Given today’s fast-shifting economic variables, many companies are favoring performance-based sales compensation plans to ensure sales reps are adequately motivated and compensated.
So says Xactly, a cloud software company that provides tools for sales performance management and sales effectiveness, as well as compensation management. In its survey of 160 companies, performance-based sales structures were identified as the biggest factor driving changes to pay for sales reps, with 62% saying it’s a key driver.
Such pay structures allow companies to control costs while still incentivizing top performers, according to Xactly. “This adjustment helps organizations stay agile, rewarding sales teams based on performance rather than providing fixed increases,” the vendor wrote in its survey report.
Similarly, more companies are adopting hybrid compensation models that combine base salaries with performance-based incentives, Xactly said. The approach offers stability to sales teams while promoting alignment with business goals. The trend “reflects a broader shift toward dynamic compensation that can be quickly adjusted in response to changing market conditions,” the report said.
Many companies are using pay-for-performance models to boost sales growth, rather than focusing mostly on maintaining existing business, according to the report. “These plans aim to encourage behaviors that increase market share, attract new revenue, and drive top-line growth,” Xactly wrote.
In fact, 73% of survey respondents — which included officials from sales, sales operations, finance, revenue operations, human resources and business development — said they’re prioritizing the acquisition of new business and customers. This often involves aggressive commission structures for acquiring new customers and expanding into new territories, as well as profit-sharing plans to tie compensation to the company’s overall success and incentivize behavior that drives long-term growth.
Drilling down a layer deeper into performance-based sales compensation, 48% of survey respondents said they are placing more emphasis on long-term incentives such as stock options, restricted stock units, and performance shares. Instead of large salaries or short-term bonuses, these incentives — which are particularly applicable to executives — promote building sustainable business models that yield consistent results over time.
Another trend is a shift toward more collaborative and team-based incentives, according to 53% of respondents. “This aligns with the growing emphasis on cross-functional collaboration and the realization that business success often requires teamwork,” Xactly observed.
Companies are basing team-oriented compensation on several measures, including team-based key performance indicators and overall team revenue or bookings. There are also metrics tracking how well departments work together toward common business goals, as well as customer satisfaction or “net promoter scores,” based on how well teams deliver consistent, high-quality experiences for clients “across the entire journey, not just during the sales process,” Xactly wrote.
