Sales Compensation Planning

How sales can create an effective sales compensation plan

How to optimize your sales compensation plan

Sales compensation is a delicate balance of budget and retention. Sales leaders need to strategize the most efficient ways to compensate their salesforce, as well as build a strategy around retention and reinforcement, all while empowering the business to make decisions regarding sales compensation planning. 

Learn the three keys to changing sales compensation plans during times of disruption.

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    Sales compensation plans break down quickly under extreme disruption such as the coronavirus pandemic. Sales operations leaders must refresh their guiding principles, plan distinct phases for short- and long-term incentive plan change, and consider quota relief and other options to contain risk.

    Steve Herz

    Senior Director Analyst, Gartner

    Build a high-performing salesforce based on compensation strategy planning

    To empower your salesforce, your compensation plan needs to focus on salary as well as non-financial workplace benefits. The key is to strategically grow and improve your sales performers, so it’s crucial that you prioritize a seller-retention strategy focused on the most important non-financial attrition drivers, such as manager quality and career development.

    Compensation plans need to focus on salary as well as nonn-financial workplace benefits.

    Insights you can use

    Disruption, such as the 2020 pandemic, forces innovation. But it can also cause breakdowns in compensation plans as employees and customers become subject to tighter economic circumstances. Discover how to plan distinct phases for short- and long-term incentives, and consider quota relief and other options to contain risk.

    The sales compensation plan of the future

    Post-COVID-19, sales compensation design will be challenging for salesforce leaders due to levels of economic uncertainty. Organizations must mitigate the risks of poor plan design and ensure that sellers remain engaged and motivated in the most cost-effective way possible.

    A graphic overview of Sales Compensation Redesign
    Of surveyed account managers, only 24% of sellers can easily calculate their total variable compensation.

    Motivating your sales team to grow

    Leaders who implement effective salary plans to motivate account managers are more likely to grow and retain accounts. Ensuring that skills development is included in your compensation planning is vital for retaining the best talent.

    Motivating your sales team to grow

    Leaders who implement effective salary plans to motivate account managers are more likely to grow and retain accounts. Ensuring skills development is included in your compensation planning is vital in retaining the best talent.

    High-Performing Versus Low-Performing Manager Time Spend Focus

    Best practice sales compensation planning

    Sales operations should use data to help sales leaders make decisions and improve salary planning. CSOs can improve sales compensation plans by designing a strategy that capitalizes on a changing selling landscape and delivers on the organization’s business goals.

    Sales leaders are expected to increase business revenue while managing a cost-effective function.

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    Dave Egloff
    VP Analyst

    Steve Herz
    Sr Director Analyst

    Steve Rietberg
    Sr Director Analyst

    Craig Riley
    Sr Principal Analyst

    Sales compensation planning: Frequently asked questions

    Like it or not, the days of ratings-based performance reviews are gone. The workforce of tomorrow requires an improvement cycle that will benefit their skills and deliver career development opportunities. CSOs and sales managers need to focus on optimizing various sets of employee data, comparison groups and cost calculations to deliver innovation in the compensation design process. Gartner has the insights and research to help you deliver an improvement-based structured compensation process.

    One of the key metrics to focus on in your sales compensation planning is talent retention. Identifying key attrition drivers and building a strategy to mitigate them will be the most cost-effective way to enhance your compensation plan. Gartner insights can help you interpret data and build a sales compensation plan that will help you deliver business success.

    Business growth is the desired outcome of most strategies developed by an organization. CSOs and sales managers need to understand how growth can be delivered by sales compensation planning, and then sell their sellers on that plan. Effective sales role design is a critical component, from sourcing the right talent to performance management and succession planning. Additionally, role clarity is needed to promote sales effectiveness, ensure customer needs are met and align pay with performance. If CSOs manage their talent effectively, their sales strategies and targets should achieve growth. Gartner can guide your sales compensation plan toward growth using our expert insights and research.

    An organization can structure its sales compensation plan in a number of ways. It depends on the size and reach of the organization, the goals of the business and various strategic decisions. The prime sales compensation structures are commission-based; however, in a rapidly changing workforce, organizations need to look further than this. Gartner can work with your organization to find the right sales compensation structure for your business goals and deliver on those needs through our expert insights.

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