Compensation plans are one of the most powerful tools for shaping sales team behavior. When designed correctly, they motivate sales professionals to excel while aligning their actions with company goals. However, without the proper guardrails, incentives can lead to unintended consequences that hurt both revenue and team culture.
David Weiss, CRO of The Sales Collective, once witnessed this firsthand at one of the largest service companies in the U.S. The company introduced a compensation plan that rewarded sales reps with a contract multiplier for selling soap dispensers. The logic seemed sound: by incentivizing dispensers, the company anticipated increased recurring revenue from soap refills. Instead, sales reps started giving away soap dispensers for free just to trigger the commission multiplier. The company hemorrhaged money—paying excessive commissions while never seeing the expected refill revenue.
This example highlights a critical lesson: salespeople will always find a way to optimize for incentives—unintentionally at the expense of the business. If compensation plans aren’t carefully designed, they can encourage short-term wins that create long-term losses. Here’s how to ensure the incentives underlying your 2025 compensation plan drive sustainable, strategic growth for the new year.
Prioritize Customer Relationships Over Short-Term Gains
Many sales teams operate on an annual quota system where accounts reset every year. While this simplifies tracking, it can also create a Q4 rush to close deals at the expense of long-term relationship-building and pipeline-building for Q1. If salespeople know they’ll lose their accounts at year-end, they’ll prioritize quick wins over nurturing prospects who might convert early in the new year.
A more strategic approach is to allow continuity in account ownership. Here are a few ways to do that:
✅ Allow salespeople to roll over 10% of their book into the new year.
✅ Let salespeople retain accounts where they’ve established active opportunities.
✅ Split commissions between old and new reps when accounts transition that have completed a sales cycle within the last 6 months.
✅ Permit post-close account ownership (3–6 months) for select accounts to allow salespeople the opportunity to upsell the customer if the deal was intentionally small to serve as a pilot.
To prevent abuse, involve management in vetting which accounts qualify for retention or splits, primarily where activity metrics are used to determine the protocol.
Establish Clear Rules of Engagement (RoE)
Rules of engagement define how sales reps interact with prospects, customers, and each other. Without clearly defined RoE, confusion arises over who gets credit for deals, how leads are distributed, and how account ownership works. This lack of clarity can breed internal conflict and inefficiency.
Best practices for RoE include:
✅ Fair lead distribution: Ensure inbound leads are evenly round-robin assigned to salespeople by properly tiering accounts based on the SOP, propensity to buy, and the buyer persona. No salesperson should feel their leads were of less quality compared to the rest of the team.
✅ Account selection: Allow reps to claim a limited number of accounts in a given year based on existing relationships or industry expertise. Allow for your salespeople to capitalize on their unique advantages with particular companies.
✅ Upsell ownership: Ensure that salespeople may (or may not) retain the right to upsell within their assigned accounts and/or receive a 5% split of commissions for all additional business won by the customer success team.
RoE should be explicit, adaptable to edge cases, and updated regularly to reflect evolving business needs.
Incentivize Team Selling, Not Just Individual Performance
Sales is often seen as an individual sport, but the most successful teams operate collaboratively. When compensation plans promote lone-wolf mentalities, they can stifle knowledge sharing, mentorship, and cross-functional cooperation.
Encourage teamwork with:
✅ Team-based bonuses: If the entire sales team exceeds quota, reward them collectively.
✅ Team travel incentives: Consider offering a group trip if revenue targets are met.
✅ Company-wide sales competitions: Create fun, engaging spiffs where teams compete against one another
✅ Collaboration with customer success teams: Reward account executives (AEs) for working closely with customer success managers (CSMs) to ensure long-term retention.
A collaborative culture not only improves morale but also strengthens overall business performance.
Final Thoughts: Create the Right Game, Not Just the Right Rewards
Salespeople are naturally competitive, and they will find ways to maximize their earnings. Your job isn’t to prevent this—it’s to ensure that the game they play aligns with company success.
Well-structured compensation plans balance attractive incentives with smart guardrails. They encourage ethical, strategic selling while discouraging short-term tactics that harm revenue. By prioritizing customer relationships, establishing clear rules of engagement, and fostering teamwork, you can build a sales culture that thrives sustainably.
Need help optimizing your sales compensation strategy? Reach out to The Sales Collective today—we’ll help you design plans that drive both revenue and sales integrity.
