Each year, the United States spends 800 billion dollars on sales compensation — almost three times more than is spent on advertising.

With so much money being invested in rewards, you might think that organizations have the science behind sales compensation and motivational behavior down pat, but they don’t. The reality is, even the best sales leaders are constantly thinking about how they can inspire reps to not only perform better and reach quota, but also how to beat the goals set.

What Quota Attainment Data Reveals

We’ve been gathering sales compensation data from over 500 Xactly customers for years. When we divide our customers’ combined total sales force into three buckets of quota attainment — 80%, 80-120%, and over 120% — we find that a majority of reps (43%) hit 80-120% of quota, and a much smaller percentage (17%) exceeded the quota.

(From: Comp Plan Strategies for 2013)

These findings led us to ask what the breakdown means. Why are only 17% of reps hitting over 120% of quota?

To get the answer, we had to further analyze the data.

If you take a look at the Incentive Attainment graph showing the distribution of on-target payments directly below, it’s a perfect bell curve. It’s beautiful. It has a nice right-tailed curve showing the distribution and how it spreads out over time. You can see that 1% of the customers in our database — the rock star reps we all love — earn 250% or more of their on target earnings.

(From: Comp Plan Strategies for 2013)

Now, take a look at the Analysis of Quota Attainment graph, which shows the distribution of annual quota attainment percentage. Spiking at 110%, and then dropping off quickly, it’s not even close to a bell curve.

(From: Comp Plan Strategies for 2013)

The spike represents the top point at which the compensation plans of our customers collectively pay out, showing clearly that these organizations are signaling to reps that they consider 110% to be great behavior. In other words, they’re failing to send the message that anything above 110% is better behavior. By neglecting to send right message, the breakdown in the previous graph makes sense. Of course 83% of reps are under 120% of quota; they have no reason to strive for a higher goal!

From this abnormal curve, we can only assume that there is some other factor driving the result, other than the quality of product or the talent of the sales rep. Sales reps who meet quota are hitting a psychological wall and assuming that they’ve done well enough. They see themselves as winners, feel good about their performance, and don’t try harder. By providing higher end goals, your reps will have something to chase beyond hitting quota.

Reps can be motivated to achieve more. With the right incentive strategy, your organization can:

• Align motivations and goals with smarter incentives

• Add second and third tier incentives to keep reps performing, even after quota has been hit

• Use automation to guarantee visibility, speed and 100% accuracy

Smarter sales compensation management starts now: By rewarding the right sales behavior, you can align motivations with company goals and begin growing your businesses.

Send us your thoughts at @XactlyCorp.