Sales Compensation Plans

The Main Rules Of Quota Setting (and 3 Ways to do it Right)

April 4, 2025Vangelis Sakelliou

Quota, or target, setting is one of the three main elements of a motivation scheme (alongside terms and conditions, and territory allocation.)

If one of these elements fails, the whole plan is likely to fail. For example, if a commission system pays generous commissions, but the quotas are too high or not achievable, the sales staff will not be properly motivated. An effective scheme is one in which all three elements are in harmony.

In this article we will focus on quotas and how best to set them for maximum success.

Key Takeaways

1️⃣ Quota setting is a core part of any effective sales motivation scheme – if quotas are too high or too low, the entire incentive plan can fail, regardless of commission levels or territory design.

2️⃣ Fair and achievable quotas boost performance and morale – aim for 70–80% of the team to hit their targets, with quotas distributed fairly across individuals and territories to avoid demotivation and risk.

3️⃣ Setting quotas requires data, collaboration, and human judgment – use historical performance, market trends, and input from both management and sales teams. Software tools can help but cannot replace human insight.

Who Is Responsible For Setting Quotas?

Assigning quotas is a skilled task that requires time, careful thought, research, and experience. Quota setting requires both a qualitative and quantitative approach.

The overall responsibility of allocating quotas lies with the sales management team, who must work closely with the incentives design team. Don’t forget, equally important is to decide WHICH type of targets are relevant to your team. Read more HERE.

Why Setting Performance Measures And Metrics Is Key to Sales Incentive Success

March 14, 2025Vangelis Sakelliou

Designing an effective sales incentive scheme isn’t just about deciding how much to pay your sales team — it’s about motivating the right behaviors to drive business growth. The secret lies in choosing the right performance measures. If your sales scheme rewards the wrong activities, you’ll end up with misaligned efforts, wasted resources, and frustrated sales staff.

In this article, I’ll walk you through the different types of performance measures and how to select the ones that will push your team toward your company’s strategic goals. By the end, you’ll have a clear framework for designing a sales scheme that boosts performance and keeps your team motivated.

Key Takeaways

Align performance measures with business goals – The most effective sales schemes motivate behavior that directly supports your company’s strategic objectives. Make sure the measures encourage the right sales activities.
Clarity and measurability are essential – Sales staff need to know exactly what’s expected of them and how their performance will be measured. Vague or untrackable measures will undermine motivation.
Balance quantitative and qualitative measures – While quantitative measures (like revenue) are easy to track, qualitative measures (like customer satisfaction and retention) are vital for long-term success.
Don’t rush the design process – Select performance measures only after defining the compensation structure, eligibility, and overall budget. A thoughtful approach leads to a more effective and motivating scheme.

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Sales Schemes – A Complex Machine

A well-designed sales scheme should help your company achieve its goals in terms of revenue growth, market positioning, and customer satisfaction. A strong incentive program motivates sales staff to meet and exceed their targets, driving better results for the business.

An effective scheme strikes the right balance between challenge and attainability — it should push your team to perform without feeling impossible to achieve. When done right, a sales scheme increases motivation, enhances company loyalty, and drives consistent high performance.

On the other hand, a poorly designed scheme leads to confusion, frustration, and underperformance. Misaligned incentives often result in higher turnover and missed business targets.

Since the sales scheme directly influences company outcomes, it’s crucial to take the time to design it carefully. Even a simple model, like offering a flat 5% commission on new revenue, requires thoughtful planning. The performance measure (new revenue) and the percentage (5%) shouldn’t be chosen arbitrarily — they need to align with your broader business goals.

How to Integrate Qualitative Measures into Your Sales Incentives Plan (3 of them to use)

February 21, 2025Vangelis Sakelliou

Are you tired of one-size-fits-all incentive plans that only focus on hitting revenue targets? If so, you’re not alone. Many sales leaders now realize that blending qualitative measures with sales incentives can create a more powerful and balanced compensation strategy. In fact, according to a recent survey by the Harvard Business Review, over 40% of high-performing sales teams use a combination of tangible and intangible metrics to drive growth. By introducing qualitative measures that go beyond raw numbers, you can motivate your team to excel in ways that not only boost revenue but also foster long-term customer satisfaction.

Key Takeaways: Balancing Quantitative and Qualitative Sales Incentives

Balancing qualitative and quantitative measures leads to a more comprehensive view of sales performance, ensuring both immediate revenue targets and long-term relationship-building are rewarded.
Clearly defining qualitative goals—such as improving customer satisfaction or brand visibility—allows teams to set actionable milestones and measure success, even if they’re not strictly numerical.
Keeping the incentive plan simple and transparent—by focusing on a small set of well-communicated goals—ensures sales teams understand how their efforts will be evaluated and rewarded.

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Why Sales Incentives Need Qualitative Measures

Traditional incentive plans often rely solely on cold, hard numbers—meeting quotas, hitting monthly revenue goals, or pushing product bundles. While these quantitative measures are essential, they don’t capture the entire performance picture. Sometimes, retaining a key client or nurturing a promising new lead requires soft skills, building relationships, and demonstrating strong customer care.

More Holistic Approach: Qualitative measures help you evaluate factors like customer satisfaction, brand awareness, and overall relationship-building activities. These elements can influence sales performance as much as pure revenue growth.
Long-Term Benefits: Measures such as improving customer experience or expanding into a new territory might not produce instant revenue spikes. However, they often yield considerable returns down the road.
Team Engagement: Sales reps can feel more ownership when they know their efforts in client retention, product education, and brand advocacy are being recognized and rewarded.

Example: Think of a salesperson who consistently keeps existing clients satisfied but doesn’t always make the highest revenue numbers. If your incentive plan is based only on immediate revenue, you might overlook the crucial role this person plays in client retention and repeat business. Integrating qualitative measures ensures their efforts are acknowledged, encouraging others to follow suit.

Choosing the Right Qualitative Measures

Before diving in, you need to identify what elements matter most to your business. Ask yourself which objectives will truly drive growth and align with your overall goals. Below are some popular qualitative measures to consider:

Customer-Related Measures
- Improve overall client satisfaction
- Successfully upsell or cross-sell products to existing customers
- Capture specific competitor market segments or niche audiences
- Set milestone goals for high-value clients
Industry-Related Measures
- Penetrate new markets or sectors
- Increase brand awareness at industry events
- Develop and launch innovative products
- Secure strategic accounts that align with future business objectives
Territory-Related Measures
- Form beneficial partnerships with local brands
- Raise brand visibility within a specific region
- Optimize your presence at regional tradeshows
- Collaborate with local influencers or business networks

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How to Set Targets for Qualitative Measures

You might wonder how to measure something like “enhancing brand awareness in a new region.” Unlike revenue totals, you can’t just set a numerical figure and watch the dashboard. However, you can still establish clear benchmarks:

Define Specific Milestones: For improving brand awareness, track social media mentions, local partnership sign-ups, or event attendance.
Use Surveys and Feedback: Gather direct customer opinions or post-meeting feedback to gauge relationship quality.
Create Action-Based Goals: Instead of saying “improve meeting quality,” set a goal such as “conduct in-depth discovery sessions with at least five key accounts each quarter.”

In many cases, a mix of quantitative and qualitative milestones works best. For instance, tie a percentage of the payout to revenue goals while allocating another portion to milestones like a boost in customer satisfaction scores or better brand perception.

Balancing Quantitative and Qualitative in Your Incentive Plan

You don’t have to abandon numeric targets to embrace qualitative measures. Instead, balance them:

Keep It Simple: Avoid overwhelming your sales team with too many metrics. Focus on one or two strategic qualitative goals alongside core revenue targets.
Transparency Is Key: Ensure everyone understands how you will measure success. Clearly communicate the criteria, timeline, and rewards.
Reward the Right Behaviors: Align each goal with a particular payout structure. For example, if maintaining high customer satisfaction is crucial, consider awarding a quarterly bonus for an above-average Net Promoter Score (NPS).

Case Study Example: A fast-growing tech startup wanted both market share expansion and happier customers. They offered a flat commission rate on sales (quantitative) plus a bonus for achieving a 10% rise in customer retention (qualitative) each quarter. This combined approach led to a 17% increase in long-term revenue after six months.

Conclusion and Call to Action

Blending qualitative measures with sales incentives can transform your team’s mindset from purely chasing numbers to delivering well-rounded, strategic outcomes. By focusing on customer relationships, brand awareness, and long-term growth, you empower your sales force to contribute in meaningful ways that drive sustainable success.

Ready to rethink your incentive strategy? Contact me today to learn how our proven expertise in designing mixed incentive plans can help you cultivate a motivated sales team that consistently meets—and exceeds—your company’s goals.

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Optimizing Sales Compensation: How to Assess and Improve Your Incentive Program for Maximum Performance

February 7, 2025Vangelis Sakelliou

Is your sales incentive program truly driving performance, or is it just an expensive payout? A well-designed sales compensation plan is the backbone of a high-performing sales team. It should motivate salespeople to push for growth while aligning with the company’s financial goals. However, crafting and implementing the right sales incentive structure is only half the battle—assessing its effectiveness is what ensures long-term success. Without continuous evaluation, companies risk misaligned incentives, demotivated reps, and lost revenue opportunities. But how do you measure effectiveness? What data should you analyze? And when is the right time to assess your program? Let’s break it down.

Key Takeaways: Optimizing Sales Incentives

A well-designed sales compensation program needs continuous assessment to stay effective. Here are the key takeaways:

Assess regularly – Initial evaluation should happen in 2-3 months, with major impact measured over 6 monthsor more.
Use the right data – Combine quantitative metrics (revenue, quota attainment, cost analysis) with qualitativeinsights (sales team feedback, market positioning).
Have a skilled team – Evaluating incentives requires data analysis, financial acumen, and an understanding of motivation psychology.
Choose meaningful KPIs – Track performance indicators that align with company goals and drive sales motivation.
A poor assessment process leads to misalignment – Without proper evaluation, sales incentives can demotivate reps, waste resources, and hurt revenue.

A data-driven approach ensures motivated teams, optimized costs, and better business outcomes.

This is also applicable when it comes to incentive programs, as the company takes time to craft and actualize a reward system that is beneficial and unharmful to all parties. The fantastic effort of a professional team takes to design an incentive scheme shows what a great process it is. The sales team takes it up from there and oversees the implementation, one which comes with lots of scrutiny as well. As these are all needed to bring efficiency, one could wonder what would have happened if no such assessment is done in the first place. Safe to say, it could have jeopardized the whole effort. It is, therefore, essential to assess the system. To achieve this, it is vital to find answers to questions, such as; How does one know if the system is effective? What does effective mean in the first place? How does each company measure effectiveness, and how is it different between different companies?

Buy my book HERE to learn how to design the most effective sales incentive program for your salesforce.

When shall we assess it?

Timing is essential in assessing an incentive scheme. To determine and analyze the results, it needs to be some time, whence one could be arriving at a wrong conclusion. Majorly, it all depends on the changes that occur in the system. The evaluation may be done if such changes were effective in 2-3 months, with a further six months required to see the significant changes in the system to manifest. The nature of products, services, and the sales cycle are the primary determinant in this case.

A dedicated team dedicated to assessing the system?

Admittedly, system assessment is a technical job; it is the reason why it has to be handled by professionals. We are not only measuring efficiency; the study requires a deep understanding of the concept of motivation scheme, which requires the technical know-how of the system.

In light of this, it is expected of the team to be skilful enough to gather data and analyze the efficiency of the system. A strong analytical background and database management should be the fortress of the team.

What kind set of data one needs to use for the job

In this present age, data is such a powerful tool, and its usefulness cuts across virtually all aspects of the modern world. Proper utilization of data gives fantastic results. The two major types of data, which are qualitative and quantitative, are required in the concept of motivation scheme. A typical example is a qualitative data being a useful tool in assessing peoples’ satisfaction concerning the system.

Qualitative data can be gathered through two methods, which are primary and secondary. Let’s have a quick look at primary quantitative data;

Revenues- It is essential to have the data on the revenue by the type of customer based on either being new or existing, the sales channel that produced it, etc.
Measures production- This is a comparative assessment of the activities of the salespeople to the result in the system. If, for example, you asked them to cross-sell to specific accounts, then you need to be able to get data on the cross-sale activity.
Numbers by period- You need to have data per period as the historical analysis is needed to see how much development is mad over time.
Sales overcast- As it is essential to compare the actual figures to the quota assigned, one needs to get the quota per salesperson and team by period.
Budget and cost- It could be argued if it is needed in the first place to pay people incentives. To justify this notion, one needs to get the financial data and the cost of salespeople (total compensation and not just the incentives paid), so cost analysis can be run.
HR data- It is important also to get data from HR about the seniority and the turnover data for the sales department.

Talking about the qualitative side, one needs to get

Feedback- The salespeople need to give their opinion on the system. Whether or not all is going well, they need to give in their opinion.
Incentive system history- Needs to have an in-depth look at the previous three versions of the system and weigh in the differences
Sales roles- One needs to understand the role of salespeople, along with their responsibilities and their involvement in the sales process. How many people are supporting them and how much the marketing department is involved in the sales process.
Sales as a department- One needs to understand also the organizational chart, the hierarchies, the reporting lines
Market and competition- They need to make a presentation that shows the market, industry, competition, and where the company stands in as a position as well as the market saturation.

Learn how to build sales – which components are important especially in the start

The usage of the data

In subsequent articles, we shall be looking into the usages of these data- how one can put it into practice. To end this article, we will briefly consider the factors that need to be put in place on how to use these data. The Key Performance Indices (KPIs) is the first parameter that one needs to decide. They are used to get a good result as regards the efficiency of the system; this is because they are quantitative indicators that are based on data gathered to derive results. It is not enough to derive the indicators, but also to decide which indicators are right to be produced. Such indicators can be used as a yardstick to tell many things about the system and of course, reveal how efficient it is.

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Crafting Sales Incentive Plans Based on Your Company’s Maturity Stage

January 24, 2025Vangelis Sakelliou

Designing an effective sales incentive plan isn’t just about motivating your team—it’s about aligning their efforts with your company’s goals at every stage of growth. In this article, I’ll share insights and strategies to help you tailor your sales compensation plan to your company’s unique maturity phase.

Here’s what you’ll learn:

How to adjust sales incentives for startups, growth-stage businesses, and mature companies.
The role of sales team structure in creating effective incentive plans.
Key metrics and pay structures to focus on at each stage of your company’s journey.

Sales incentives are the backbone of a motivated and effective sales team, but let me tell you this: one-size-fits-all strategies simply don’t work. Over the years, I’ve seen companies struggle because they tried to copy what others were doing without considering their unique needs. A startup, for example, has entirely different priorities than an established market leader. That’s why I would suggest aligning your sales incentive plans with your company’s current maturity stage—it’s a game changer.

Each phase of a company’s growth journey brings its own challenges and opportunities. In my experience, businesses thrive when their incentive plans evolve with their goals. Let me walk you through what this looks like in practice.

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Startups: Building Foundations
If you’re in the early stages of your company, your focus is likely survival. I’ve worked with startups that were laser-focused on landing their first clients and building a reputation. At this stage, your sales team will likely be small, and they’ll need to wear multiple hats—hunting for leads, closing deals, and even managing some post-sale work.

Here’s what I’ve found works best for startups:

Pay Mix: I would recommend a higher fixed pay ratio, such as 70/30. This reduces risk for your sales team, especially since success at this stage often depends on factors beyond their control.
Leverage: If you want to motivate your team, consider rewarding them aggressively for exceeding their targets. For example, pay more generously after they hit 100% of their quota.
Metrics: Focus on goals like acquiring new clients and building brand awareness. At this stage, it’s not just about the size of the deals—it’s about getting your foot in the door.

Growth Stage: Expanding the Base
When your company starts scaling, the game changes. You’ve established a foothold, but now you’re focused on rapid expansion and consistent cash flow. I’ve seen companies at this stage thrive by adjusting their incentives to reward aggressive growth and clear territory targets.

Here’s what I’d suggest:

Pay Mix: Shift toward a more balanced structure like 50/50 or even 40/60 between fixed and variable pay. This incentivizes performance while still offering security.
Leverage: Scaling businesses benefit from accelerators for exceeding quotas. For example, a higher payout percentage for revenue beyond 120% of the target can work wonders.
Metrics: At this stage, prioritize regional expansion, winning new accounts, and driving revenue growth. Retention is important but secondary.

Maturity: Maximizing Value
When your company is well-established, priorities often shift toward profitability and customer loyalty. I’ve seen mature companies lose momentum because they failed to adapt their sales incentives to reflect this new reality. At this stage, your sales team should focus on maximizing the value of existing relationships while still pursuing growth.

My advice for mature companies:

Pay Mix: A slightly lower leverage model, such as 60/40, can balance acquisition and retention priorities.
Leverage: While accelerators are still important, they should focus on initiatives like cross-selling and upselling, which drive more value from existing accounts.
Metrics: Retention rates, account growth, and profitability should take center stage. This is where account management roles become critical.

Aligning Sales Roles to Company Needs
Before even designing a compensation plan, think about whether you have the right sales roles in place. In my experience, startups need hunters—sales reps who can chase leads and close deals. Growth-stage companies often benefit from specialists focused on regional or vertical markets. And for mature businesses, introducing account managers to strengthen client relationships can make all the difference.

Evolving Incentives with Your Business
What I’ve learned over the years is that sales incentives should never be static. Just as your business evolves, your sales compensation plans should, too. By tailoring your incentives to your company’s maturity stage, you ensure that your team’s focus aligns with your goals, driving sustainable success.

Don’t forget though; sales incentive cannot replace sales management as written HERE. However, designing the right plan isn’t easy, but it’s worth it. If you’re unsure where to start or want guidance in crafting an effective incentive program, I’d love to help. Let’s talk—reach out today, and let’s design a plan that works for your business.

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Additional useful resources for you:

FREE e-book digest — Choose the right sales compensation plan (let me know if you want the whole document. Click HERE

VIDEO to learn how to master the B2B consultative way and the power of being a subject matter expert. Click HERE

If you want to be part of a group of people that receive exclusive insights, register HERE