Sales Contest Ideas to Spark Your Team’s Performance

T​​o keep your sales team motivated and engaged, it’s essential to introduce contests beyond conventional metrics. Creative contests encourage friendly competition and foster skill development and team collaboration. 

Here, we will cover 12 creative sales contest ideas designed to elevate your team’s performance and maintain their enthusiasm throughout the sales process.

1. Daily Dash

For a burst of daily energy, the “Daily Dash” focuses on quick wins. This short-term contest rewards reps for achieving small daily goals, such as scheduling the most meetings or making the most follow-up calls in a day. Immediate rewards, like gift cards or recognition, keep everyone engaged and motivated for continuous action.

2. Bingo Bonanza 

Transform sales tasks into an interactive game of bingo. Each rep gets a card filled with various activities like closing a deal, generating a lead, or scheduling a demo. The first to complete a row or column wins. This keeps the competition fun and ensures that reps engage in a diverse range of sales activities.

3. Conversion Master

Instead of rewarding volume, the “Conversion Master” focuses on quality. Track the conversion rates of leads to closed deals and reward the sales reps with the highest conversion percentages. This encourages your team to focus on engaging high-value leads and moving them through the pipeline efficiently.

Using tools like email tracking, reps can monitor when and how prospects engage with their outreach, allowing them to time follow-ups more effectively and increase the chances of conversion. This data-driven approach ensures reps focus on the most promising leads, driving higher-quality results. 

4. Pitch Perfect 

The “Pitch Perfect” contest lets reps showcase their best sales pitches. Reps present their product pitch to the team or a panel of judges. The best pitch wins based on creativity, effectiveness, and customer value. This contest hones communication skills and encourages innovative approaches to closing deals.

5. Objective Battle

Handling objections is a crucial part of sales. The “Objection Battle” pairs team members in role-playing scenarios where one acts as the customer and the other as the sales rep. Judges score how well each rep handles the most strenuous objections. This sharpens their skills and boosts confidence when facing real customer pushback.

6. Team Effort

Encourage collaboration with the “Team Effort” contest. Split your sales force into teams, focusing on a shared goal such as increasing total sales, boosting average deal size, or reducing the sales cycle. Team-based rewards like group outings or experiences foster a sense of unity and shared success.

7. Customer Feedback Frenzy 

In the “Customer Feedback Frenzy,” the goal is to drive high customer satisfaction. Reward reps with the best customer reviews, testimonials, or survey feedback. This encourages your team to focus on closing deals and creating positive customer experiences that enhance long-term loyalty.

Utilizing a contact center solution can streamline this process by providing tools for collecting feedback directly from customers during interactions. These solutions can help track customer satisfaction metrics and ensure that reps are meeting sales targets and fostering strong relationships with clients.

8. Leaderboard Lottery 

Unlike traditional leaderboard contests where only the top performer wins, the “Leaderboard Lottery” gives everyone a chance. Reps earn tickets for a prize lottery for every completed activity—like a demo or closed deal. This method keeps all reps motivated, regardless of where they rank, while pushing for top performance.

9. Themed Sales Sprints

Break your contest into short, themed sprints. Each sprint could focus on a different goal—like lead generation, upselling, or closing deals. This prevents burnout by keeping the competition fresh and shifts focus to the areas that need the most attention, driving improvements in targeted areas.

10. Mystery Prize Challenge

The “Mystery Prize Challenge” adds an element of suspense to the contest. Reps know they’re working towards a prize, but the nature of the reward remains a mystery until the end. This increases engagement as reps push hard, intrigued by the unknown prize that could range from a small token to a major reward like a trip.

11. Upsell or Cross-Sell Contest 

In this contest, team members compete to generate the most revenue through upselling or cross-selling to existing customers. This encourages reps to build stronger relationships with current clients, increase deal size, and deliver added value. Top performers might earn bonuses, extra time off, or experience-based rewards.

12. Flash Sale Face-off

A “Flash Sale Face-off” is all about speed. For this contest, set a short window—perhaps just a few hours in a day—where reps compete to close as many deals as possible. The fast-paced, high-energy environment fosters quick decision-making and creates urgency during slower periods. Immediate prizes like gift cards or extra break time can drive participation.

How to Ensure Your Sales Contest is Successful

Effective sales performance management is essential for ensuring the success of any sales contest. For a contest to truly drive results, it must be thoughtfully designed and skillfully executed. Let’s explore some key strategies to help maximize the impact of your sales contests.

1. Define Clear Objectives

Clearly outline the purpose of the contest. Whether it’s lead generation or boosting average deal size, ensure the contest aligns with your overall business goals. Utilizing a sales planning template can help structure these objectives and provide a clear roadmap for what you want to achieve.

Engaging your sales team in goal-setting can foster ownership and commitment to the contest, enhancing motivation. Additionally, consider measuring success through specific metrics to evaluate effectiveness and adjust strategies as necessary, ensuring continuous improvement for future contests​

2. Set Realistic and Attainable Targets

Setting realistic and attainable targets is crucial for motivating your sales team. Goals should be challenging enough to inspire effort but achievable to avoid demoralizing your reps. If targets are too lofty, team members may feel overwhelmed and disengaged, leading to decreased performance. 

Conversely, easily achievable goals can result in complacency and lack of motivation. Balancing ambition with realism encourages teams to strive for excellence while maintaining their confidence. Regularly reviewing and adjusting targets based on team performance and market conditions can also help ensure they remain relevant and motivating​.

3. Incentivize Consistently 

To maintain motivation, it’s important to reward performance consistently. Utilizing sales incentive automation can simplify this process, allowing you to automatically track achievements and distribute rewards in real-time. This improves accuracy and helps maintain transparency in how sales reps are compensated for their efforts, ensuring that no top performer goes unrecognized.

Ensure the rewards are both meaningful and fair. Consider random draws or smaller prizes to motivate all participants, not just the top performers.

4. Create a Sense of Urgency 

Creating a sense of urgency is vital for maintaining momentum in sales contests. Deadlines are key to success. Setting a firm timeframe keeps energy and focus high, whether it’s a one-day challenge or a month-long initiative.

When team members know they are working against a ticking clock, it motivates them to act swiftly, driving more immediate results. Urgency encourages quick decision-making and fosters a competitive spirit, which can significantly enhance performance. Similarly, a structured timeline helps participants prioritize their tasks effectively, ultimately leading to better outcomes.

5. Monitor Progress and Offer Regular Feedback

To ensure the success of your sales contest, it’s essential to track your team’s progress continuously. This can be done through daily leaderboards, regular emails, or public shout-outs, which keep motivation high and drive healthy competition. Offering real-time updates on performance helps maintain momentum, as reps can see where they stand relative to their peers and push themselves further to reach their goals.

In addition to these daily touchpoints, holding effective quarterly business reviews (QBRs) can provide a more structured platform for evaluating overall performance and identifying opportunities for improvement. These reviews allow sales leaders to take a step back and assess individual performances, broader team dynamics, contest effectiveness, and alignment with sales objectives. 

Regular feedback—immediate or through more comprehensive reviews—ensures your team remains engaged, motivated, and aligned with the company’s broader sales goals.

Final Thoughts

Sales contests are a fantastic way to energize your team, improve performance, and foster healthy competition. The key is to keep the contests varied, focusing on different skills and sales activities to maintain engagement and prevent fatigue. By introducing creative contest ideas like themed sprints, mystery prizes, or team-based efforts, you can drive your team to hit new levels of success.

Remember, a well-run sales contest should boost numbers and encourage skill development, teamwork, and long-term growth. With the right mix of fun, strategy, and rewards, you can turn everyday sales tasks into exciting, productive challenges that benefit your team and your business.

About the Author

David 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 team customer engagement.

To succeed in business today, you need to use your data. Efficiently using your data can help you unearth many essential insights and improve operations tenfold – or even more.

The issue isn’t what data can potentially do for you; it’s that data is simply information on its own. It cannot do anything or be valid until it’s sorted, analyzed, and processed through systems. 

Leveraging your sales data can unearth many benefits, from improved cost savings to supercharged operations, but only after it’s been properly sorted, cleaned, and applied through a practical sales data management approach.

So the question isn’t “What can my sales data do for me?” but “How can sales data management help my business?” 

This blog gets into everything you need to know. By the end, you’ll know just how sales data management can improve your strategic business decisions and how to get started with an effective sales data management strategy.  

What is sales data management? 

Sales data management is a full-scale process that includes collecting sales (and marketing) data, organizing it, storing it, analyzing it, and finally using it to improve your business’s performance. It should be included on every enterprise transformation roadmap, as it’s essential for taking large-scale businesses from the murk of guessing into the clarity of precise analytics and streamlined processes. 

How can sales data management improve your strategic business decision-making? 

Sales data management can help you understand your customers and your sales. This is particularly crucial in B2B sales, where it starts by first getting your data in order. From there, you’ll need to use the right tools to put that data to work. Once you fully set up your sales data management pipeline, you’ll enjoy these key benefits: 

1. Build better campaigns to increase sales

In sales data management, you organize customer data to gain a complete and simplified understanding of each customer. This makes segmenting your customer base and using sales data to build better and more personalized marketing and sales campaigns much more manageable.

For example, say you own a party supply store, and a customer buys a whole set of decorations. Thanks to your sales data pipeline, you can infer that these decorations are for a child’s birthday party. 

You can then use that information to market to that customer more effectively in the lead-up to that period, helping to increase the likelihood of repeat sales and a higher checkout price. 

2. Build better products 

You can use information like sales, reviews, and even return data to help you understand which products are doing well, which are being poorly received (high sales, high returns), and which aren’t gaining public interest. Using this information, you can then workshop what works and what doesn’t and move forward on improving your product development. 

3. Reactivate inactive customers 

Ultimately, you want to increase the number of repeat customers and their customer lifetime value (CLV). 

One of the easiest ways to do that is by working to reactivate inactive customers. 

To do this, you will need to be able to track and store when a customer last: 

• Visited your website
• Opened an email
• Purchased or hired from you 
• Participated in a survey
• Etc 

You will then have to set a time limit. For example, if three months go by without any engagement from your customer, you can then work on reactivating them via their SMS or email. You can try to recapture their loyalty (and get a sale) with: 

• We miss you: Use personalization to show top offerings or provide exclusive discounts. 
• What’s new: Work to recapture interest by highlighting what’s new with your business. 
• Have your say: Invite customers to comment on your following product or to fill out a survey. 
• Your privacy matters to us: This is a simple but effective way to inform customers you’ll delete their data soon unless they log in or tell you otherwise. Combined with a roundup of what they’re missing, you can work to reactivate even years’ cold leads. 

4. Improve sales forecasting

According to a Gartner study, most CMOs don’t believe they have enough budget to execute their strategy, with the average budget falling to just 7.7% of total revenue. In comparison, marketing teams usually had between 10 and 11% of their businesses’ revenue to work with pre-pandemic. 

This means that marketing and sales teams need to do more with less. One of the easiest ways to do that is to focus on when customers do business with you. 

How do you know when that is? 

You use your historical data to generate a sales forecast. This will help you identify critical periods when sales volumes were highest so you can refocus those smaller marketing budgets and sales performance incentive funds on when you can develop the most significant number of sales (for example, during Christmas or another relevant holiday). 

5. Identify cost-saving opportunities 

You can identify many cost-saving opportunities by managing and analyzing your sales data. For example, a Canadian business might notice an increase in sales to the US during specific times of the year, but the ROI on those sales is low because shipping is higher. 

That information lets you know you need to find the cheapest international shipping options to reduce costs. 

6. Identify bottlenecks and improve efficiency 

Sales require a massive assortment of different systems to work effectively. This complexity can often lead to inefficient tools, redundant applications, and disorganized connections as your business grows. 

Auditing your applications is a great step to add to your sales data management strategy. Application portfolio management best practices can quickly optimize your entire collection of tools to ensure they work towards your business goals. 

The goal is to end up with the most valuable and cost-effective options that work together to help streamline and automate your sales pipeline. 

7. Easily manage multiple sales teams

Structuring your sales data will allow you to identify repeat processes, files, and profiles. Cleaning them up so that there are no repeats or conflicting information makes managing multiple sales channels effortless and effective. 

After all, one of the biggest conflicts within sales teams is when territories overlap. For example, if your inside and outside reps target the same customers. With a sales data management strategy, you can work to clear up sales operations to ensure everyone has their responsibilities without overlap. 

8. Identify which marketing strategies are performing the best

A fully realized sales data management system can help you understand which sales pipelines are the best value for your business. Over 40% of polled B2B businesses generally believe in-person/virtual events, online courses, research reports, and e-books/white papers performed best. This is, however, average. Your business may find that your podcast or magazine is the most lucrative portion of your content strategy. 

With a fully realized sales data management strategy, you can clearly understand the content pathways that provide the best results and allocate your marketing budget to where your business would benefit the most. 

Top tools to start making better sense of your sales data today

Sales data management isn’t a tool; it’s an approach. You will need various tools and software at your disposal to make the benefits of sales data management a reality for your business, including: 

• Data Analytics 
• Customer relationship management
• Data visualization
• AI and machine learning analytics   
• Automation 
• Marketing 
• Social listening
• And more 

First, however, you will need what’s known as sales intelligence. What is sales intelligence, you may ask? It’s the tools that work to collect, analyze, and use sales data from all sources. This means collecting data from your website, social media, databases, third-party marketplaces, and more. 

Once all that information is collected and sorted, you can use the other tools to make sense of it and put it to work. 

How to start implementing a winning sales data management program 

Implementing a robust sales data management strategy requires an extensive audit and processing period as you get a handle on all the relevant data. To help you through this process, follow these steps: 

1. Assess your current capabilities 

The first step is to understand your current capabilities. You’ll want to organize what your system can currently do into core, supporting, and strategic categories. Focusing on the information being handled rather than the processes themselves is essential, as this helps avoid process overlap. 

For example, a capability is customer detail management. Technically, two processes can be involved—onboarding new customers and servicing existing customers. However, the processes involved are very similar (updating details and preferences). By focusing on the information (customer data), you can avoid overlap and simplify this identification step. 

This step helps prep you for the others, so review this business capability example to understand better how to sort through your sales data capabilities and learn how to use them to identify gaps and bottlenecks. 

2. Adopt or replace crucial sales data tools 

Once you’ve identified your systems and capabilities, you’ll want to select the legacy, outdated, or unusable systems and work to delete, replace, or support them with new technologies. This is particularly important with the rise of new AI and machine learning systems, which can help automate more of your sales process than in the past. 

3. Centralize your data 

You’ll need to centralize your data for any automation tool to work. If data exists in individual silos, then everyone in your company is working with an incomplete view of your operations. 

There are several ways to approach this step. If you have legacy systems you cannot get rid of or replace, start with hybrid integration solutions that connect them to more modern systems. This lets you access data from the cloud from those legacy systems. 

You can also work on using a data fabric solution or create a data mesh to safely import data from all sources and store it in a single data warehouse. 

Whatever your method, you want all of your data in one place. From there, you’ll need to clean it up. 

4. Clean up data 

Having all your information in one place means nothing if you still have conflicting files, missing information, and poor metadata. That’s why the next step is to clean it up. During this process, you’ll want to consolidate relevant files, like your customer information profiles, into a single source of truth. For example, if there are two “John Doe” customers at the same address, you will want to consolidate them for a complete view of that customer. 

You will also want to establish data governance, which helps future information go where it needs to go and stay secure regardless of whether it’s in transit or at rest.  

5. Segment and define customers

Now that all your data is consolidated and you’re prepared, it’s time to shift focus to the customer segment of sales. Start by segmenting your customers. While demographic data is essential, prioritize understanding who the customer is and what they need.

You will want to create ideal customer profiles to help your sales and marketing teams do their jobs best and analyze intent data to understand why and when sales are made. This will help you increase revenue on your terms.

6. Optimize your sales performance

With your operations primed and ready to go, it’s time to start optimizing your sales. To do this, you’ll want to outline which metrics you’re tracking and the KPIs you will use to determine success or failure. For example, you may want to start tracking: 

• Revenue
• Customer acquisition cost
• Customer lifetime value
• Average order value
• Units sold
• Conversion rate
• Etc. 

As for analyses, you can implement moving averages, regression analysis, or exponential smoothing to help you get a more realistic look at your sales averages. 

Regardless of your exact methods, you will want to rely on the analysis extracted by your systems to improve your approach. Use A/B testing to help you adjust your marketing and sales methods to increase revenue, sign-ups, followers, or your latest goal. 

7. Keep records accurate 

When optimizing your sales process, don’t forget the steps that occur after a sale. All records must stay 100% accurate. You must also optimize inventory management, supply chains, and finance teams. It is all connected! 

Integrating automation software is the best way to ensure all the information stays accurate. Automated reconciliation software, for example, helps streamline processes by providing real-time data and reports, enabling you to quickly audit your finances and ensure compliance. 

8. Continuously work to improve

As with any strategy, you must continually work to improve your efforts. Customer trends come and go, newcomers rise as disruptive competitors, and regulations change the game in your industry every day. The good news is that, with a well-managed sales data stream and strategy in place, you’ll be ready to adapt to those changes quickly. 

Build Your Sales Data Management Strategy Today 

Investing in your business’s custom sales data management strategy offers many benefits, including boosted revenue, better resource allocation, cost reduction, and improved performance. While the exact steps to implement a sales data management strategy will be unique to your company, the tips outlined in this guide will help you effectively approach your sales data management adoption, so get started today. 

Strong compensation plans are essential for attracting the best talent to your organization.

An efficient, well-thought-out package is built with company finances in mind. This means you’re much more likely to deliver the benefits offered, and your business can continue to grow effectively. 

However, some organizations bite off more than they can chew in trying to offer the best package. If your business is in this position, don’t worry.

This article will explore five simple methods for getting your benefits package back on track. 

Why Efficient Employee Compensation Plans Are Important

To begin, let’s consider why your business needs compensation plans. Employee retention is a top concern for many organizations. While ‘The Great Resignation’ might be over, the number of people wishing to change jobs has increased by 28% in 2024. Organizations need an attractive offering to hang on to top talent.

However, compensation plans should be efficient and effective. Offering ‘the kitchen sink’ to employees might deliver short-term satisfaction. In the long-term, though, this approach is unlikely to be sustainable. 

Successful businesses follow a more pragmatic approach. This involves taking steps to streamline compensation plans. Of course, there is a delicate balancing act between maintaining employee happiness and staying within the limits of company resources. To succeed, organizations must carry out compensation benchmarking and craft a well-thought-out strategy. 

5 Ways to Optimize Operational Costs Through Streamlined Compensation

Luckily, there are many ways you can achieve efficient employee compensation plans. See below.

Standardize compensation packages

There are several benefits to taking a uniform approach to company compensation. Most significantly, a streamlined approach helps you to cut costs. 

When planning your benefits packages, stick to the adage ‘simplicity is the best policy. Make distributing benefits as straightforward as possible while embracing a more transparent approach. If Employee A receives a specific set of benefits, Employee B should be given the same. 

This avoids creating a complex system for allocating different benefits to different employees. A simple distribution framework means there is less scope for costly mistakes. It also makes the process of implementing automation much more manageable.

Secondly, a standardized process helps to create a fairer workplace environment.

Employees won’t feel jealous of coworkers who have better compensation than them. This also means there’s reduced risk of staff looking for employment elsewhere. 

Automate payroll and benefits administration

If your organization is still taking a manual approach to administering compensation, now might be the time to rethink. A manual approach is often more expensive. It requires a larger payroll team, paperwork, and managing and securing documents. There’s also scope for costly errors, such as overpaying staff. 

An automated tool can file wages and benefits for you, cutting out manual paperwork. These solutions also help to reduce risk. A payroll tool will carry out tasks in line with its programming. There’s no scope for human error. Automated payroll tools are also more scalable. You pay only for the features that you need.  

Benefits and compensation, though, will vary depending on role or sector. This means you’ll need an industry-specific automated solution. 

Payroll automation software comes in various forms, each meeting the needs of different service providers. A healthcare organization will use medical billing and accounting software to remain compliant with industry data standards. On the other hand, real estate software is more adept at calculating sales bonuses and commissions. 

Integrate performance-based incentives

Optimizing compensation plans for performance and growth can bring major advantages.

It’s a more efficient method of distribution; accelerated growth means an organization will recoup money spent on benefits more quickly. For instance, a team might receive compensation if they complete a project within a set timeframe. 

Performance-based compensation can be implemented in several ways. Some examples are listed below: 

• A point-based approach – This system rewards points to employees each time they complete certain tasks. Team members can later redeem these points for cash, vouchers, or other predetermined rewards. 
• Personal development rewards – Under this approach, your organization rewards employees for hitting career milestones. For example, after receiving a certain qualification or completing a training program. 
• Referral programs – You could incentivize employees to introduce talent to your organization. You might offer an initial reward for a referral and additional rewards if somebody progresses through the interview stages. 

Optimize employee benefits spend

Are you spending your money on employee benefits effectively? This should be a central question when optimizing your compensation plans. After an internal review, you may find that employees underutilize certain benefits. These are prime examples of areas where cuts can be made. 

During this process, it’s worth getting in touch with your employees. What benefits would they like to see your business provide? You may also conduct market research to find the benefits that are most likely to attract new employees. You can then consider reallocating your funds towards these areas. 

Once you have a clearer idea of employee preferences, it is also essential to carry out a cost-benefit analysis. This looks at the cost of each form of compensation and the associated organizational benefits. Ideally, you’ll want to prioritize low-cost compensation that brings high benefits to your business. 

Outsource non-core functions

Not all forms of compensation need to be carried out in-house. Payroll and benefits, although vital, are not classed as core functions. These areas can be outsourced to save on operational costs,

One method of outsourcing is employing the help of a professional employer organization (PEO).

Here, under an arrangement known as ‘co-employment,’ a PEO will perform admin tasks on your behalf. Not only do these services administer benefits for you, but they also often come with access to benefits packages, such as healthcare or dental plans.

PEOs can also be tasked with handling payroll tasks. For instance, they can relieve some of the pressure on your organization by helping to file taxes. Ultimately, the scale of outsourcing is up to your organization. You may choose to outsource some or all payroll and benefits.  

If you work with a third party, always seek quality and reliability. Look for positive testimonials from other customers as a sign of quality.      

Legal Considerations and Compliance

Although an organization can be flexible around employee compensation, there may be a legal requirement to deliver some benefits. In the US, for instance, Social Security, Medicare, unemployment insurance, and workers’ compensation are all federally mandated benefits. 

There are also state-level benefits to consider.

For example, if your business is based in California it must provide paid leave. This requirement doesn’t apply in Kansas, though. It’s important to carry out research to understand any legal obligations your business bears for compensation. 

Infringements can be costly for your organization. This isn’t just about financial impact but also reputation.

If you’re ever unsure, it can be helpful to seek professional legal advice to provide clarity. 

Measuring the Impact and Continuous Improvement

Is your approach to compensation helping you to build a better business? Ultimately, your goal should always be to seek continuous improvement. This means that the process of streamlining compensation is never truly complete. You should constantly monitor data to see where improvements can be made. 

Leveraging budget management software can track spending across multiple departments and locations. This will help you continue monitoring your compensation packages and how your new streamlined system benefits your operational costs.

When using software, remember to track various payroll and employee benefits metrics, such as:

• Benefits utilization rate – The percentage of employees who are using certain benefits. This helps you to know whether you are spending on the right benefits packages. 
• Benefits costs per employee – The average amount you spend on benefits for each employee. This helps you to budget more effectively. 
• Payroll processing time – The average time it takes to pay your employees. For a happy workforce, the goal should always be to keep this number as low as possible. 
• Payroll errors – The frequency of errors that errors occur within pay cheques. Again, for maximum satisfaction, you’ll want to minimize mistakes as much as possible. 
• Compliance score – We’ve reflected on why compliance is so important for business. This helps you to measure how effectively you’re staying within the confines of legislation. 

Key Takeaways

Employee compensation is an essential factor for all businesses, especially when looking into operational costs. Whether it’s ensuring staff are paid accurately and on time or ensuring competitive benefits, compensation is vital for happy and productive employees. But to deliver results compensation must also be efficient. There’s no use in wasting money handling manual tasks or allocating unused benefits. 

To make compensation work, some organizations need to rethink their approach. Here, we’ve explored five different ways you can improve payroll and benefits. Remember, always opt for a standardized approach and automate where possible. 

A streamlined approach is the only way to guarantee both employee satisfaction and organizational success. Why not consider ways to optimize your processes? 

Modern commerce has brought businesses and customers closer together. Personalized advertising, social media, and newsletter subscriptions have helped companies build stronger relationships with customers and help increase sales.

While these relationships are great, having a direct sales model can help businesses leverage the brand further. This is because it gives you more control over the sales process and helps create even stronger customer communication channels. This can improve customer relationships and increase brand loyalty. Keep reading to find out more.

What is the direct sales model?

While indirect sales uses distribution channels and third-party retailers, the direct sales model means that businesses sell their products straight to the customer. Products sold through a direct sales model are not usually available to buy elsewhere. 

This sales model doesn’t rely on traditional retail methods such as stores. Instead, it utilizes selling through your website or face-to-face through pop-up stores, in the home, or through organized gatherings. This helps businesses protect their brand and control the quality of their service.

While the direct sales model prioritizes personal engagement and control, exploring a channel sales strategy could further enhance market reach. 

By partnering with other sales channels, businesses can access broader audiences while maintaining a strong brand presence and leveraging insurance solutions can help protect against operational risks, offering a strategic complement to their direct efforts.

How the direct sales model works

Here are the three main types of direct sales.

1. Single-level sales

This is a one-to-one model in which a salesperson sells a product directly to a customer, usually for a commission. For example, let’s take the case of an IT company helping businesses reduce technical debt. The company employs a sales team to sell its support packages. If a salesperson sells a support package, they will earn a commission on that sale.

2. Direct-to-customer sales

This is where a business sells to the customer through its website, social media channels, or newsletter. Instead of salespeople, they rely on marketing, referrals, and promotions to generate sales. An example of this could be a skincare brand that sells exclusively through its own website. This type of direct selling requires a good eCommerce framework. 

3. Multi-level sales

Multi-level sales involve using the same strategy as single-level selling. The extra levels involve the added dynamic of salespeople earning commissions for recruiting more sales representatives. 

Sales reps can sell products in several ways, such as via their network and social media, door-to-door, or by hosting parties in someone’s home where they can demonstrate the products and make sales on the day. A well-known example of this is the famous “Tupperware parties” of the 50s and 60s.

Benefits of the direct sales model

Direct selling has various advantages over traditional retail models. These make the model an attractive option for some businesses, especially in markets where you need to make a significant impact on customers. Some reasons for a direct sales approach include the ones listed below.

1. Reduces costs

Direct selling cuts out the middleman. The costs of using intermediaries, such as paying for retail space, distribution, rent, and staffing, can be reduced significantly. On top of this, you can sell products at retail prices rather than selling to other parties for wholesale prices, which can further maximize revenue.

2. Offers a range of sales channels

Direct selling doesn’t limit your options to a physical shop front. Instead, it can give you more autonomy over which sales channels you want to use. This could include:

• Your website
• Your social media platforms
• Your newsletters
• In-person

Moreover, these channels are flexible and can change to meet market demands. Managing this can be simplified with an enterprise integration platform, which allows you to centralize analytics, communications, and much more.

Additionally, a Personal CRM system enhances customer interaction and data management, crucial for personalizing sales approaches.

3. Expands customer reach

Using channels like social media to sell your product can enable you to reach a broader audience. While a physical store has the advantage of passing trade, this still has geographical limitations. Social media, on the other hand, can help you reach a global audience.

Pro tip: using the best sales automation software can help you maintain high customer service as you expand.

4. Improves customer relations

It’s no secret that building great customer relationships allows you to build brand loyalty and customer retention. Direct selling means you deal directly with the customer, whether face-to-face or virtually, which gives you several opportunities to connect. 

When you sell your products indirectly through a third-party retailer, such as a wholesaler or a retailer, you lose the opportunity to connect with the customer, either at the point of engagement, the point of sale, or during any aftercare. Instead, you can rely on their customer experience, whether good or bad.

5. Provides more control over branding

Think about it; your product is your baby. You and your team(s) created it, brought it to life, and brought it to market. Now imagine that dusty product on the top shelf at the back of a store, tucked behind a display board for another brand. People who see that probably won’t walk away with the brand image you intended to put out there.

By following a direct sales model, you’re in the best position to look after your brand and how your product is marketed. The direct sales model also means you are keeping consistent messaging across all channels.

6. Benefits from direct customer feedback

When you’re in direct contact with customers, you have the opportunity to gather crucial feedback on your products and services by sending out feedback forms or asking for reviews. Your customer services team can also speak directly to customers, gathering valuable information on how you can make improvements moving forward.

7. Helps control your promotions

Using the direct sales model means you can benefit from instant access to analytics and quickly adapt to market trends by offering relevant promotions whenever needed. For example, if there’s a big football game on, you can offer a ‘game day discount.’ without having to go through various channels.

Challenges with the direct sales model

The direct sales model is not without its challenges. Having more control over sales and distribution inevitably means more work, and without good enterprise architecture frameworks in place, it can be tricky. Some other challenges are illustrated below.

1. Distribution responsibility

With direct selling, you’ll need to plan how to distribute your product thoroughly. This may involve setting up sales and marketing teams and looking at ways to generate leads. In-house teams bring challenges, such as managing recruitment, staff absence, or turnover.

There are also costs involved with recruitment, training, and commission management, especially if you want to attract top talent. This should be factored into your planning.

2. Reputation management

A strong brand voice is important in the direct sales model, requiring planning, effort, and consistency.

Whilst you have more control over your reputation, this means taking much care to protect it. If anyone on your customer service team is curt or a sales representative is too aggressive, it can impact how people view your brand. Staff training and motivation are essential parts of maintaining the standards you expect different teams to deliver.

3. Market saturation

Direct selling, especially when face-to-face, relies heavily on local area marketing. There’s a risk of over-saturation where salespeople are involved when more sales representatives join the field and operate within a small geographical area. OneStream finance modeling, for example, can show you the real-world impact on sales that such occurrences may cause.

How to use the direct sales model to maximize revenue opportunities

If you’ve done business capability modeling and think the direct sales model could benefit your business, knowing how to implement it well is key to its success. Generating leads and developing a successful sales funnel is an important process. Taking these simple steps can help you make sure you make the most of the model.

1. Make sure it’s right for you

The direct selling model won’t suit all businesses. There are several green flags to look out for in your business and strategies to implement to make it work. These are:

• You already have a company with a strong brand voice
• Your product has a solid customer following.
• Your product can be easily found and bought online
• You’re equipped with the sales and marketing personnel and knowledge (or know how to be)
• You’re passionate about your product and ready to put the hard work in
  

2. Use email marketing…

Email marketing is a great way to keep in touch with your audience. It helps you nurture leads, build customer relationships, and offer more personalized communication. The key to a successful marketing campaign is careful planning and curation. 

This means varying your content and keeping it relevant. Depending on your market, you may look at sending emails that range from informative and helpful (such as top tips) to company news (e.g. new products) or special offers.

3. … And social media

Social media is a key asset in direct sales. It can help you showcase your products and brand personality and reach new audiences if done well. Social media can and will bring you closer to your target market if you use it well. This means being consistent with posts, using high-quality images, and responding to comments.

Each platform can vary in terms of how you build engagement, so taking time to learn how to make the most of each channel or using third-party experts can help you maximize the performance of your social media accounts.

4. Offer freebies and giveaways

Everyone loves a freebie, right? Free samples can be a cost-effective way to generate a buzz around your products. For example, free samples can be offered to people new to your brand (in exchange for signing up for your newsletter) or to existing customers (such as when a new product variation is launched).

This can help customers develop a love for your brand without taking any risks while also fostering trust with existing customers.

5. Utilize product demonstration tools

New brands often lack customer backing because they’re not tried and tested. Practical product demonstration is an essential part of showcasing your products’ greatness. In face-to-face direct sales, this can mean live demonstrations of the product in action. However, videos can be a great tool if you sell online directly from your website. You can use webinars, live streaming, and even third-party influencers on social media to show how great your products are.

6. Incentivize your sales team

If you decide to use single or multi-level sales, incentivizing your sales team can help to improve their sales rates. The commission is one way, but what about your business development team? Having a business development commission structure doesn’t just focus on sales. It focuses on rewarding the team for the whole sales process, from finding new ways to generate business to nurturing leads through the sales pipeline.

7. Collect customer data

Knowing who has purchased what (and when) can help you refine the sales process and improve your personalized marketing. For example, if you sell laundry detergent, you’ll have a good idea when that will run out. Having this data means you can send a ‘ready to re-order?’ email.

You can also collect valuable feedback to help you improve your product or service moving forward and even offer referral incentives to generate new customers.

Final thoughts

The direct sales model is a great way to maintain brand control. If you’re prepared to upskill your sales team and put in the work, it can help you build strong customer relationships and improve brand loyalty. 

Getting it right could mean a shift in your current company culture, but that’s not always a bad thing. We don’t evolve if we don’t change, right?

Recruiting the right people, training them well, and having an attractive sales compensation package are the key ingredients to applying the direct sales model successfully.