Getting Started with Sales Incentive Schemes

Jun 21, 2017
2 min read
Businesses must realize the potential of incentive schemes to drive sales and motivate behaviors that will achieve success. Here's everything you need to know.

The annual Wimbledon tennis tournament will be getting underway soon here in the UK, and we’re waiting to see the best players from around the world, coming together on the world-famous grass courts. But what makes the difference between being a good player and a great player? Quite simply, it’s not enough to have a stunning backhand; you need an exceptional game plan.

Strategy is what separates the Roger Federers' or Serena Williams’s from the rest of the pack. Exactly the same principle applies to sales incentives. Bonuses can be one of the most powerful levers for driving change in an organization – when they are used effectively.

But all too often, businesses fail to realize the potential of commission: for not only driving sales, but incentivizing the behaviors that will achieve success for the organization. It’s the difference between tactics and strategy. So what are the steps for building a sales incentive scheme?

1. Work Out What "Good" Looks Like

Incentive schemes should be intrinsically linked to the company’s strategy. What are the priorities for the next 12 months and how will these be achieved? What sectors are you targeting, and which prospects are the top priority? Select the top five objectives for your business – any more and it becomes difficult to align the organization.

From there, you can work out how the sales team can best support the company vision – and the behavior that should be incentivized as a result. For example, it might be more important to close large deals with the key prospects in the pharmaceutical sector, as opposed to a large number of smaller deals. Alternatively, customer satisfaction might be key for ensuring long term relationships, and repeat business.

Ultimately, it’s about identifying what good will look like in your sales teams – then determining how you can evaluate and reward those behaviors through commission.

2. Give Your Sales Team Visibility

Incentives can’t be effective if they aren’t visible. It’s not enough to tell employees they will get a bonus ‘if they hit targets’. Employees need to be able to map their own performance and understand what they need to do to achieve their metrics and maximize their earnings.

With Xactly’s Compensation Management Solutions, the sales team gets real time visibility of their commission, as well as forecasting commission from deals they’re working on. This transparency allows them to adjust their priorities and actions on a day to day basis, maximizing the influence of the incentive scheme. And crucially, it means sales teams have more trust in the accuracy of the scheme – so spend less time tracking their bonuses offline, and have improved focus on closing deals.

3. Evaluate and Adjust

All too often, businesses set an incentive scheme running for a full year and then don’t touch it again until planning season comes back around. The risk with this approach is that it may lead to nasty surprises when it comes to the final compensation bill.

But crucially, it also means that they miss the opportunity to evaluate how effective schemes are – and make adjustments to them in good time. By assessing schemes every quarter using solutions like Xactly, organizations can see where they are working well to engage employees – and where the gaps still remain.

This means sales operations or reward teams can make changes, ensure the most business critical behaviors are being incentivized and check that the overall cost will stay within budget.


Developing a sales compensation scheme, as opposed to a plan, means developing a strategy that truly mirrors the business’ objectives and incentivizes the individual behaviors that will drive the whole organization to success. It’s about thinking strategically, rather than only tactically, to make incentive compensation as impactful as possible. Bonuses are a hugely powerful tool when used effectively. It’s all about developing that game plan, not getting caught up in the backhand.

  • Incentive Compensation
Karrie Lucero
Karrie Lucero
Content Marketing Manager

Karrie Lucero is a Content Marketing Manager at Xactly. She earned marketing and journalism degrees from New Mexico State University and has experience in SEO, social media and inbound marketing.