The idea behind sales compensation and incentive pay may never change: “Show me an incentive, and I’ll show you an outcome.” — Charlie Munger

However, the strategy behind what incentives you offer and how you reward them certainly evolves. And that’s especially true amid market changes, shifting workforce dynamics, and increased competition.

Understanding compensation trends is essential for attracting, motivating, and retaining top sales talent in an increasingly complex environment.

Our research showed that 86% of reps rank compensation as their top priority when job hunting. Failing to maintain a competitive compensation plan can lead to increases in rep exits and challenges in maintaining a sufficient headcount to drive business goals.

Right now, external factors impacting sales compensation logistics include economic uncertainty, remote work shifts, and technological advancement. Companies that can effectively adapt their sales compensation strategies will not only drive growth but also position themselves as employers of choice in an increasingly competitive talent market.

Below, we provide insight into five key compensation trends that we think will influence sales compensation strategies in 2025.

These trends are based on recent Brevet, World at Work, and Alexander Group research.

Explore these trends to remain competitive.

5. Emphasis on Pay-for-Performance Models

First up is the rise of pay-for-performance compensation models.

As companies increasingly update their compensation plans to strengthen the link between pay and performance, they ensure that incentives closely tie to individual and organizational achievements.

A Pay-for-Performance sales compensation model links earnings directly to performance metrics such as sales volume, revenue targets, or other key performance indicators (KPIs). This approach incentivizes reps to meet or exceed specific goals aligned with business objectives such as growth and profitability. This model rewards better performance with higher compensation through commission-based pay, bonuses, or tiered incentives.

This strategy effectively motivates sales teams for organizations wishing to drive performance and accountability. However, it’s best to balance this model with team-based rewards or recognition components to ensure other factors such as customer satisfaction and other non-sales responsibilities don’t suffer.

4. Integration of Profitability Metrics

There’s a growing trend to incorporate profitability measures into sales compensation structures, encouraging sales teams to focus not just on revenue generation but also on the quality and profitability of sales. Tying compensation to profit-focused metrics like gross margin or customer retention encourages sales teams to prioritize high-margin products or ideal customer profiles (ICPs), supporting sustainable growth and the company’s bottom line.

Clear communication, training, and tools are essential when integrating these measures into sales incentive plans, ensuring team members understand how they earn and boosting plan effectiveness. For instance, providing team members with access to a platform like QuotaPath helps reps easily identify which deals to prioritize based on their compensation plan and track progress, increasing buy-in and adoption of profitability measures.

3. Utilization of Data-Driven Compensation Strategies

Organizations are leveraging data analytics to gain deeper insights into sales performance, enabling more tailored and effective compensation plans that align with specific business objectives. For instance, data can help identify which sales activities, products, or deals contribute most to profitability, enabling companies to know which behaviors to incentivize.

This approach ensures compensation plans align with revenue targets and strategic goals like entering new markets, customer acquisition, or retention. Data-driven strategies enable businesses to easily track rep performance and compensation plan effectiveness, facilitating plan adjustments in response to evolving market and economic conditions, and organizational goals.

Providing reps with real-time data access increases their understanding of how they get paid on a data-driven plan while giving them greater visibility into specific reward elements. This serves to boost plan effectiveness at motivating behaviors intended to drive business objectives.

When we asked nearly 500 revenue leaders what area of their sales compensation management process needs the most improvement, 25% reported “alignment to business goals” as their top focus, followed closely by simplicity, optimization, visibility, and automation. (Report)

2. Adoption of Flexible and Hybrid Work Models

How and where reps like to work is also impacting compensation structures.

The on-going shift towards hybrid work environments is influencing compensation strategies, with companies adapting their plans to accommodate remote work dynamics and maintain employee engagement. In 2023 companies had started reconsidering their work models, with 74% planning to shift to hybrid work permanently.

This measure increases rep satisfaction and retention as 55% of surveyed employees prefer working remotely at least three days per week, and 59% are attracted to employers offering hybrid or remote work options. Sales reps working remotely can also generate up to 50% more revenue, according to McKinsey.

However, flexible work isn’t only remote work.

For instance, flexible work models include employee-friendly leave of absence policies, incentive guarantees while on leave, and quota relief policies. Be sure to establish a clear plan detailing delegation of responsibilities during leaves of absence to ensure all internal and client-related duties are covered, preventing negative impacts on employees or the company overall.

1. Increased Investment in Sales Talent

Lastly, despite economic uncertainties, many organizations are boosting their sales compensation budgets and expanding headcount to attract and retain top sales talent, reflecting a commitment to driving growth through skilled personnel. Factors inspiring these increases include inflation and increased competition.

Compensation plans need to include a balance of financial and non-financial workplace benefits, according to Gartner. They recommend strategically growing and improving sales performance and boosting sales team retention by offering quality management and career development.

Career and skill development is beneficial to the organization while being attractive and desirable to current and potential employees. Organizations that invest in employee development reported 11% greater profitability and are twice as likely to retain their employees according to Gallup.

Looking Ahead: Preparing for 2025 Sales Compensation Success

These five trends are essential for building a competitive and effective sales compensation plan for 2025.

A pay-for-performance model, profitability metrics, and data-driven compensation strategies all support the alignment and achievement of organizational goals and sustainable growth. Adoption of flexible work while increasing headcount and skill development helps boost productivity and rep retention.

Aligning compensation strategies with both business goals and current market dynamics ensures you’re driving the right behavior for sustainable growth and profitability.

Take the time to evaluate your current compensation plans and consider how each trend may impact or improve your approach.

Then, with rapidly evolving trends, set up regular assessments of compensation effectiveness to stay agile and responsive to changing needs.

Forward-thinking compensation planning plays a pivotal role in achieving 2025 sales targets and long-term business growth.See how QuotaPath simplifies compensation effectiveness assessments and facilitates data-driven incentive strategies. Schedule time with a team member today.

Tracking sales performance metrics plays a pivotal role in driving business success.

This process helps you identify strengths and weaknesses to pinpoint areas where sales reps excel and areas needing improvement. Sales productivity metrics help drive business growth by aligning sales strategies with overarching business objectives and monitoring progress toward their attainment.

Monitoring performance criteria for sales enables you to optimize team performance, driving sales team efficiency through tailored training and tools. It also boosts revenue predictability by allowing you to understand sales data patterns to forecast future performance accurately.

In this blog, we discuss sales performance metrics, why and how to track and measure them, highlight the top sales productivity metrics, pitfalls to avoid, and how to select which metrics to track.

It’s a long read, but by the end, you should feel fully prepared to tackle your team’s metrics in the new year.

What Are Sales Performance Metrics?

Sales performance metrics are quantifiable data points that measure the effectiveness of sales activities. These measurements play a key role in assessing individual, team, and organizational sales performance. This data provides insights into key aspects of the sales process, identifying trends and bottlenecks, enabling individual performance evaluation, and compensation strategy development or optimization.

Using Multiple Metrics To Measure Sales Productivity

Above, you’ll notice everything is plural.

“Data points.” “Measurements.” “Metrics.”

That’s because relying on a single sales performance metric has its limitations and can lead to too narrow of a focus, misaligned behaviors, and lack of context.

• Sales reps spend 35% of their time selling. Measuring just revenue fails to account for the time spent on non-revenue-generating activities. Focusing on revenue alone can lead to unhealthy practices like discounting to close deals quickly.
• CSO Insights found that organizations tracking just revenue were more likely to miss potential churn indicators.

Benefits of Comprehensive Approach to Sales Performance Metrics

Meanwhile, a comprehensive approach provides a holistic view of sales productivity while offering additional benefits. A more thorough method improves decision-making, balances team performance, enables early detection of issues, and promotes alignment across teams.

Why Analyze Sales Performance?

Tracking performance criteria for sales facilitates sales performance analysis. Analyzing sales performance helps leaders assess the effectiveness of sales strategies and individual and team contributions.

The key benefits of analyzing sales performance include: (BULLETS)

Identify Strengths and Weaknesses: Highlight top-performing reps and areas needing improvement.

Optimize Processes: Discover inefficiencies in the sales funnel such as lengthy deal cycles.

Forecast Accuracy: Improve predictions of revenue and pipeline health.

Drive Strategic Decisions: Inform decisions on territory allocation, resource investment, and training.

Performance analysis acts as a bridge between sales activities and business goal achievement. This process provides valuable insights to hit revenue targets, reduce churn, and align sales with broader company objectives.

Foster a culture of accountability and continuous improvement by leveraging metrics and insights. Start by establishing clear performance indicators, routinely monitoring data, opening sharing insights with employees, and encouraging feedback loops for continuous improvement.

Companywide Sales Metrics

Beyond what’s happening at the team level, you can also look into companywide metrics for high-level view.

Such as:

Total Revenue

Total revenue is the sum of all sales generated across all products and services.

Tracking total revenue is vital because it reflects a company’s overall sales performance and financial health, informing strategic decisions and adjustments for sustained success.

To calculate: Total Revenue = Number of Products Sold x Price Per Product 

Revenue Growth Rate

Revenue growth is a company’s sales increase over a specific period.

Tracking total revenue helps leaders understand how well the company converts leads into sales. It’s a key measure of overall business health.

To calculate: Revenue Growth = [(Total Revenue in Current Period – Total Revenue in Previous Period) / Total Revenue in Previous Period] x 100 

Quota Attainment Rate

The quota attainment rate is the percentage of a company’s sales reps meeting or exceeding their sales targets.

This metric is crucial for gauging sales performance, identifying coaching needs, and assessing the effectiveness of the compensation plan to motivate sales reps’ performance.

To calculate: Quota Attainment = (Number of reps that achieve sales quota / Total number of reps) x 100 

Customer Acquisition Cost (CAC)

Customer acquisition cost is the total cost to secure a new customer.

This measurement helps companies gauge profitability compared to customer lifetime value (CLV) and understand the costs associated with gaining a new customer.

To calculate: (Total cost of sales and marketing)/number of new customers acquired 

Customer Lifetime Value (CLV)

Customer lifetime value is a measure of the total revenue a company expects to generate from a customer throughout their relationship with the company.

CLV is an important metric because it can help companies make decisions about resource allocations such as marketing and sales.

To calculate: CLV= Average revenue per year x Average length of time with the company

Win Rate:

The win rate measures how well sales reps close sales by comparing the number of sales opportunities against the number of successfully closed deals, without consideration of the time frame.

Tracking the win rate helps assess the effectiveness of sales strategies and approaches in the current competitive environment to facilitate adjustments and optimization.

To calculate: Win Rate (%) = (Number of won deals/Total number of deals) x 100 

Average Deal Size:

The average deal size, also known as the average contract value, is the average value of sales over a given period or for a specific region.

This metric helps companies understand how much revenue is generated from each sale, assess the effectiveness of sales strategies, accurately forecast revenue, and set realistic sales goals.

To calculate: Average Deal Size = Total Revenue/Number of Deals 

Sales Cycle Length:

The sales cycle length is the average time it takes for a lead to advance through the sales pipeline from initial contact to deal closure.

Sales cycle length provides insights into sales process efficiency and the identification of bottlenecks. This metric can help organizations lower CAC.

To calculate: Sales Cycle Length = Total Number of Days for All Deals ÷ Total Number of Deals 

Pipeline Coverage Ratio

The pipeline coverage ratio is the comparison of the sales opportunities in the pipeline and the sales goals for the period.

This metric helps businesses gauge how healthy their sales pipeline is at a given time and the likelihood of achieving quota. For instance, a pipeline value 3 – 4 times as much as quota for the period is good.

To calculate: Pipeline Coverage = Number of Opportunities in Pipeline in a Period/Quota for That Period 

Lead-to-Customer Conversion Rate

The lead-to-customer conversation rate measures the percentage of leads generated by a company that converts into paying customers.

This metric helps assess a company’s sales process effectiveness at transforming potential customers into actual buyers.

To calculate: Lead-to-Customer Conversion Rate = (Number of Converted Customers / Total Number of Leads) x 100% 

Customer Retention Rate (CRR)

The customer retention rate measures the number of customers a company retains over a specific period.

It is a business health indicator that helps gauge a company’s ability to retain customers and increase CLV. This metric is also useful for ideal customer profile (ICP) identification and adjustments.

To calculate: CRR = (Total number of customers at the end of a period – Number of new customers acquired during the period) / Total number of customers at the start of the period 

Churn Rate

The churn rate highlights the proportion of customers who discontinue product or service use during a given timeframe.

This metric is useful for identifying challenges in areas like sales performance, product fit, and customer service.

To calculate: Churn Rate = ((Number of customers at the start of a period – Number of customers at the end of the period) / (Number of customers at the start of the period)) x 100 

Upsell and Cross-Sell Revenue

Upsell and cross-sell revenue are additional revenue generated when customers purchase more expensive versions of products and complementary products.

Tracking this revenue helps the company monitor existing customer growth and ways to boost customer lifetime value while fostering long-term loyalty.

To calculate: Total Upsell and Cross-Sell Revenue = Upsell Revenue + Cross-Sell Revenue 

Sales Team Productivity (e.g., revenue per rep)

Sales team productivity measures the average revenue generated by each individual sales rep within a company during a period.

This is a crucial metric for assessing individual and team sales productivity, allowing businesses to identify top performers, pinpoint areas for improvement, and make informed decisions regarding resource allocation and sales strategies.

To calculate: Sales Team Productivity = Total Sales Revenue / The Number of Sales Reps 

Forecast Accuracy

A company’s sales forecast accuracy is a measure of how closely projected sales align with actual sales.

This metric measures the reliability of forecasts for a company to make informed decisions about resource allocation, inventory management, strategic planning, optimization of operations, and financial stability.

To calculate: Forecast Accuracy (%) = (1−(Actual Sales−Forecasted Sales)/Actual Sales)×100 

Sales Efficiency Ratio (e.g., revenue-to-cost ratio)

A sales efficiency ratio measures how much revenue a company generates for every dollar spent on sales and marketing efforts, gauging how cost-effective their sales process is.

This metric helps identify areas for improvement and measures the ROI of sales efforts.

To calculate: Sales Efficiency Ratio = Total Sales Revenue / Total Sales & Marketing Expenses 

Net Promoter Score (NPS)

A Net Promoter Score (NPS) is a customer experience metric that measures how likely a customer is to recommend a company, product, or service to others, based on a single survey question.

NPS helps a company gauge customer loyalty and the potential to retain customers.

To calculate: Net Promoter Score = Percent of Promoters (9-10 rating) – Percent of Detractors (0-6 rating) 

Team-Based Sales Metrics

These sales performance metrics examples help with team sales performance analysis.

Team Quota Attainment

The team quota attainment rate is the percentage of a team’s sales reps meeting or exceeding their sales targets.

This metric is crucial for gauging sales performance, identifying coaching needs, and assessing the effectiveness of the compensation plan to motivate sales reps’ performance.

To calculate: Team Quota Attainment = (Number of reps that achieve sales quota / Total number of reps) x 100 

Team Win Rate

The team win rate measures how well sales reps close sales by comparing the number of sales opportunities against the number of successfully closed deals, without consideration of time frame.

Tracking the win rate helps assess the effectiveness of sales strategies and approaches in the current competitive environment to facilitate adjustments and optimization.

To calculate: Win Rate (%) = (Number of won deals/Total number of deals) x 100 

Team Pipeline Value

Team pipeline value represents the total potential revenue a sales team could generate from all the active sales opportunities currently in the team’s pipeline.

This metric provides insight into the team’s future revenue potential. It allows sales leaders to forecast sales accuracy, identify potential bottlenecks, and make informed decisions about sales strategies to reach targets. 

To calculate: Tally the total estimated value of opportunities in the pipeline, using a weighted average based on the likelihood of closing each deal at its current stage.  

Sales Activity Metrics

Sales activity metrics are quantifiable measurements used to track and evaluate the day-to-day actions and efforts of a sales team.

This data provides insights into team performance and helps businesses optimize their sales process by identifying areas for improvement. These metrics typically include things like the number of calls made, emails sent, and meetings scheduled.

To calculate: Track the occurrences of these activities within a specific timeframe within your CRM 

Average Deal Size

The average deal size, also known as the average contract value, is the average value of sales over a given period or for a specific region.

This metric helps companies understand how much revenue is generated from each sale, assess the effectiveness of sales strategies, accurately forecast revenue, and set realistic sales goals.

To calculate: Average Deal Size = Total Revenue/Number of Deals 

Time-to-Close for Team Deals

The time-to-close for team deals measures the average sales cycle length for a sales team from initial contact with a potential customer until a deal is closed.

This metric is a crucial indicator of the sales process and team efficiency in converting leads into paying customers.

To calculate: Time-to-Close for Team Deals = Total number of days for all closed team deals / Total number of closed deals for the period 

Forecast Accuracy

A company’s sales forecast accuracy is a measure of how closely projected sales align with actual sales.

This metric measures the reliability of forecasts for a company to make informed decisions about resource allocation, inventory management, strategic planning, optimization of operations, and financial stability.

To calculate: Forecast Accuracy (%) = (1−(Actual Sales−Forecasted Sales)/Actual Sales) × 100 

Cross-Selling and Upselling Revenue

Cross-selling and upselling revenue are additional revenue generated when customers purchase more expensive versions of products and complementary products.

Tracking this revenue helps the team monitor existing customer growth and ways to boost customer lifetime value while fostering long-term loyalty.

To calculate: Cross-selling and Upselling Revenue = Cross-Sell Revenue + Upsell Revenue 

Pipeline Coverage Ratio

The pipeline coverage ratio is the comparison of the sales opportunities in the pipeline and the sales goals for the period.

This metric helps businesses gauge how healthy their sales pipeline is at a given time and the likelihood of achieving quota. For instance, a pipeline value 3 – 4 times as much as quota for the period is good.

To calculate: Pipeline Coverage = Number of Opportunities in Pipeline in a Period/Quota for That Period

Sales Metrics For Individual Sales Reps

Consider these sales rep performance metrics to understand individual team member performance.

Individual Quota Attainment

Individual quota attainment is the percentage of a sales rep’s sales target they achieve.

This metric is crucial for gauging sales performance, identifying coaching needs, and assessing the effectiveness of the compensation plan to motivate sales reps’ performance.

To calculate: Individual Quota Attainment = (Value of sales achieved / Sales Rep’s Quota) x 100 

Win Rate

The win rate measures how well a sales rep closes sales by comparing the number of sales opportunities against the number of successfully closed deals, without consideration of the time frame.

Tracking the win rate helps assess the effectiveness of sales strategies and approaches in the current competitive environment to facilitate adjustments and optimization.

To calculate: Win Rate (%) = (Number of won deals/Total number of deals) x 100 

Average Deal Size

The average deal size, also known as the average contract value, is the average value of sales over a given period or for a specific region.

This metric helps companies understand how much revenue is generated from each sale, assess the effectiveness of sales strategies, accurately forecast revenue, and set realistic sales goals.

To calculate: Average Deal Size = Total Revenue/Number of Deals 

Sales Cycle Length

The sales cycle length is the average time it takes for a lead to advance through the sales pipeline from initial contact to deal closure.

Sales cycle length provides insights into sales process efficiency and the identification of bottlenecks. This metric can help organizations lower CAC.

To calculate: Sales Cycle Length = Total Number of Days for All Deals ÷ Total Number of Deals 

Lead-to-Customer Conversion Rate

The lead-to-customer conversation rate measures the percentage of leads generated by a company that converts into paying customers.

This metric helps assess a company’s sales process effectiveness at transforming potential customers into actual buyers.

To calculate: Lead-to-Customer Conversion Rate = (Number of Converted Customers / Total Number of Leads) x 100% 

Revenue Generated

Revenue generated refers to the total amount of income a sales representative brings in by selling a company’s products or services during a specific period.

This metric helps assess individual sales rep performance and their contribution to the company’s total revenue. It is critical for evaluating sales effectiveness and making informed decisions about compensation, training, and sales strategy. 

To calculate: Revenue Generated = (Total sales closed by the sales rep during a specific period) x (Average price per sale) 

Activity Metrics (e.g., calls, emails, meetings)

Activity metrics are quantifiable measurements used to track and evaluate the day-to-day actions and efforts of a sales rep.

This data provides insights into rep performance and helps businesses optimize their sales process by identifying areas for improvement. These metrics typically include things like the number of calls made, emails sent, and meetings scheduled.

To calculate: Track the occurrences of these activities within a specific timeframe within your CRM 

Pipeline Contribution

Pipeline contribution refers to the total value of sales opportunities a specific salesperson currently has within their sales pipeline.

This metric represents a rep’s potential future revenue based on the deals they are actively working on at any given time. It is a key metric for gauging how much a sales rep is contributing to the overall sales goals of the team by tracking the potential revenue tied to their active deals across different stages of the sales process. 

To calculate: Pipeline contribution = Total value of deals in sales rep’s pipeline

Upsell and Cross-Sell Revenue

Upsell and cross-sell revenue are additional revenue generated when customers purchase more expensive versions of products and complementary products.

Tracking this revenue helps monitor existing customer growth and ways to boost customer lifetime value while fostering long-term loyalty.

To calculate: Total Upsell and Cross-Sell Revenue = Upsell Revenue + Cross-Sell Revenue 

Customer Retention Rate

The customer retention rate measures the number of customers a sales rep retains over a specific period.

This metric provides insight into a rep’s ability to maintain and nurture long-term customer relationships. A high retention rate indicates they know how to keep customers satisfied and loyal, leading to increased lifetime value and sustained revenue for the company.

To calculate: CRR = (Total number of customers at the end of a period – Number of new customers acquired during the period) / Total number of customers at the start of the period 

Challenges With Sales Performance Metrics

Sales performance metrics are essential for assessing a sales team’s effectiveness, but they present several challenges.

Data accuracy is a significant issue, as ensuring CRM and reporting tool data are correct and current can be difficult due to human error or delayed entry. Data overload is another concern where the vast number of metrics tracked can divert attention from actionable insights.

Additionally, metric overlap can create redundancy and make it hard to isolate areas needing improvement. Collecting and analyzing these metrics is also time and resource-intensive, diverting resources from other productive activities. Inconsistent definitions can lead to confusion and misalignment of metric definitions across teams. For instance, what qualifies as a “lead” or “activity” can cause reporting discrepancies.

Moreover, the lack of integration between various systems, such as CRM, sales enablement, and marketing platforms, hinders the aggregation of comprehensive insights. It can also be challenging to achieve team alignment where both team-based and individual metrics align with overall company objectives. However, addressing these challenges can lead to a more efficient approach to managing sales performance metrics and better sales outcomes.

How To Choose The Right Sales Metrics For Your Team

Keep these sales performance metrics challenges in mind as you work through the following steps to identify performance criteria for sales in your organization.

Tools Used To Measure And Track Sales Performance Metrics

When done manually, tracking and measuring sales productivity metrics can be overwhelming and cumbersome. Leverage tools to streamline the process to facilitate sales performance metrics analysis.

QuotaPath

Description: A comprehensive sales compensation and performance management tool that tracks quota attainment, commissions, and team productivity.

Metrics Measured: Quota attainment, earnings forecasts, split deal tracking, and sales rep productivity.

Salesforce

Description: A leading CRM platform with robust reporting and analytics features, enabling sales teams to track pipeline health and performance metrics.

Metrics Measured: Revenue, pipeline value, win rate, sales activity (calls, meetings), and customer retention.

HubSpot CRM

Description: A user-friendly CRM that integrates sales, marketing, and customer service data to provide insights into sales performance.

Metrics Measured: Deal stage progression, lead-to-customer conversion rates, activity metrics, and revenue forecasting.

Gong

Description: A revenue intelligence platform that analyzes sales calls and interactions to improve team performance and deal outcomes.

Metrics Measured: Deal win rates, time spent selling, engagement trends, and coaching effectiveness.

Outreach

Description: A sales engagement platform that automates and tracks communication sequences while providing insights into team activity and effectiveness.

Metrics Measured: Sales activity metrics (emails, calls, meetings), response, and engagement success rates.

Start Tracking Sales Performance Metrics

Selecting, tracking, and analyzing sales performance metrics is essential to driving business success. Choose multiple sales productivity metrics for a holistic view, improved decision-making, balanced team performance, early issue detection, and team alignment.

This facilitates the identification of strengths and weaknesses, process optimization, improved forecast accuracy, and informed strategic decisions. Start by selecting the sales performance metrics that best suit your needs. Then, streamline the tracking and analysis by leveraging tools.

See how QuotaPath simplifies sales performance metric tracking and analysis. Schedule time with a team member today.

Are you incentivizing early renewals?

If not, you should definitely consider doing so.

Incentivizing early renewals can be a strategic win for both the company and the customer. 

For business, early renewals secure revenue, improve cash flow, and increase customer lifetime value (LTV).

For customers, the benefits can range from cost savings to enhanced continuity and deeper partnership opportunities. 

Here, we’ll explore why early renewals matter, their mutual benefits, and how to structure incentives for Customer Success and Account Management teams to encourage these renewals effectively.

Why Incentivize Early Renewals?

First, let’s start with the why. Why would you want to do this?

Securing Revenue and Stability for the Company

Early renewals provide revenue stability, which supports forecasting and strategic planning. 

Organizations can reduce churn risk by securing revenue earlier, ensuring long-term stability and financial predictability. This particularly benefits companies with aggressive growth targets or those facing uncertain market conditions.

Enhancing Customer Lifetime Value (LTV) 

Plus, encouraging early renewals increases a customer’s LTV by extending their contractual commitment and deepening the partnership. 

This is especially valuable for SaaS companies, as higher LTVs improve financial health and contribute to more sustainable business models.

Strengthening Customer Relationships

Lastly, offering early renewal options with incentives demonstrates a proactive approach to customer success. 

It shows that the business values the customer’s continued success and is committed to supporting their needs. This can foster trust and loyalty, leading to future opportunities for upselling and cross-selling.

Benefits for the Customer

And, the best part about incentivizing early renewals is that the customer wins, too.

For customers, early renewals often come with exclusive benefits that make it advantageous for them to commit early:

• Cost Savings: Early renewals may come with discounts or price locks, protecting customers from potential price increases.
• Customized Offers: Companies can offer value-added services, additional product features, or priority support to incentivize early renewals and enhance the customer experience.
• Enhanced Continuity: Customers are assured that they’ll continue receiving uninterrupted service, reducing the administrative burden of renegotiating later and maintaining steady access to valuable tools and services.

Starting to see the win-win scenario? You ultimately align incentives with customer benefits, resulting in loyalty and long-term partnerships.

Structuring Incentives for Early Renewals

Now, how do you actually get your team to ask for the early renewal?

Sure, you can coach them and review the benefits to the organization and customer, but that kind of ignores the rep’s “what’s in it for me” perspective.

The answer is in the compensation structure. 

Creating a compelling incentive structure can significantly encourage early renewals. 

Here are some strategies recommended by experienced professionals from the RevOps community:

1. SPIFFs and Bonuses Over Core Metrics

A common recommendation is incentivizing early renewals through one-time bonuses or SPIFFs rather than adjusting core metrics like Gross Revenue Retention (GRR) or Net New ARR.
Offering a SPIFF tied to a specific percentage of the renewing ARR can motivate Customer Success Managers (CSMs) without distorting long-term performance metrics.

Example: Reward CSMs with a one-time SPIFF for securing renewals 90 days or more before the contract ends. This ensures early revenue without impacting standard performance measures, providing CSMs with a short-term win without altering their primary targets.

2. Use Booking Date for Accelerators

Another approach is to allow early renewals to count toward accelerators by using the booking date rather than the start date. 

This gives CSMs a reason to advance renewals, especially if they have GRR or ARR targets. 

However, caution is necessary to avoid creating an incentive to “pull forward” renewals artificially, which can disrupt long-term targets.

RevOps Leader Darryl Heffernan suggests setting up the incentives so that early renewals count towards achievement (numerator) and target (denominator). This structure can encourage early renewals without skewing the team’s ability to achieve sustainable long-term results.

3. Retain the Start Date for Core Metrics but Offer a Bonus for Early Closures

Ryan Milligan, VP of RevOps at QuotaPath, also advises keeping the contract start date so you don’t tamper with measuring GRR while focusing on genuine retention and renewal rates. 

To incentivize CSMs, offer an additional bonus based on the ARR percentage for early renewals.

This setup maintains clarity around retention metrics while offering an extra reward for those who secure renewals ahead of schedule.

4. Incentivize Multi-Year Conversions

If early renewals align with the company’s broader strategy, consider offering additional incentives for customers transitioning from one-year to two-year (or longer) contracts. 

Multi-year agreements lock in revenue for a more extended period, reduce churn risk, and allow for deeper engagement with the customer. For CSMs, this comp plan provides an extra reason to focus on renewals as a strategic priority, supporting customer loyalty and revenue predictability.

5. Implement One-Time Year-End Adjustments

Lastly, consider one-time year-end adjustments.

To keep incentive structures straightforward, some companies only calculate early renewal incentives at year-end. 

By allowing early renewals to count in end-of-year recalculations, you can create an additional retention lever without complicating ongoing commission calculations. This also prevents potential “gaming” where CSMs might otherwise rush renewals merely to inflate short-term performance.

Final Thoughts

Incentivizing early renewals can be a win-win for both organizations and customers.

Offering structured bonuses or SPIFFs without impacting core retention metrics can encourage their Customer Success and Account Management teams to pursue early renewals. This approach secures revenue and strengthens customer relationships, increases customer lifetime value, and supports more accurate revenue forecasting.

The proper incentive structure aligns customer success with company objectives, ensuring that teams remain motivated to foster long-term customer success. 

If your organization wants to boost early renewals, start by defining clear, manageable incentives that promote genuine engagement and encourage CSMs to prioritize customer needs and company growth.

For additional help aligning your compensation structure with your most important metrics and streamlining your compensation process, schedule time with our team. 

Sales compensation is often an overlooked strategic lever, yet it’s one of the most influential elements impacting a company’s performance.

Poorly structured compensation can drive reps away, with our research showing that 9% of sales reps quit over disputes or errors related to compensation​. Additionally, sales incentives that misalign with company goals can encourage deals that don’t add long-term value, leading to increased customer churn. 

These issues arise from several pain points in traditional sales compensation models, including a lack of alignment with business objectives, opacity, and overly complex and demotivating​ compensation structures.

“You have to eliminate any disconnect between the business’s performance and your team’s performance,” said Ryan Milligan, QuotaPath’s VP of RevOps​ and Sales.

As companies seek efficient growth, outdated compensation plans can be a stumbling block. 

However, a well-designed compensation plan can be transformative, providing a solid return on investment (ROI) by aligning sales incentives with business goals and empowering teams.

In this post, we’ll share how optimizing sales compensation benefits RevOps and Finance leaders, why QuotaPath is a crucial partner in this transformation, and how this investment ultimately drives financial growth.

The Financial Impact of Sales Compensation

A well-structured sales compensation plan directly impacts a company’s financial health. 

By incentivizing desired behaviors and aligning sales goals with company objectives, a strong plan can boost sales productivity and increase revenue.

A competitive compensation package can also improve employee retention, reduce turnover costs, and ensure a stable sales force.  Below, we unpack each of these.

Increased Sales Productivity

First, let’s discuss sales productivity. 

A well-designed compensation plan is foundational to maximizing sales productivity. It determines how much reps are paid, influences their behavior, speeds up deal cycles, and can increase the average deal value. 

The underlying principle is simple: when compensation aligns with desired sales outcomes, sales reps are naturally motivated to meet and exceed those expectations.

According to Alexander Group’s 2023 National Sales Compensation Survey, companies with a higher percentage of variable pay in their compensation plans—above 30%—reported a 23% higher win rate than those with lower variable components. 

This statistic illustrates the direct impact that a strategically structured comp plan can have on performance outcomes.

Effective sales compensation planning also involves ensuring clarity and transparency, building confidence and driving reps’ productivity.

This clarity is one of the underlying principles that explain why we created QuotaPath. 

We designed QuotaPath’s platform to support productivity by providing real-time visibility into commission structures and attainment progress. Here’s how these features drive sales efficiency:

Clear Breakdown of Commission Structures Per Deal 

Reps see how each deal impacts their earnings through automated commission tracking. This allows them to prioritize deals that maximize their commission. This clarity ensures that salespeople focus on high-value opportunities and accelerate deal closing times.

Real-Time Views of Attainment and Earnings Progress

The ability to track earnings and forecast commissions in real time helps drive sales performance by keeping reps motivated and providing insights on how close they are to their next milestone or accelerator. 

With a clear understanding of their position, reps are more driven to hit targets and close deals faster to reach their earnings goals.

Quick Resolution of Earnings Issues

Earnings disputes can be distracting and time-consuming. QuotaPath’s commission payout software allows reps to flag discrepancies, communicate quickly, and resolve issues in-app. 

This results in improved accuracy, which saves operational time and minimizes the friction associated with commission disputes. For many teams, this has translated into a 50% reduction in time spent on commission management, freeing up operations teams to focus on strategic growth initiatives​.

Scenario Modeling for New Compensation Structures

You can’t calculate the ROI of something without knowing the initial cost. 

QuotaPath enables finance and RevOps teams to test and model various compensation scenarios before implementing them to understand cost. This capability ensures that comp plans align with team goals and budget constraints, allowing leaders to refine structures for maximum impact. Reps, in turn, benefit from realistic, motivating plans that align with company objectives.

Performance Tracking for Compensation Plans

QuotaPath’s tools provide insights into how each plan performs over time, helping RevOps teams measure the success of different compensation strategies and refine plans as needed. This ongoing optimization ensures that comp plans continue to drive intended sales behaviors and contribute to efficient growth.

Productivity naturally increases when sales reps are empowered with clear earnings visibility, streamlined processes, and responsive support. 

Improved Employee Retention

Next up: the ROI of sales compensation on employee retention.

Retention is a persistent challenge for sales organizations, and HubSpot says inadequate compensation is the top reason salespeople leave their roles. 

Those of us in sales know how costly this can be. 

Studies estimate that replacing a single sales rep can cost 1.5 to 2 times their annual salary when factoring in recruiting, onboarding, and lost productivity as new reps ramp up.

The key to mitigating turnover is a compensation plan that is both fair and motivating. 

When sales reps feel their efforts are rewarded and understand how to reach their earnings targets, they are more likely to remain engaged and satisfied. 

For many companies, an effective retention-focused compensation plan includes clear, attainable targets and a transparent structure. Communicating the comp plan, such as explaining the why behind the math and offering resources and support to meet their goals, also helps with rep retention. 

This way, reps feel confident that they can achieve their quota and understand the specific actions needed to maximize earnings.

The QuotaPath Approach

QuotaPath’s approach emphasizes simplicity and transparency in compensation. 

The platform offers clear views into earnings potential, commission structures, and attainment progress, allowing salespeople to monitor their own progress toward quota. This level of visibility empowers reps to take ownership of their performance and income, reducing frustration and fostering long-term loyalty.

Enhanced Revenue Growth

Effective sales compensation isn’t just about paying for performance; it’s also a growth driver. 

Sales leaders can directly impact revenue by aligning compensation with company goals and providing flexibility to adjust as priorities shift. 

For this, we point to QuotaPath customer, Everview.

Everview reported a record sales year after integrating QuotaPath, attributing part of this success to reps’ ability to use “what-if” scenarios to manage acceleration opportunities and forecast earnings​.

Blackthorn reps, too, took advantage of forecasting earnings in QuotaPath by identifying which deals at the end of the month accelerated them toward their next kicker and then focusing on bringing those in. 

By aligning sales activities with strategic objectives, companies can ensure efficient and sustainable growth.

“You can start by identifying the most important metric that will move the needle for your business next year, and then one-by-one creating components of your comp plan that directly support and drive that metric,” Ryan said.

How to Align Your Comp Plans to Broader Company Goals

500 revenue leaders found that 25% identified “alignment to business goals” as the top area needing improvement in their sales compensation management process​.

Read More

Calculating the ROI of Sales Compensation

Investing in sales compensation is more than allocating funds to reward performance—it’s about ensuring that the structure and management of these incentives yield measurable returns. 

For RevOps and Finance leaders, calculating the ROI of a sales compensation investment involves analyzing how the strategy impacts productivity, costs, and overall revenue outcomes. To gauge the potential ROI of a sales compensation strategy, let’s start with a straightforward estimation framework.

A Simplified Framework for Estimating Sales Compensation ROI

To evaluate ROI, RevOps and Finance leaders can use this basic formula:

ROI = (Revenue Gains + Cost Savings – Investment Cost) / Investment Cost

Here’s a breakdown of what each component might include:

• Revenue Gains: Increases in revenue directly attributable to a compensation strategy, such as higher deal values, shorter sales cycles, and improved rep performance.
• Cost Savings: Reductions in administrative time, error handling, and hiring/training costs as a result of efficient compensation management.
• Investment Cost: The total cost of implementing the new strategy, including software expenses, any consulting fees, and time spent on plan design and execution.

This framework allows teams to clearly see how sales compensation enhances revenue and reduces operational expenses, contributing to a stronger bottom line.

Key Metrics to Track for Measuring ROI on Sales Compensation

To make informed decisions, tracking the right metrics can clarify the impact of compensation on company performance. Here are some key metrics:

1. Cost per Hire: Calculating the cost per hire for each sales rep provides insight into the financial impact of turnover. By using an effective compensation plan, companies can reduce turnover and, consequently, the cost per hire, as engaged reps are more likely to stay longer.
2. Sales Cycle Length: A well-structured comp plan motivates reps to close deals faster. By tracking any reductions in sales cycle length, companies can measure the effectiveness of their compensation strategy in driving quicker revenue. For instance, QuotaPath clients, like Muck Rack, found that reducing commission processing time from five days to six hours kept reps focused on selling, ultimately improving deal velocity​.
3. Revenue per Rep: This metric indicates each rep’s average revenue, providing a direct measure of compensation effectiveness. With QuotaPath’s real-time visibility features, reps gain clarity into their earnings progress, helping them prioritize high-value deals and maximize their revenue potential.
4. Administrative Costs for Commission Management: Automating commission management with tools like QuotaPath can lead to considerable savings in administrative costs. For example, QuotaPath clients have reported up to a 50% reduction in time spent managing commissions. This frees up resources, allowing Finance and RevOps teams to focus on higher-value tasks rather than manual calculations and error handling​​.
5. Rep Performance and Attainment Lift: QuotaPath helps boost rep performance by providing real-time insights into their commissions. This transparency lets reps see how their actions impact their earnings, driving motivation and improving quota attainment​.

Measuring and Maximizing ROI with QuotaPath

Investing in a well-designed sales compensation strategy is powerful for any business seeking to drive growth and improve financial performance.

By aligning sales incentives with company goals, companies can boost sales productivity, improve rep retention, and optimize revenue outcomes. Tracking metrics like revenue per rep, sales cycle length, and administrative costs allows RevOps and Finance leaders to quantify the return on investment in sales compensation and continuously refine their strategy for maximum impact.

QuotaPath is here to help you with a platform that adapts, simplifies, and enhances sales compensation management, leading to measurable ROI. 

To learn more, schedule time with our team. 

Sales capacity planning helps businesses estimate the number and roles of sales reps to meet monthly, quarterly, or annual organizational goals.

Accurate and consistent sales capacity planning is essential for consistent revenue growth as market and economic conditions continue fluctuating. Otherwise, you risk falling short of business objective achievement.

There are several key considerations involved in creating a sales capacity model including data accuracy, sales resources, and quota attainment. Effective sales capacity planning requires data-driven decisions for reliable projections. Interestingly, Forrester found that data-driven companies are 58% more likely to beat their revenue goals.

However, these data-driven sales capacity projections are only as accurate as the historical data they’re based on. CRM improves forecast accuracy by as much as 42% according to Salesforce. So, leveraging a CRM helps improve sales capacity planning effectiveness.

The use of sales resources such as sales automation tools is another consideration.

Sales automation improves sales efficiency up to 15 percent and sales productivity by up to 10 percent according to McKinsey. These tools directly impact the number of sales reps your organization will require to achieve sales revenue targets.

Finally, across industries, average quota attainment has remained a challenge.

Data from 2012–2024 shows that only about 51% of sales reps typically hit their quotas, with downturns exacerbating this challenge. In 2023 and 2024, quota attainment saw a further decline due to market disruptions​. This factor also directly affects your sales capacity planning projections.

Ultimately, the goal of sales capacity planning is to determine the ideal number of sales team members to achieve business objectives and avoid under or over-utilized reps.

Below, we’ll lean into sales capacity models and share best practices along the way, so you’re all set for the new year.

What Is Sales Capacity Planning?

First though, let’s define it.

Sales capacity planning is an essential process leveraged by businesses to ensure consistent growth.

The process of creating a sales capacity model involves forecasting the optimal number of sales resources, such as sales reps, tools, skills, and knowledge, needed to meet revenue targets efficiently. It includes setting quotas, assessing hiring needs, and aligning resources with market demand.

Sales capacity planning is especially critical for SaaS companies where revenue is largely based on subscription renewals and consistent growth from customer acquisition. Effective sales capacity planning can increase revenue growth by up to 15% for SaaS companies by optimizing resource allocation, according to a Salesforce study. This highlights the importance of leveraging accurate historical sales data to ensure the creation of an effective sales capacity model.

Benefits of Sales Capacity Planning

Next, let’s outline the benefits of effective sales capacity planning, which offers many advantages in addition to driving business goal achievements.

How To Create A Sales Capacity Plan

Complete the following nine steps to build an effective sales capacity plan.

1. Set Clear Revenue and Growth Targets

Define Sales Goals: Establish specific revenue and growth targets for the quarterly or annual planning period.

Align with Business Objectives: Ensure targets are aligned with the company’s overall business goals, such as expansion, retention, or market share growth.

Example: A SaaS company might set a 20% revenue growth target with goals for both customer acquisition and retention.

2. Analyze Historical Sales Data

Review Past Sales Performance: Analyze historical data on revenue, deal sizes, win rates, and sales cycle length.

Identify Patterns: Look for patterns in sales volume, seasonality, and trends that can inform future capacity needs.

Example: If sales tend to spike in Q3, the company may plan for additional capacity during that period.

3. Forecast Sales Demand

Use Sales Forecasting Models: Apply forecasting methods such as linear regression and pipeline forecasting to project future sales demand.

Adjust for Market Factors: Consider external factors like economic conditions, market trends, or new product launches that could affect demand.

Example: If you are expanding into a new region, increase demand forecasts accordingly to account for potential growth.

4. Calculate Sales Capacity Requirements

Determine Optimal Sales Headcount: Based on sales targets, calculate the number of reps needed to achieve goals, factoring in productivity and quota attainment.

Define Productivity Benchmarks: Set realistic quotas and productivity benchmarks per rep, based on factors like average deal size and win rate.

Example: A company aiming for $10M in revenue with average quotas of $500K per rep would require 20 reps.

5. Account for Attrition and Ramp Time

Estimate Attrition Rates: Consider average turnover rates to determine the additional headcount needed to maintain capacity.

Factor in Ramp Time: Include ramp-up time for new hires to reach full productivity. This is typically 3–6 months in SaaS.

Example: For a 20% annual turnover rate and 6-month ramp-up, the company may need to hire 25% more reps than planned to ensure steady capacity.

6. Align Territory and Quota Allocation

Optimize Territory Assignments: Assign territories or segments to reps based on potential and coverage needs.

Set Fair and Attainable Quotas: Use historical performance data and market potential to set achievable quotas for each rep or team.

Example: For high-growth regions, assign more reps and set higher quotas compared to mature markets.

7. Plan for Seasonal or Cyclical Adjustments

Account for Seasonality: Adjust capacity plans for anticipated seasonal or cyclical variations in demand.

Adjust Resource Allocation: Hire temporary reps or reallocate resources to manage peak periods effectively.

Example: If demand is higher in Q4, allocate extra resources or consider temporary hires to manage the load.

8. Implement Sales Tools and Support Resources

Leverage Sales Technology: Equip reps with CRM, automation, and analytics tools to maximize productivity.

Provide Training and Support: Ensure reps have the necessary training, resources, and support to reach their quotas.

Example: Implement a CRM system for better tracking of sales activities and pipeline management.

9. Monitor and Adjust the Capacity Plan

Track Performance Metrics: Regularly review metrics such as quota attainment, pipeline health, and territory coverage to assess capacity.

Make Data-Driven Adjustments: Adjust the plan as needed based on performance, turnover, and market changes.

Example: If quota attainment is low, consider revising quotas or reallocating resources to underperforming areas.

Metrics To Consider When Sales Capacity Planning

Another detail to keep in mind as you explore capacity models if the data to include.

The following sales data is typically used during the sales capacity planning process. 

Implementing Your Sales Capacity Model

Feeling ready to go? You should be!

As you execute your sales capacity plan, keeping best practices in mind will increase its effectiveness in driving organizational objectives.

Start by aligning the plan with business goals to ensure it supports the company’s overall revenue and growth objectives. Then use historical sales data to help you assign attainable quotas based on average rep productivity, deal sizes, and territory potential.

Plan for ramp-up and attrition to maintain consistent sales capacity and adjust for seasonality and market changes to align headcount with demand. Applying reliable forecasting models to project demand and revenue more accurately will help as you refine your capacity needs. Optimizing territory allocation to maximize market potential and balance workloads across the team is also important to ensure productivity and prevent underutilization.

Incorporate sales support and technology to enhance productivity and meet capacity expectations. Then monitor key performance indicators (KPIs) routinely to evaluate plan effectiveness.

Remember, your plan requires regular reassessment and adjustment based on performance data and changing business conditions.

To learn how QuotaPath can support your sales capacity planning process through attainment reporting and commission reporting, schedule time with a team member.

For those of us with sales backgrounds, what feelings did you experience when your leadership introduced a new sales compensation plan?

Was it distrust? 

Frustration? 

Perhaps the jumpstart you needed to pursue a new job?

All of this is very common, especially when sales teams are blind-sighted by increased quotas, less support, and no explanation behind the logic of the changes. 

According to our report, 97% of revenue leaders face challenges with their compensation plans, primarily due to plan design, communication, and management ​issues. 

Sales reps often struggle with complex comp structures, and many don’t fully understand their earnings until three to six months into the plan​. This lack of clarity and transparency can erode trust and reduce motivation across the team.

However, by following a structured, intentional approach, you can avoid these pitfalls and foster a rollout that improves morale and drives performance. 

As you plan for next year, follow these five best practices to keep your team privy, inspired, and committed during a compensation plan rollout. 

1. Involve Reps Early in the Process

Start by engaging your reps.

One of the most effective ways to secure buy-in from your team is to involve sales reps from the beginning. 

By hosting rep feedback sessions or forming committees during the planning phase, leaders can gain insights into their motivations and identify potential issues before they arise. This collaborative approach will help you surface rep concerns before they snowball into a more significant issue and empowers them to feel a sense of ownership over the plan.

As former HubSpot CRO Mark Roberge noted, overlooking transparent communication and alignment can have severe consequences: he recalls how a company lost “10 amazing salespeople” due to a failed compensation plan rollout. 

Early involvement helps ensure the plan resonates with your reps’ goals and mitigates the risk of disengagement.

2. Communicate Proactively and Clearly

Second, provide clear and consistent communication. This is a must to minimize confusion and build trust. 

From initial announcements to the finer details of how the plan works, be proactive in explaining the mechanics of the new plan and the rationale behind its design. Utilize multiple channels—emails, town halls, Q&A sessions, and interactive discussions—to ensure that every team member understands how the plan benefits both the individual and the company.

Statistics back up the importance of transparency: 75% of sales reps report a lack of trust in their compensation structures​. 

When companies provide clear visibility into how earnings are calculated and projected, reps feel more confident, which can improve their motivation and performance​.

3. Provide Ample Notice and Training

More on that proactive front — it’s super important to let your team know changes are coming, even if you don’t know what those changes are yet. 

You could introduce changes in phases, allowing reps to digest the information and adjust their expectations. Start with a broad overview and then move into specifics, ensuring ample opportunity for questions and clarification. 

Provide training sessions that cover plan mechanics, with practical examples and visual aids, to ease the transition.

As far as the timeline for announcing the launch of the new comp plan, most teams will do this during their Sales Kickoff (SKO), where alignment from the sales, finance, and HR teams sets the stage for successful adoption. This event also gives you the space to show how you’ll support reps with resources (more below), professional development, education, and more. 

4. Offer Clear Tools and Resources

Also, consider equipping your team with the right tools to understand better what they are paid on, how much, and when. 

Resources like FAQs, earnings calculators, and examples illustrating various earning scenarios empower reps to understand how their work translates to compensation. 

You could also enlist the help of a platform like QuotaPath to offer real-time tracking and insights into commission calculations, enabling reps to stay engaged with their sales performance metrics​.

5. Collect Feedback Post-Launch

Lastly, remember that feedback after the rollout is just as important as the feedback leading up to a new plan. 

To ensure ongoing alignment, gather feedback from your reps post-launch to identify any issues and areas for improvement. Regular surveys, one-on-ones, and data analysis on compensation performance—such as quota attainment and motivation levels—can reveal whether adjustments are needed.

Establishing feedback loops helps refine the plan, reinforces transparency, and demonstrates that leadership is committed to creating a fair and motivating compensation structure even as the company goals evolve. 

Communicate. Build trust. Profit. 

A well-executed compensation plan rollout can strengthen trust, boost morale, and drive performance.

 By involving reps early, communicating transparently, providing adequate training, equipping the team with resources, and gathering feedback post-launch, you set the stage for a successful implementation. Tools like QuotaPath offer essential support in managing these components, ensuring your comp plan aligns with broader business objectives and keeps reps motivated to hit their goals.

For those looking to streamline their comp plan rollouts and maintain alignment with growth targets, QuotaPath offers the tools and expertise to guide your process. Schedule time with our team to learn how QuotaPath can support your compensation strategy and create a winning culture for your sales team.

What’s the hottest role in tech… again?

RevOps, of course.

And for good reason. Having a RevOps leader at your organization leads to significant impacts on businesses.

For example, Forrester RevOps Survey revealed that respondents experienced increased revenue growth (41%), customer satisfaction (36%), and profitability (35%) after implementing RevOps in their organizations.

If that’s not the holy trinity of tech metrics, we don’t know what is.

As the department of RevOps evolves, as well as the RevOps leaders, reliable resources help accelerate individual and organizational growth across the industry. So, we curated a list of top RevOps leaders to follow this year.

These 10 leaders are pushing the RevOps movement as strong voices in the many RevOps communities, sharing their learnings, and inviting others to learn with them.

Check out their profiles, then follow them to start learning.

Rosalyn Santa Elena

First up is Rosalyn Santa Elena, one of the most recognized voices in the RevOps community.

As the Founder and Chief Revenue Operations Officer at The RevOps Collective and host of the “Revenue Engine” podcast, Rosalyn shares actionable insights and thought leadership around building scalable RevOps functions. Her influence stems from her ability to simplify complex processes for revenue alignment across sales, marketing, and customer success.

Rosalyn’s influence also extends beyond her organization. On a mission to elevate the Ops function and professionals, she provides RevOps-as-a-Strategy to scaling start-ups.

And we’re not the first ones to point out you should follow her. Rosalyn has been recognized as a top Sales and Marketing influencer for five consecutive years since 2020.

Brad Smith

Next on our list is Brad Smith, a well-known advocate for the RevOps movement.

Brad serves as the President, Chief Customer Officer, and Co-Founder of Sonar, a revenue operations tool that helps businesses manage changes in their tech stack.

He is highly active on LinkedIn and shares insights on optimizing tech stacks and scaling revenue teams. Brad’s work focuses on solving common RevOps challenges related to tools and integrations.

Additionally, his influence extends to Wizards of Ops (aka WizOps), a non-profit dedicated Slack community he founded, where operations professionals gather to question and share their expertise.

Taft Love

Taft Love is the Founder of Iceberg RevOps, a consulting company helping businesses optimize their revenue operations functions. He also supports Commercial Strategy and Operations at Dropbox, which acquired DocSend, where he previously served as VP of Sales prior to the acquisition.

He is known for his deep insights into revenue intelligence, sales productivity, and process improvements. Plus, Taft’s leadership has impacted many early-stage companies looking to build efficient RevOps teams, including Rattle, Outset, Scale Venture Partners, and more.

Sarah Jane Hicks

Sarah Hicks is the Chief of Staff at Olympix, a proactive web3 security tool.

In previous roles, Sarah has helped companies streamline sales processes and optimize revenue growth.

Sarah also acts as an instructor at Sales Impact Academy and frequently speaks on RevOps best practices and the importance of a unified revenue function. She brings a data-driven approach to solving RevOps challenges, making her a key influencer in the RevOps space.

Ryan Milligan

Up next, we had to include Pavilion’s Startup CRO of the Year winner, our very own Ryan Milligan.

Ryan is the VP of Revenue Operations at QuotaPath and plays a dual role overseeing both RevOps and the sales team. Under his leadership, the sales team has achieved 100% attainment for four consecutive quarters, a testament to his strategic approach and ability to align RevOps with sales execution.

Ryan’s expertise optimizes revenue processes and ensures that sales strategies are tightly aligned with company goals to drive the right kind of revenue.

His hands-on approach to managing sales and operations empowers teams to hit targets consistently while creating a culture of accountability and transparency. Ryan strongly advocates using data to inform decision-making and streamline processes across go-to-market functions.

Stephen Diorio

Stephen Diorio is the Executive Vice President of Growth Strategy at Green Thread and Managing Director at the Revenue Enablement Institute.

He has played a pivotal role in shaping how organizations think about revenue operations. Stephen’s work focuses on driving commercial transformation through technology, data, and processes, helping align RevOps with long-term business strategies.

Jacki Leahy

To find informative articles and posts on RevOps topics such as strategy, user experience and client services, start following Jacki Leahy.

Jacki is the Head of GTM and Founder at Activate the Magic, a fractional RevOps agency providing expert strategy and execution for scaling start-ups. She also offers month-to-month technical guidance for GTM teams using the Salesforce and HubSpot ecosystems.

You can also check her out on on podcasts, webinars, and events as a key voice in the RevOps community.

Ann Pao

Anne Pao, the founder of Ignite Consulting, is a seasoned revenue leader with over 20 years of experience leading go-to-market strategy, operations, and analytics for high-growth tech and healthcare companies.

Her proven track record includes building go-to-market foundations for companies like Tubular Labs (acquired), Airship (Series F), Heap (Series D), Maven Clinic (Series E), Medallia (IPO), and Gilead Sciences (Fortune 500). Under her guidance, these companies experienced significant revenue growth, scaling from $25 million to over $5 billion.

Anne’s impact extends beyond her role, as she’s a strong advocate for diversity in tech and operations, contributing to thought leadership that emphasizes inclusivity alongside operational excellence through her RevOps community, RevOps Village.

Sarah McConnell

Sarah McConnell is the VP of Demand Generation at Qualified, a fast-growing conversational sales and marketing platform. She has extensive experience in sales operations and has been a strong advocate for integrating marketing and sales strategies into the RevOps framework.

Sarah’s focus on process improvement and data analytics makes her a leader in the RevOps space.

Michael Hanna

Last up is Michael Hanna, the Co-Founder of Hanna Strategy, developing a community of revops leaders through training, coaching, and community. 

He has led Revenue Operations for some of the world’s fastest-growing technology companies, including Shopify, Intuit, and Clio, building RevOps teams from scratch. Michael often speaks about optimizing sales processes, improving lead generation systems, and refining revenue forecasting models. His work focuses on aligning revenue operations with broader business objectives to maximize ROI.

Closing Thoughts

Following these 10 RevOps leaders is sure to expand your RevOps knowledge and influence your day-to-day RevOps practice. We encourage you to take the next 60 seconds to follow them on LinkedIn.

Then, come on back to see how QuotaPath streamlines sales compensation creation and management. Schedule time with a team member to learn more or start your free trial to experience QuotaPath for yourself.

In the words of big-time entrepreneur and investor Mark Cuban, “A well-managed pipeline is like a garden. You need to constantly tend to it, weeding out the bad deals and nurturing the good ones.”

— And pipeline reviews are like regular check-ins on your garden’s health. 

These weekly, bi-weekly (or some other cadence) meetings help go-to-market teams identify which areas need immediate attention and which are thriving or have the most potential.

Unfortunately, most reps view these meetings as chores or high-pressured meet-ups where leadership picks apart their pipelines and puts reps on the spot. 

But pipe reviews are far too important to be viewed as a menace.

“Pipeline reviews directly impact the financial forecast, which is crucial for securing resources like headcount. To expand your team and gain the support of the board, you need to demonstrate that your forecasts are reliable and achievable, ensuring continued investment,” said RevOps Leader and fractional Chief Revenue Officer Anne Pao. 

The way to do this is through your pipeline.

And, the way you get your reps onboard is by putting them at the center of it, not to put them on the spot, but instead empower them.

Our CEO AJ Bruno and Anne presented this topic at INBOUND 2024. Below are the main takeaways. 

TIP: RevOps, you run the meeting.

What Good Pipeline Reviews Share In Common

Building on the importance of tending to your sales pipeline like a garden, effective pipeline reviews are crucial for keeping your deals healthy and on track. 

A successful review goes beyond just tracking progress—it provides clarity, fosters collaboration, and ensures the team is aligned for action.

Here are the key elements that all strong pipeline reviews have in common:

Shared Learnings: A well-run pipeline review is a space for continuous learning. It’s an opportunity for team members to share insights from their deals—what’s working, what’s not, and what challenges they’re encountering. These learnings not only help individual reps improve but also enable the entire team to grow by building on shared experiences.

Support and Expertise Offered: These reviews should feel collaborative. When a rep hits a roadblock, it’s not just their problem—it’s a team opportunity to lend expertise. Sales leaders and peers can provide advice, suggest strategies, or even offer direct assistance to help move deals forward. This exchange of support fosters a strong team dynamic and ensures no deal stagnates due to a lack of guidance.

Alignment for Action: A pipeline review isn’t just about tracking progress; it’s about aligning on the next steps. Teams use these meetings to discuss priorities and set clear actions, ensuring everyone is on the same page. Whether following up with a prospect or reworking a deal strategy, these sessions create alignment across the team to drive consistent momentum in the pipeline.

Celebration of Wins: No review is complete without celebrating the victories. Recognizing deals that have closed and milestones achieved keeps morale high. It also reminds the team that their hard work pays off and reinforces the behaviors and strategies that lead to success.

Accountability must exist at all levels, from the rep to the CRO. Everyone, including leadership, should contribute to the forecast and include alignment across marketing, customer success, and even product teams for full funnel visibility. A well-run pipeline review should be engaging and valuable for everyone involved, not just leadership. This fosters ownership and makes it a meeting that people want to attend.

Multi-level Accountability: A good pipeline review creates accountability at all levels. Reps are accountable for their deal progress, managers for coaching and oversight, and leaders for strategic decisions. This multi-level accountability helps everyone drive toward common goals.

Reliable Forecasts: Ultimately, pipeline reviews contribute to building reliable sales forecasts. The team can more accurately predict future revenue by regularly evaluating deal status and progress. This is critical for the company’s broader financial planning and helps secure resources from leadership and stakeholders, such as additional headcount or investments.

What Bad Reviews Share In Common

As important as highlighting what characteristics solid pipeline reviews share, it’s equally important to recognize the common pitfalls that can undermine their success.

Poorly run pipeline reviews can stall progress, drain morale, and result in unreliable forecasts. 

Here are some qualities bad pipeline reviews tend to share:

Top-down; no rep ownership: When pipeline reviews are dominated by leadership without involving reps, the people closest to the deals are left out of critical decision-making. This leads to a lack of accountability and ownership at the rep level, weakening the accuracy of forecasts.

Poor CRM hygiene: A lack of clean, up-to-date data in the CRM can cripple pipeline reviews. When deals are not accurately reflected in the system, it’s impossible to make informed decisions about next steps, resulting in wasted time and missed opportunities.

Weak next steps/future actions: A bad pipeline review often ends without a clear action plan. Without defined next steps, deals stagnate, and progress becomes challenging to track.

Fear-based interrogation vs. collaborative deal strategy: When reviews feel like an interrogation, it creates a culture of fear rather than collaboration. Instead of working together on deal strategies, reps become defensive, and open dialogue breaks down.

No unified customer methodology: Sales and customer success teams struggle to align without a shared language or process for customer stages. This lack of common vernacular leads to miscommunication and inconsistent deal progression.

Sales only (no full GTM): Pipeline reviews focusing solely on sales and excluding other go-to-market teams—such as marketing, customer success, and product—miss the bigger picture. Effective reviews require input from all relevant teams to drive full-funnel success.

Inconsistent cadence: Pipeline reviews that happen sporadically rather than on a consistent schedule lose their value. Regular reviews are essential for maintaining momentum and ensuring deals are progressing.

Low executive support: When leadership doesn’t actively participate in or support the pipeline review process, it signals to the team that it’s not a priority. This lack of engagement leads to a drop in overall effectiveness and commitment.

Limited transparency: Finally, a lack of transparency—regarding deal status, progress, or strategy—erodes trust within the team and results in misaligned priorities.

Who’s Coming to Pipe Reviews: Host by Function

So, how can we avoid those missteps regarding pipeline reviews? Start by dedicating pipeline reviews specific to the GTM function.

“A lot of traditional pipe reviews just involve one team— the new business team,” said AJ. “That’s such a failure of the organization because, at the end of the day, you’re doing that bottom-up forecasting, and you want to see holistically the entire organization. This is a team sport you want to think about with pipe reviews.”

You could follow this format and cadence for pipe reviews:

• Weekly New Business Reviews (Sales Team):
  • Focus: These reviews center on new business opportunities led by the sales team.
  • Action: Reps should come prepared with updates and forecasts already in the system. Weekly reviews are ideal to maintain momentum and focus on the next steps.
  • For teams where sales also handle upsells, you might combine this review with upsell tracking, though it’s typically best to keep them distinct.
    
• Bi-Weekly Renewals and Upsell Reviews (Post-Sales Teams):
  • Focus: This review targets renewals and upsell opportunities managed by the post-sales side of the business.
  • Action: These reviews are critical for identifying customer retention opportunities and cross-sell/upsell initiatives. Customer success teams and account managers should be present, ensuring alignment on long-term customer goals.
    
• Monthly Executive Pipeline Reviews:
  • Focus: Conducted weekly or bi-weekly, depending on your deal cycle, these reviews aggregate the insights from grassroots reps and middle management to create an overarching view for leadership.
  • Action: Executives align on the CRO’s forecast and how it relates to the CFO’s financial forecast. These reviews help assess overall pipeline health and strategy, setting the tone for cross-departmental alignment.
    
• Bi-Weekly Pipeline Generation (Marketing and Cross-Functional Teams):
  • Focus: A pipeline generation review ensures that top-of-funnel efforts effectively contribute to pipeline growth.
  • Action: Marketing, sales, and customer success teams must collaborate here, especially to analyze marketing-qualified leads (MQLs) and their conversion into sales opportunities (SALs). Address response times and ensure pipeline targets are met.

Master Forecasting

Mastering forecasting improves pipeline reviews and ensures that your business can hit reliable targets, secure investments, and drive predictable growth.

Methodology Matters: Start by mapping your sales process and lifecycle stages, but remember, stages are not the same as forecasting methodology. Forecast categories—like pipeline, test case, most likely, and commit—should be layered on top at the deal level for more accurate forecasting.

Bottom-Up and Top-Down Forecasting: Effective forecasting includes both bottom-up ownership and top-down analysis. Reps should take ownership of their deals while leadership analyzes trends, conversion rates, and broader financial forecasts to ensure accuracy.

Implement a Reliable CRM: Ensure your CRM is clean and captures key data like win rates, pipeline coverage, and deal progression. This data is critical for financial planning, annual forecasts, and pipeline reviews.

• Tip: Implement QuotaPath so that your reps see their forecasted commissions tied to pipeline.

Accountability at All Levels: Forecasting success hinges on multi-level accountability. Sales leaders should focus on coaching reps while RevOps handles the technical forecasting processes, keeping their roles distinct.

Cadence and Consistency: Pipeline reviews and forecasting meetings should happen consistently to maintain accuracy and momentum. Ensuring regular, predictable meetings fosters better pipeline management and more reliable forecasting.

Customer-Centric Approach: Always consider the buyer’s journey in your forecasting. Understanding their intent and awareness at each stage ensures reps focus on the right opportunities and align with customer needs.

Empower Reps by Tying Commissions to the Pipeline

One of the most powerful ways to engage your sales team and enhance pipeline reviews is by directly connecting their commissions to the deals in the pipeline.

At QuotaPath, for example, every rep uses our system to create a “what if” calculator to visualize and calculate how their deals will impact their paycheck.

By openly discussing commissions and earnings during pipeline meetings, you tap into the natural motivation of your reps. 

When they know exactly how their current and future deals translate into personal earnings, they become more invested in accurately forecasting, pushing deals forward, and staying accountable. This transparency can drive better results across the board.

One innovative way to do this is by leveraging tools like our new native app in Sales Hub, which allows reps to forecast their earnings directly inside HubSpot’s CRM. This integration provides instant visibility into how pipeline movements impact their commissions, all in real time. 

This feature simplifies the process and eliminates common frustrations, especially with split deals where multiple reps share commissions. In traditional setups, tracking individual earnings accurately across shared deals is hard, leading to mistakes and mismatches in attainment reporting. 

By embedding commission tracking directly into your CRM in this first-of-its-kind integration, you empower reps to see exactly where they stand, helping them stay motivated and focused on what matters.

Incorporating this earnings transparency into your pipeline reviews brings a new level of engagement. When reps see that their forecasted deals are directly tied to their commission, it increases their sense of ownership and accountability. 

This leads to more accurate forecasting, higher productivity, and a more motivated

Learn what commission actions you can take directly in HubSpot. 

Parting Thoughts

Effective pipeline reviews and forecasting drive predictable revenue and empower your sales team to succeed. 

By segmenting pipe review by stakeholder function, mastering forecasting, fostering accountability, and tying commissions directly to pipeline performance, you can ensure that your team stays motivated, aligned, and focused on the right deals.

At QuotaPath, we help you improve your pipeline management and commission tracking. 

With features like real-time earnings forecasting directly inside HubSpot’s Sales Hub, we make it easier than ever for your reps to understand their compensation and focus on what matters.

Schedule time with our team to see how we can help you drive better outcomes for your team and your business.

SaaS companies rely on recurring revenue sales compensation models to incentivize sales reps toward long-term customer relationships and revenue stability rather than short-term gains.

By rewarding contract renewals, expansions, and customer retention, these models align sales goals with the company’s growth, making them ideal for subscription-based businesses that depend on sustainable revenue streams.

Research shows that a 5% increase in customer retention can boost profits by 25-95%, highlighting why retention is vital for SaaS growth​.

However, sales compensation plans must carefully align with recurring revenue goals to drive behaviors that support long-term organizational objectives for these strategies to work.

In this guide, we’ll explore recurring revenue models, compensation structures, commission plans, and optimization strategies.

Let’s dive in.

What Is Recurring Revenue and Why It Matters

We’ll start with defining recurring revenue.

Recurring revenue is consistent, predictable revenue streams generated from ongoing customer subscriptions or services. By contrast, traditional one-time sales feature nonrecurring payments that may not happen again. This can make future revenue forecasting and business growth more difficult.

That’s why recurring revenue is critical to consistent long-term business growth.

It’s integral to SaaS subscription model businesses, enabling them to attain higher average customer lifetime value, stable cash flow, greater customer retention and loyalty, and more predictable growth.

Understanding Recurring Revenue Sales Compensation

Now that you understand recurring revenue let’s tie it to sales compensation.

What is recurring revenue sales compensation?

Sales commission plans for recurring revenue are based on ongoing, recurring revenue generated from customer subscriptions or contracts. Sales incentives for subscription sales are typically calculated as a percentage of recurring revenue and focus on long-term customer retention and value.

By contrast, traditional businesses that generate one-time, non-recurring sales prioritize closing individual deals and tie compensation to a single product or service’s total sale price or profit.

Key Components of a Recurring Revenue Sales Compensation Plan

You’ll include the following components when designing a sales compensation plan that promotes recurring revenue.

Common Recurring Revenue Compensation Models

Next, let’s look at some examples of recurring revenue compensation models.

Best Practices for Structuring a Recurring Revenue Sales Compensation Plan

Leverage these tips when building sales compensation for recurring revenue models. 

• Incorporating customer lifetime value (CLTV): CLTV should influence sales compensation decisions. Key considerations include overall customer lifetime value, upsell potential, and cross-sell opportunities. For instance, incentivize renewals, multi-year renewals, upsells and cross-sells within accounts. Then, reward new business opportunities and deals with ICPs as they will most likely renew.
• Aligning compensation with business goals: Ensuring compensation plans motivate the right sales behavior is crucial to achieving business objectives. When aligning sales compensation with customer success, include incentives like bonuses and commissions in the plan. Then leverage upsell, renewal, and customer success metrics to motivate sellers to focus their activities accordingly.
• Flexible compensation plans for scaling companies: As companies grow, compensation plans should adapt to incorporate appropriate incentives based on responsibilities. For instance, early-stage companies often leave renewals with account managers (AMs) or customer success managers (CSMs) allowing AEs to focus on winning new business. However, companies often shift renewal responsibilities to AEs to maintain a direct relationship with customers as they scale.

How QuotaPath Can Help Optimize Recurring Revenue Sales Compensation

For SaaS businesses, managing recurring revenue requires more than a solid compensation plan; it demands tools that enable ongoing tracking, optimization, and alignment with long-term goals.

QuotaPath is a powerful sales compensation platform tailored for businesses dependent on recurring revenue. Designed to support the unique needs of subscription-based models, QuotaPath offers robust tools that allow businesses to track, analyze, and optimize compensation plans that drive renewals, expansions, and customer retention.

With customizable reporting and predictive modeling, QuotaPath enables companies to measure compensation costs, monitor the effectiveness of compensation plans, and adjust strategies to align with recurring revenue goals.

The platform’s real-time earnings forecasting tool also provides sales teams with up-to-date views of their potential commissions, helping them prioritize high-impact deals in their pipeline and motivating them to move opportunities toward renewal or expansion.

Final Tips for Effective Recurring Revenue Sales Compensation

To optimize sales compensation for subscription-based models, include base salary, commissions, retention bonuses and incentives, and upsell and cross-sell compensation. Incentivize these elements through popular compensation models such as flat-rate commissions, tiered commissions, clawbacks, and chargebacks.

Boost recurring revenue sales compensation plan effectiveness by incorporating CLTV, aligning compensation with organizational objectives, and employing a flexible compensation plan as you scale.

Use clear, transparent communication when sharing recurring revenue sales incentive plans to ensure understanding, alignment, and motivation. This serves to increase plan buy-in, adoption, and effectiveness.

Closing Thoughts

Recurring revenue sales compensation is essential for driving desired selling behaviors for long-term growth and retention.

Apply this guide’s best practices and tips to build effective sales compensation for subscription-based models.

Lastly, remember to explore QuotaPath’s solutions for managing and optimizing recurring revenue sales compensation. Schedule time with a team member or start a free trial.

Aligning your compensation plans with broader company goals is not just a best practice but a necessity. 

A recent survey of nearly 500 revenue leaders found that 25% identified “alignment to business goals” as the top area needing improvement in their sales compensation management process​. 

This highlights a critical issue: compensation plans can miss the mark without alignment, driving short-term wins at the cost of long-term success.

That’s why it’s important to create your compensation plans in conjunction with your team’s go-to-market (GTM) strategy as your budgeting for the following year. 

GTM-strategy-aligned compensation plans can directly influence key metrics such as pipeline growth, customer retention, and average contract value, all of which are vital for achieving sustainable revenue growth.

Below are some ways to think about driving your GTM strategy via your compensation plan.

 Start By Identifying Your Most Important Metric

Under no circumstances should your comp plan creation proceed by identifying the biggest driver of your business.

Instead, start with the business objective.

Then, create ways to incentivize all branches of your GTM team to drive them.

A successful GTM strategy is built on clearly defined business objectives, such as increasing average deal size and boosting customer lifetime value. 

However, these objectives are only meaningful if your teams are motivated to achieve them. 

This is where compensation planning plays a role. 

By structuring comp plans directly tied to your GTM goals, you can influence the behaviors that matter most. This ensures that every deal closed, lead generated, and customer retained contributes to your overarching business objectives.

Key GTM Metrics

So, which metrics should you be thinking about?

Below is an overview of the core GTM metrics you should consider when structuring your comp plans:

Demand Generation

• Marketing Qualified Leads (MQLs): MQLs represent the leads most likely to convert into sales. Incentivizing demand generation teams or business development reps (BDRs) based on the number of MQLs generated encourages a steady pipeline of high-quality leads for the sales team.
• Pipeline: A healthy sales pipeline is critical to future revenue. Compensation plans can include bonuses or rewards tied to pipeline growth, ensuring that teams focus on building a sustainable flow of opportunities that can be converted into closed deals.
• Average Contract Value (ACV): ACV measures the average revenue per customer contract. Deals with higher ACV tend to bring more value to the business, and by offering higher commission rates or bonuses for deals that exceed a certain threshold, you can encourage your team to pursue larger opportunities​.

Sales

• Qualified Pipeline: Focusing on the qualified pipeline ensures that reps aren’t just filling the funnel with leads but actively engaging prospects more likely to convert. Compensation plans can be structured to reward reps based on the number or value of qualified opportunities they generate.
• Win Rates: Improving win rates—the percentage of deals closed versus deals in the pipeline—directly reflects a sales team’s effectiveness. Tying comp plans to increase win rates motivates reps to focus on closing quality deals and refining their sales approach.
• ACV: Similar to demand generation, incentivizing sales teams based on ACV ensures that reps target larger, more profitable accounts, ultimately contributing to higher revenue growth​.

Account Management

• Gross Revenue Retention (GRR): GRR measures the percentage of revenue retained from existing customers before considering upsells or expansions. Compensation plans that reward account managers for maintaining or increasing GRR encourage them to build long-term relationships and reduce churn.
• Net Revenue Retention (NRR): NRR takes into account upsells, expansions, and cross-sells and reflects the total revenue retained from existing customers. Aligning incentives with NRR helps drive a focus on both retaining customers and expanding their accounts over time.
• Product Adoption: For SaaS businesses, encouraging customer adoption of new products or features can drive long-term value. Account managers can be rewarded based on product adoption milestones, ensuring that customers fully utilize the solutions, leading to higher satisfaction and retention rates​.

Finance

• Lifetime Value (LTV): LTV measures the total value a customer brings over their entire relationship with the company. By linking commissions to LTV growth, sales, and account management teams are encouraged to focus on closing deals and nurturing long-term, high-value relationships​.
• Burn Rate: This metric tracks the rate at which a company spends capital. Keeping the burn rate within acceptable limits is crucial, especially for startups and growth-stage businesses. Compensation plans can include financial performance incentives, helping align all teams with the company’s budgetary goals.
• Customer Acquisition Cost (CAC): CAC measures the cost of acquiring new customers and is a critical factor for growth and profitability. Compensation models that reward reps for keeping acquisition costs low (while still closing quality deals) help drive more efficient sales processes.

Identifying the Key Metric to Improve

Now that you know which metrics to look at, it’s time to identify the metric.

Choose this based on the one most directly tied to your financial plans and strategic goals. You could start by asking: which metric will make or break our revenue plan? 

Example: Increasing Average Contract Value (ACV)

If your goal is to break into the enterprise market, increasing the average contract value (ACV) should be a top priority. This focus will influence how you design compensation plans, from higher commission rates for larger deals to bonuses for enterprise-level customers. 

By focusing on the most critical metric, you can ensure that your compensation plan motivates sales reps and supports the company’s long-term growth goals​.

In the past, many teams have relied on traditional methods to improve metrics like ACV or win rates, such as:

• Attending Enterprise Events
• Account-Based Marketing (ABM)
• Hiring Specialized Talent

While these approaches have proven effective in driving progress, they often fall short without a well-aligned compensation plan. 

Compensation plans should be structured to support these efforts, ensuring reps are consistently incentivized to pursue and close larger, more complex deals​.

But, it would be best if you first recognized the challenges that hold back your key metric. 

One of the main reasons enterprise deals are harder to close than small-to-medium business (SMB) deals is the complexity and length of the sales cycle. Enterprise sales often involve multiple stakeholders, longer decision-making processes, and more complex contract negotiations. Additionally, enterprise customers typically demand more customized solutions, further adding to the challenge.

It’s often easier for reps to close multiple smaller SMB deals in the same time it takes to close one enterprise deal. However, the payoff from larger deals is usually significantly higher. 

Compensation plans should provide substantial incentives to motivate sales reps to focus on these larger opportunities. For example, offering a higher commission rate or bonuses for deals that exceed a certain value threshold can encourage reps to invest the time and effort required to close enterprise accounts​.

Compensation Levers:

• Account Executives: Higher commission rates for deals over a certain value.
• Business Development Reps (BDRs): Bonuses for demos or opportunities created with large deals.
• Account Managers: Bonuses for expanding accounts over a threshold value.

Understanding your metric’s opportunities and challenges and structuring compensation plans accordingly can drive meaningful improvements in your GTM performance. 

Add Organizational-wide Incentives

Another tip: Don’t stop at your immediate GTM teams. 

Consider adding incentives for every department that could drive change.

If we continue on our example from above, you could look into the following:

• Marketing: Bonuses for generating enterprise pipeline.
• Product & Engineering: Bonuses for delivering enterprise-grade features.
• Customer Experience (CX): Rewards for driving enterprise customer adoption.

Measuring the Success of Your Comp Plan

Once your compensation plans are in place, tracking its success to ensure that it’s driving the desired outcomes.

To measure the effectiveness of your comp plan, focus on up-funnel metrics—the early indicators that show whether your strategy is moving in the right direction. These metrics provide valuable insights long before your end-of-year results are finalized, allowing you to adjust and optimize real-time performance.

Tracking Up-Funnel Metrics

Up-funnel metrics offer an early view into how well your compensation plan influences behavior. By identifying early signals of success, you can course-correct if needed and ensure your team is on track to meet your key GTM objectives. When you tie compensation plans to specific GTM goals, it’s important to track indicators that signal improvements before larger results, like revenue or retention, become apparent.

Key Up-Funnel Metrics for Predicting Success

To evaluate the success of your compensation plan in driving improvements in areas like ACV or customer retention, consider monitoring the following up-funnel metrics:

• % of enterprise customers adopting the product in the first 90 days: This metric indicates how quickly new enterprise customers are seeing value from your product, which strongly predicts long-term retention and revenue expansion.
• Average selling price (ASP) of new customers: Tracking the ASP of new deals can help you assess whether your comp plan motivates reps to close larger, more profitable deals, directly impacting ACV.
• % of pipeline from enterprise customers: By monitoring how much of your pipeline consists of high-value enterprise opportunities, you can gauge whether your sales team is focusing on the right accounts, as incentivized by your comp plan.
• Enterprise product usage rates: High customer usage rates are a leading indicator of future upsells, expansions, and renewals. Tying part of your compensation plan to product adoption can help ensure account managers are driving this key metric​.

Iterating on Your Plan

Lastly, compensation plans should not be static.

Tracking these up-funnel metrics and regularly analyzing their trends can refine your comp plans to better align with company goals and evolving market conditions.

If specific metrics aren’t showing the expected progress, consider adjusting incentives or shifting focus to other key areas. This iterative process helps ensure that your compensation plan remains a powerful tool for driving the right behaviors and delivering on your GTM strategy​.

Key Takeaways for 2025 Planning

As you prepare for 2025, here are the key takeaways for building compensation plans that align with and enhance your GTM strategy:

1. Expand Incentive Programs Across the Company: Compensation plans shouldn’t just be the sales department’s responsibility. Aligning incentives across teams like marketing, customer success, and finance ensures that every part of the organization works toward the same key business goals.
2. Drive the Right Metrics: Focus on the metrics that will have the most significant impact on your GTM strategy. Whether it’s increasing ACV, boosting pipeline growth, or improving customer retention, make sure your comp plan is structured to drive these specific outcomes.
3. Measure Early and Often: Continuously track up-funnel metrics to ensure your compensation plan works as intended. Regular measurement and iteration help keep your team aligned with company objectives and responsive to changing market conditions.

Want more help?

Connect with our team to learn compensation planning best practices and how QuotaPath can help you run and manage sales compensation more efficiently and strategically.  

Compensation planning is the strategic process of designing and implementing a fair, effective, and motivating compensation structure for your sales team. 

It’s a crucial component of any successful sales and go-to-market organization, directly impacting employee morale, performance, and overall business outcomes.

However, many companies struggle with their compensation planning efforts. 

Our recent study revealed that 44% of sales reps aren’t motivated by their compensation plans, and 75% don’t trust they are paid fairly. This indicates the need for a well-thought-out and executed compensation strategy.

Easier said than done, though, right?

These challenges experienced by the reps stem from problems at the management levels.

For instance, only 1% of RevOps leaders are confident that their compensation plans align with key business metrics. If retention is your organization’s most important business driver, your compensation structures (across teams) do not include payouts that foster growing retention. 

Solving the Biggest Sales Compensation Challenges

Over 450 Finance, RevOps, and Sales executive leaders identified the top pain points surrounding sales compensation.

Get Report

What’s more, revenue leaders said maintaining simplicity ranks as their biggest challenge during compensation planning, attributing to another alarming statistic: 60% of reps take 3 to 6 months to understand their comp plan.

So, as you plan for next year, how can you get ahead in your compensation planning to avoid these missteps?

In this blog post, we’ll explore the key steps in compensation planning, including strategies for large and small teams, and discuss the nuances of executive and individual contributor compensation. 

We’ll also provide insights into how compensation planning and administration are typically done and introduce how compensation planning software like QuotaPath can streamline the process.

What Are The Steps Involved In Compensation Planning

Creating an effective sales compensation plan requires careful consideration of various factors, including team size, deal value, selling motion, sales complexity, team member roles, and pricing models. These factors can change over time, making it crucial to tailor your plan to your current situation rather than simply copying a previous one.

The key steps involved in compensation planning include:

1. Define your company objectives: Identify the specific business goals you want to achieve through your compensation plan, such as increasing revenue, shortening sales cycles, or improving customer retention.
2. Review the role for whom the comp plan is for: Consider the responsibilities, skills, and contributions of the role to your company’s objectives.
3. Set your budget: Based on your company’s financial resources and market competitiveness, determine how much you can allocate for compensation.
4. Choose your compensation mix: Decide on the combination of base salary, commissions, bonuses, and other incentives you will offer.
5. Establish payout frequency: Determine the appropriate frequency for paying out compensation, such as monthly, quarterly, or annually.
6. Design your commission structure: Select the commission structure that best aligns with your business goals and motivates your sales team.
7. Define quotas and performance metrics: Set clear and achievable quotas and metrics that are fair, objective, and aligned with your objectives.
8. Implement tracking and reporting systems: Use tools to track performance, calculate payouts, and generate reports to ensure transparency and efficiency.
9. Calculate OTE: Determine the on-target earnings (OTE) for each role to ensure fair compensation.
10. Communicate your plan effectively: Clearly communicate your compensation plan to your sales team to ensure understanding and motivation.

Key considerations when designing a compensation plan:

• Alignment with business goals: Ensure your plan supports your company’s strategic objectives.
• Clarity and fairness: Keep the plan simple, transparent, and equitable.
• Motivation: Consider both monetary and non-monetary incentives to motivate your team.
• Flexibility: Be prepared to adjust your plan as your business evolves.

By following these steps and considering these factors, you can create a compensation plan that attracts, retains, and motivates top talent while driving your company’s success.

Compensation Planning For Large And Small Teams

While the core principles of compensation planning remain consistent across team sizes, some specific strategies and considerations are more suitable for larger or smaller startup sales organizations.

Similarities:

• Alignment with business goals: Both large and small teams need compensation plans that align with their company’s objectives.
• Fairness and equity: Ensuring fair treatment and avoiding favoritism is essential for both team sizes.
• Motivation: Using a mix of monetary and non-monetary incentives is necessary to motivate employees in both types of teams.

Differences:

Larger Teams:

• Complexity: Compensation plans for larger teams can be more complex due to factors like multiple sales roles, diverse territories, and varying deal sizes.
• Communication: Effective communication is crucial in larger teams to ensure everyone understands the compensation plan and its implications.
• Technology: Leveraging technology can help streamline compensation processes, improve transparency, and facilitate data-driven decision-making.
• Tiered commission structures: Implementing tiered commission structures can incentivize high achievers and reward top performers.
• Regular adjustments: Larger teams may require more frequent adjustments to their compensation plans to accommodate changes in market conditions, sales goals, and team dynamics.

Smaller Teams:

• Simplicity: Smaller teams can often benefit from simpler compensation plans that are easier to understand and implement.
• Flexibility: Smaller teams may have more flexibility to experiment with different compensation structures and adjust their plans quickly.
• Personal relationships: Building strong relationships between team members and management can foster trust and motivation in smaller teams.
• Direct communication: Open and direct communication can be more effective in smaller teams, allowing for better understanding and feedback.

Executive Compensation Planning

Now that we’ve explored compensation planning for both large and small teams, let’s get into executive compensation.

Executive compensation can be tricky because it is often tied to a percentage shy of 100% of the financial goal, involves equity, and higher, negotiated base pay and benefits (sign-on bonus, relocation stipend.)

Key Tactics and Best Practices:

• Align with company strategy: Ensure executive compensation is aligned with your company’s long-term strategic objective and financial plan. This helps drive focus and accountability.
• Consider performance metrics: Use a mix of financial and non-financial performance metrics to evaluate executive performance and determine compensation.
• Balance short-term and long-term incentives: Incorporate a mix of short-term incentives (e.g., bonuses) and long-term incentives (e.g., stock options) to encourage a focus on both immediate and sustainable results.
• Benchmark against peers: Regularly benchmark executive compensation against similar companies in your industry to ensure competitiveness.
• Transparency and disclosure: Maintain transparency in executive compensation practices and comply with regulatory requirements for disclosure.
• Consider company size and stage: Tailor executive compensation to your company’s size and stage of development. For example, startups may prioritize equity-based compensation, while mature companies may offer a mix of cash and equity.
• Evaluate regularly: Regularly review and evaluate your executive compensation plan to ensure it remains effective and competitive.

Much of that will hold for your individual seller compensation plans, but there a few differences.

Key Differences Between Executive Compensation Plans and Individual Contributor Comp Plans:

• Scope: Executive compensation plans typically cover a more comprehensive range of benefits and incentives than individual contributor plans.
• Complexity: Executive compensation plans are often more complex, involving factors like perquisites, deferred compensation, and performance-based bonuses.
• Alignment with company strategy: Executive compensation is more closely aligned with the company’s overall strategic goals and objectives.
• Regulatory requirements: Executive compensation is subject to stricter regulatory oversight and disclosure requirements.
• Benchmarking: Executive compensation is typically benchmarked against peers in the same industry and at similar levels of seniority.

Following these tactics and best practices, you can design an effective executive compensation plan that attracts and retains top talent, aligns incentives with company goals, and supports your organization’s long-term success.

Individual Contributor Compensation Planning

You’ll follow similar best practices for your reps with a few differences, underlined below. 

1. Alignment with Business Goals:

• Company Objectives: Ensure the plan aligns with your company’s strategic goals and objectives.
• Sales Team Goals: Clearly define the specific goals and metrics that the rep will be responsible for achieving.

2. Role-Specific Considerations:

• Responsibilities: Understand the rep’s specific role, responsibilities, and contributions to the company.
• Skills and Experience: Consider the rep’s skill set, experience level, and growth potential.

3. Compensation Structure:

• Base Salary: Determine a competitive base salary that attracts and retains top talent.
• Variable Pay: Choose appropriate variable pay components, such as commissions, bonuses, or incentives, that align with the rep’s role and performance metrics.
• Commission Structure: Select a commission structure that motivates the rep to achieve their goals, such as single-rate, tiered, or accelerator-based.

4. Quotas and Performance Metrics:

• Attainability: Set realistic and achievable quotas that challenge the rep but are not overly burdensome.
• Relevance: Ensure that performance metrics are relevant to the rep’s role and align with the company’s objectives.
• Fairness: Avoid bias or favoritism in setting quotas and metrics.

5. Communication and Transparency:

• Clarity: Communicate the compensation plan clearly to the rep, ensuring they understand the rules, expectations, and potential earnings.
• Transparency: Maintain transparency in the calculation and payment of commissions and bonuses.
• Feedback: Provide regular feedback on performance and address any questions or concerns.

6. Flexibility and Adaptability:

• Market Changes: Be prepared to adjust the compensation plan as market conditions, company goals, or the rep’s performance change.
• Individual Needs: When designing the plan, consider individual needs and preferences, such as flexible work arrangements or additional benefits.

Consider these factors to create a sales compensation plan that motivates the rep, aligns with company goals, and supports overall business success.

How Compensation Planning and Administration Is Done

Next, we look into the administration and accounting of commission reporting.

Compensation planning and administration are multifaceted processes that involve designing, implementing, and managing your company’s compensation programs. They require collaboration among various departments, including human resources, finance, sales, and legal.

To effectively manage this process while ensuring ASC 606 compliance, follow these steps:

1. Define your company objectives: Clearly outline your company’s strategic goals and how compensation can support them while adhering to ASC 606 principles.
2. Conduct a compensation survey: Gather data on market rates and industry standards to ensure your compensation is competitive and compliant with ASC 606 requirements.
3. Design your compensation structure: Determine the appropriate mix of base salary, variable pay, and benefits for different roles, ensuring that commission payouts align with revenue recognition criteria.
4. Set quotas and performance metrics: Establish clear and measurable goals for employees to achieve, ensuring they are consistent with ASC 606 principles.
5. Implement tracking and reporting systems: Use technology to track employee performance, calculate pay, and generate reports that accurately reflect ASC 606 requirements.
6. Communicate your compensation plan: Clearly explain the plan to employees, ensuring they understand the rules, expectations, and potential earnings while emphasizing the importance of ASC 606 compliance.
7. Monitor and evaluate: Regularly review and evaluate your compensation plan to ensure it remains effective, aligned with your company’s goals, and compliant with ASC 606.
8. Address compliance: Ensure your compensation practices comply with all applicable labor laws and regulations, including ASC 606.

While motivating your employees and driving business results are important, you must remember to be compliant and mitigate bookkeeping risks. 

QuotaPath, Your Compensation Planning Tool

Lastly, one way to immediately improve your sales compensation process is to partner with trusted experts and implement user-friendly technology to support and automate your strategy.

QuotaPath is a powerful tool that can streamline your compensation planning and administration process. 

With QuotaPath, you can:

• Create and manage compensation plans: Easily design and customize compensation plans for different roles and teams in partnership with their team.
• Track performance and calculate payouts: Accurately track employee performance, calculate commissions and bonuses, and generate detailed reports to measure success.
• Ensure compliance: Maintain compliance with ASC 606 and other relevant accounting regulations.
• Improve communication: Enhance transparency and communication between employees, managers, and finance teams.

By leveraging QuotaPath, you can optimize your compensation planning efforts, improve efficiency, and drive better business outcomes.

To learn more, schedule time with our team. 

In recent years, Revenue Operations (RevOps) has emerged as a powerful function driving cross-departmental alignment and optimizing revenue generation.

As businesses increasingly recognize the strategic impact of RevOps, the demand for tools that empower these teams has skyrocketed. The global market for revenue operations platforms is expected to continue its rapid growth, reflecting the need for solutions that integrate data across sales, marketing, and customer success, enhance operational efficiency, and provide valuable insights.

With over 90% of companies prioritizing data-driven decision-making, the availability and diversity of RevOps tools have expanded dramatically, offering more specialized options for data management, automation, and real-time analytics​​.

Selecting the right RevOps tools is crucial for streamlining operations and driving revenue growth, yet the sheer volume of available software can make it overwhelming to know where to start.

To help you navigate this landscape, we’ve curated a list of top RevOps tools for 2024.

From commission automation to data enrichment and predictive analytics, these platforms support your team’s goals for efficiency and transparency, helping you stay competitive in today’s fast-paced market.

Clay

Clay helps go-to-market teams uplevel their data enrichment and automate personalized outreach. You can start with a list of leads, either prospected through Clay or from your own CRM.

“Huge fan of Clay, which allows our GTM and RevOps teams to have the latest enriched data and AI-powered insights on our prospects and customers through their 75+ data providers. This data powers key initiatives that ultimately drive revenue growth for the QuotaPath team.”

~ Brandon Smith, RevOps Manager, QuotaPath

HubSpot

HubSpot is an AI-powered CRM that offers integrations and resources to unite marketing, sales, and customer service. It serves as a single source of truth for managing the entire customer lifecycle.

“The best thing about HubSpot is that the interface and seamless integration with the ecosystem is best. This CRM is easy to navigate, allowing for efficient lead management and tracking. Its automation tools like email sequencing and task reminders save a lot of time by automating repetitive tasks which frees up more time for meaningful sales interactions.”

~ Fazal Mohammed Y. on G2 (source)

QuotaPath

QuotaPath is a sales compensation management tool. The platform offers real-time data syncs and personalized dashboards for greater earnings transparency and understanding across the sales team, boosting quota attainment. It helps gauge sales performance and drive consistent outcomes while automating commissions.

“We’re starting to scale up and we wanted to make sure that we could scale up properly without using Excel sheets.

QuotaPath is a perfect tool, not only for our team to have less of a hassle with commission calculation, but it solves the issue of our sales team waiting a full quarter to see a finalized commission statement after going through multiple levels of emails and slacks going back and forth.

Reps can see how much they’ll earn right after closing a deal.

Then, the cool part that we really hope is going to benefit the sales team is forecasting earnings on any deal, to motivate teams to have more Salesforce cleanliness because if you have a clean pipeline, you can see how much money you will make.”

~ Pete Tenaglia, Director of Finance at Blueconic

PandaDoc

PandaDoc is a document automation platform. This tool helps streamline document management processes allowing businesses to seamlessly create, send, track, and sign digital documents. This streamlines workflows, improves collaboration, and boosts productivity.

“PandaDoc is an awesome e-signature platform that truly stands out! It’s incredibly user-friendly, making it easy for anyone to create, send, and sign documents without any hassle. The interface is intuitive, and the setup process is smooth, which saves a lot of time compared to other tools.

PandaDoc also comes packed with all the necessary features you need—from templates, document tracking, and custom fields to seamless integrations with other apps. It has everything you’d want for managing documents in one place, making it perfect for both small teams and large organizations.

Overall, it’s a well-rounded solution for e-signatures and document management, and I highly recommend it to anyone looking for an efficient and reliable platform.”

~ Quali V. on G2 (source)

Gong.IO

Gong is a revenue intelligence platform for B2B sales teams. It helps teams improve their performance by analyzing customer interactions. Gong captures interactions, provides insights, and improves efficiency through automatic follow-up reminders and next steps. It also offers AI-powered deal warnings and account insights that help sales teams strengthen pipeline inspections and address deal risks.

“Everyone knows that following up with a personalized email is the right thing to do, but it eats up a tremendous amount of time.

Gong’s AI is mind-blowing. In just three short months, I feel like I know more about what’s going on in my team’s sales cycle than I did in the previous nine months of working with them. Their productivity is incredible.

Being able to nail those key messages at the right time and map that process in a repeatable way has led to giant growth in our pipeline.

Gong helps us be ruthless in our pipeline prioritization. After all, we need an accurate forecast. Otherwise, what’s the point of having one?

Having one platform for every aspect of our sellers’ jobs creates insane efficiency for us. Our revenue growth has been astounding.”

~ Matt McGonegle, Director of Inside Sales, SpotOn (source)

Mozart Data

Mozart is a data management platform for growing businesses. This all-in-one data application makes it easy to centralize, organize, and analyze data without engineering resources to get the most from your data. The platform facilitates data management, automation, visualization, monitoring, cataloging, and data reliability.

“Mozart made it super accessible for somebody who’s slightly technical enough to write SQL and build dashboards, but not somebody who really wants to maintain a full-fledged ETL layer or stand up a data warehouse myself.”

~ Ryan Milligan, VP of RevOps, QuotaPath (Source)

MadKudu

MadKudu is a predictive lead-scoring solution designed to help high-volume B2B SaaS companies accelerate their growth. This platform integrates data from multiple sources to help revenue teams prioritize where to focus their revenue-generating efforts.

“Within one month of onboarding MadKudu, we saw our best month ever in terms of meetings booked and quality of opportunities. I couldn’t be happier with MadKudu.”

~ Brett Rizzo, OutSystems, Director of Sales Development (source)

Looker

Looker is a business intelligence (BI) platform that makes it easier to access, analyze, and act on business data. It facilitates data modeling and includes a user-friendly interface for easy dashboard creation. Looker is part of the Looker product family, owned by Google.

“I recently started using Looker for my data analytics needs, and it has been a game-changer. Its ability to transform complex data into insights is remarkable. The intuitive interface makes it incredibly easy to build and customize reports, while the robust data modeling capabilities ensure that we have a single source of truth.

It is very flexible. Whether you’re a data scientist or a business user, Looker’s user-friendly design helps all skill levels. The integration with various data sources is seamless, and the real-time data exploration feature has significantly improved our decision-making process.”

~ G2 Verified Looker User (source)

Chili Piper

Chili Piper is an all-in-one demand conversion platform that automates lead appointment scheduling to increase inbound conversion rates. This tool allows prospects to book appointments directly through applications including web forms, chat, email, and G2. It enables real-time lead qualification plus lead and meeting routing while updating CRM records instantly.

“Within the first full month of having the Chili Piper integration setup, we saw a 40% increase in our contact requests, which is exactly what I want to see within my role. Having this integration was a game changer!”

~ Mary Nelson, BambooHR (source)

Anaplan

Anaplan is a cloud-based business planning platform that helps businesses plan, analyze, and manage performance. It provides a single source of information, integrates planning across the organization into one platform, scenario modeling, and predictive insights.

 “I work in the programmatic ad tech space which is super complicated, due to the supply chain nuances, and planning for multiple business units in Excel is a nightmare. Forecasting tools like Anaplan enable connected planning and help break information silos. Thereby leading to more predictable scaling.”

~ Atul, Revops Co-Op Member

Tools for 2025

If you’re building out your wish list for 2025, this is a great place to start.

These RevOps tools streamline processes, improve collaboration, and optimize revenue generation.

Whether you want to boost inbound conversations, streamline document management, or boost sales productivity and performance, we’ve got you covered. Check out these top-rated RevOps tools as you seek to improve your operations and achieve your goals.

QuotaPath supports comp plan alignment, management, tracking, and CRM hygiene to drive better business outcomes. To learn more, schedule time with a QuotaPath team member.