When To Update Your Sales Compensation Plan


As the end of the year quickly approaches, many sales leaders are beginning to develop Sales Plans for next year, but it is also essential to benchmark Sales Compensation Plans to help your business reach sales goals.

A well-structured Compensation Plan can increase employee performance by 44%. Validating both will ensure you can attract and retain the talent needed to run your business in one of the tightest labor markets in decades.

The Power of a Well-Designed Sales Compensation Plan

Sales Compensation is one of my favorite sales topics because it not only helps drive the sales team’s performance but also must align and support the organization’s overall strategy. Sounds easy, but all too often, there is ample room for improvement.

Based on 30 years of experience developing compensation plans for various sales teams – ranging from Inside Sales to Field Sales and from Channel Sales to Strategic Accounts – I’ve seen how powerful and effective properly-designed Sales Compensation Plans can improve performance.

Similarly, poorly designed Sales Compensation Plans can be surprisingly destructive and demotivating. You must invest time annually to refine and optimize your Sales Compensation Plan to drive the right behaviors while delivering the desired results.

Updating Your Sales Compensation Plan

I recently spoke to a sales leader who hasn’t updated their Sales Compensation Plan in over 20 years. With inflation alone, not to mention the growth of the average project size, their top producers are now highly compensated.

The sales leader is aware the company may be overpaying for the sales delivered and admits any change now will likely be detrimental.

By not updating the Sales Compensation Plan for so long, they find themselves boxed into a corner – the changes they need to make will seem significant and antagonistic to their top producers.

These long overdue adjustments would not only change the status quo but would likely be viewed negatively by the sales team. They may even result in the loss of top producers.

If the company had updated its Sales Compensation Plan more regularly, the changes would seem much more incremental, thereby minimizing the risks to the company. Sales goals change, so your compensation plan should, too. I highly recommend updating your Sales Compensation plans regularly, preferably annually.

Sales Team Strategy and Planning Resources

I’ve posted three valuable resources on StrategicElevation.com to help business owners, sales leaders, and other involved functions (e.g., Finance, HR, and Marketing) to update your current Sales Compensation Plan and incentive structure to attract and retain top performers.

These resources were developed by industry experts and can provide valuable insight on ways to improve your Sales Compensation Plan and incentive structure.  They also provide insight into how much sales and marketing positions are being paid (by function, by region) around the country.

There have been many changes to the business environment over the past year in regard to compensation, flexible working arrangements, and employee satisfaction that should be taken into consideration. It is crucial that your Sales Compensation Plan is developed thoughtfully.

Working with a Sales Performance Advisor can help sales leaders make the best choices for your organization. If you’re ready to update your Sales Compensation Plan, contact Strategic Elevation and get on the fast track to sales growth.


Posted DECEMBER 15, 2022
Strategic Elevation is a sales performance consulting firm powered by Sales Xceleration. For over 20 years, Strategic Elevation has helped some of the most innovative and creative businesses accelerate sales performance by improving their sales organization, infrastructure, and processes.

Updated: Dec 15, 2022

About the author
Mike Lindert of Sales Xceleration is a member of XPX Chicago

CEO ADVISOR & FRACTIONAL CSO, PROVIDING SALES SOLUTIONS FOR B2B BUSINESSES. Top Line Revenue Growth, Sales Strategy, Sales Structure, Sales Assessments, Sales Staffing, Resource Optimization, On-Site Sales Leadership.