Service · Toronto & GTA
Compensation Design
If your comp plan needs an explanation, your reps are already wrong.
A comp plan should fit on one page. A rep should know exactly what they made today, this week, this month. They should know exactly what they would make if they did a little more. They should know there is no ceiling on doing a lot more. Most comp plans fail because they were designed by accounting to control cost, not by sales to drive behavior.
What we see
The pattern in most comp plans operations.
- Capped commission plans that punish your best reps for being your best reps.
- Plans tied to year over year growth that quietly tell the rep to stop selling once they have hit the number.
- Bonus structures so complex the rep has to call accounting to figure out what they earned.
- SPIFFs that incentivize the wrong sale.
- Plans that look great on paper and lose money in practice.
- Sales managers paid on a base salary that has no relationship to team performance.
- Reset clauses on January 1 that wreck Q4 motivation.
- Plans that incentivize closing one big deal and ignoring twenty small ones.
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The principles of good comp plan design
- Commission should always be uncapped. Selling more should never have a downside.
- The plan should be simple enough to explain in five minutes.
- Behavior matches incentive. Reps do what they are paid to do. Always.
- Lead measures matter for managers. Pay them partially on lead measures, partially on team outcomes.
- The percentage of revenue paid out should make sense. Roughly ten to twelve percent of gross revenue is healthy.
- Reset cycles need to be designed thoughtfully. A January 1 reset creates a slow January and a fast December.
02
Common comp plan failures we fix
- The capped plan: caps tell your best reps to stop selling. We rebuild capped plans into accelerator plans.
- The growth bonus trap: rewards growth over last year, which creates gaming in Q4.
- The complexity trap: plans with seven components and eleven multipliers. We simplify aggressively.
- The wrong behavior trap: plans that reward closing speed but ignore deal quality.
What changes for you
Reps know exactly what they make. You know exactly what you will pay. Behavior matches strategy. Arguments about commission disappear because the math is on one page.
Industries
We deliver Comp Plans for:
Questions
Frequently asked questions
What is a fair commission rate for a sales rep?
Healthy comp programs pay reps roughly ten to twelve percent of the gross revenue they generate.
Should I cap commissions?
No. Capping commissions punishes your best reps and pushes them to underperform on purpose.
How do I roll out a new comp plan without losing reps?
With transparency, preview math, and a grandfather period.
Should sales managers be on commission?
Sales managers should be paid on a mix of team outcomes and lead measures.
What is a SPIFF and when should I use one?
A short term incentive for a specific behavior. Use them sparingly.
How often should I review the comp plan?
Once a year as a formal review. Adjustments more often than that confuse the team.
Can a comp plan really change behavior that fast?
Yes. A new comp plan that rewards the right behavior produces visible change within thirty days.
Related reading
More on compensation design.
Why Capped Commissions Hurt Your Best Reps (And What to Do Instead)
Capped commission plans tell your best reps to stop selling. The rep does exactly what you paid them to do.
Read post →How Much Should You Pay a Sales Rep? Benchmarks and Rules of Thumb
Healthy sales operations pay reps roughly ten to twelve percent of the gross revenue they generate. Pay much less and you cannot recruit. Pay much more and you cannot scale.
Read post →Designing Comp Plans for Sales Managers: Lead Measures vs Lagging
A sales manager paid only on team revenue chases the number. A sales manager paid on lead measures builds the operation that produces it.
Read post →Ready to pay your reps in a way that makes them sell harder, not smarter around the plan?
$4,950 · Credited to your first retainer