Sales compensation refers to the combination of salary, commissions, bonuses, equity incentives and other elements that financially reward and motivate sales teams. Compensation aims to attract top talent, drive individual and team performance, retain key personnel, and align activities with company success metrics.
The compensation mix balances fixed and variable components. Plan design should incentivize desired behaviors and outcomes based on role. Optimizing compensation requires understanding different sales positions, maturity levels, potential, and win rates.
Overemphasis on commission risks overzealous selling. Transparency on calculation methodologies and achievement levels keeps reps focused while limiting deception. Sales compensation done thoughtfully establishes a scalable driver of growth and accountability. But it requires periodic rebalancing as conditions change.