Sales Comp Showdown: Best Practices from Revenue Vs. Comp Leaders

Opinions on best practices for sales incentive design and comp plan rollout differ depending on who you ask. Those opinions tend to get even more polarized when you ask revenue leaders vs. sales comp leaders. That’s exactly what we did in our Sales Comp Showdown survey, where 100 revenue and comp leaders gave us their perspectives on sales compensation planning and rollout.

We shared a few of the results in a recent event and discussed why leaders might agree or disagree. The panelists were:

• Eliot Offutt, VP of Implementation and Onboarding at Forma.ai
• Nabeil Alazzam, Founder and CEO of Forma.ai
• Mike Duda, Head of Solutions Engineering at Forma.ai

If you didn’t get to tune into the discussion, keep reading to see the results and hear how our panelists and audience interpreted the results.

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Access the full Sales Comp Showdown results with expert insights and takeaways!

Question 1:  How long should the sales compensation design process take at an enterprise org?

Result: Most revenue leaders think it should take 1-2 months or less, while most comp leaders think it should take 1-2 months or more. (See recording for full data.)

Sales leaders prioritize simplicity and efficiency, aiming to finish the design process quickly. On the other hand, comp leaders value accuracy and procedural checks to ensure the plan stays consistent throughout the year, leading to a longer design process, according to Mike.

Furthermore, since revenue leaders are accountable for hitting targets, their goal is to be able to pivot the sales organization as fast as possible, according to Nabeil. Conversely, comp leaders are accountable for accuracy and fiscal responsibility, taking time to ensure they hit all checks and balances.

“At the end of the day, I think everyone's aligned to move as fast as possible. It's just that, the ownership of the consequences of moving too fast if you don't have the process and systems in place is not felt as much by the revenue leaders versus comp leaders.” - Nabeil Alazzam, CEO and Founder of Forma.ai

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Question 2: How often should you adjust your comp plan based on actual spend & effectiveness data?

Result: Most revenue leaders think plans should be adjusted based on actual spend and effectiveness data twice a year or more, while most comp leaders think it should be done once a year. (See recording for full data.)

Put simply, “comp plans should change when it makes sense to do so,” according to Nabeil. However, there’s a significant hurdle for comp leaders to execute a change. There’s also the subsequent burden of change management, enablement, and education, which may not be worth the benefit of the change. This would sway comp leaders’ answers toward annual adjustments.

However, not as privy to the burden it requires, revenue leaders favor making changes more often as they get actual spend and effectiveness data, and real-time feedback from the sales team throughout the year, as Mike echoed the results.  

Many audience members chimed in through the chat. They agreed that fewer plan adjustments are the best practice, citing that it could be a “legal rat’s nest” to make mid-year changes, that plans should stay consistent if deals take years to close, and that changes could disrupt progress and impact morale. If adjustments are necessary, one audience member underscored the importance of transparency and communication, particularly around performance metrics.

Question 3: What is the biggest bottleneck to launching new comp plans and quotas on time?

Result: Both groups agreed that stakeholder alignment is the biggest bottleneck to launching comp plans and quotas on time. (See recording for full data.)

There are many bottlenecks to launching a comp plan on time, such as siloed go-to-market planning, the usage of multiple tools and systems, and the necessity for clear policies. While the majority of both groups agreed that stakeholder alignment is the biggest issue, Nabeil suspects that answers would differ for participants at companies that have a Sales Comp Center of Excellence vs. those that don’t. Having a Sales Comp Center of Excellence provides centralized expertise and processes, which can help streamline the stakeholder management process, making it less of a burden.

“To me, the key here is how do you think about implementing process/frameworks, so that decisions that are made are not made from scratch every single time, but rather, follow these guided frameworks of decision making to kind of streamline all the respective stakeholders within this process.” - Nabeil Alazzam

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Another common issue that contributes to a lack of stakeholder alignment across many enterprise orgs is a lack of data and analytics, Eliot mentioned.  

“The more analytics you can do in running different scenarios on potential plans and see those outcomes, I think that is likely one of the solutions to at least shortening the time it takes to get alignment.” - Eliot Offutt, VP of Implementation and Onboarding at Forma.ai

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Question 4: When is the ideal time to share the new comp plan with sales?

Result: Both groups agreed that the ideal time to share the new comp plan is prior to SKO. (See recording for full data.)

The panelists agreed that the sooner comp plans can be launched, the better. Going into the SKO with a clear understanding of the comp plan can help focus the SKO conversation on the year ahead.  

However, Nabeil had a few exceptions. When the comp plan reflects significant changes to the go-to-market strategy, it’s best to wait until during or after SKO in order to elaborate on the new goals first.

Audience members were split on this one. Some agreed with our panelists that comp plan should be launched before SKO, with key points reinforced during SKO. Others preferred sharing the strategies and priorities first, then using the last day or two of SKO to roll out the comp plan, explaining how it supports the priorities.

Question 5: When is the best time to survey reps to gauge satisfaction with the comp plan?

Result: Though answers were very split for both groups, revenue leaders leaned towards “within a quarter of rolling it out” while comp leaders leaned slightly towards “right before designing the next comp plan.” (See recording for full data.)

Our panelists underlined the importance of early and frequent feedback on comp plans. However, they brought different perspectives to this question. Mike advocated for surveys as a great tool that more organizations should adopt and launch while designing the next comp plan.

“Too often than not, we're relying on leadership feedback and financial inputs as the main inputs into the comp design process. If we included that sales feedback before rolling out new comp plans, I think it would achieve some better outcomes.” - Mike Duda, Solutions Engineer at Forma.ai

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The timing makes all the difference, though. Eliot suspects you’ll get different kinds of results depending on when you launch, so it depends on your goal for the survey.

“If you do it early, you're gonna get more around the reaction to the plan and maybe how well it was understood. If you do it late, it's gonna be biased, I suspect, towards how people do on the plan. The satisfaction is gonna be different later in the year versus earlier in the year.” - Eliot Offutt

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Nabeil suggests “the sooner the better” for getting feedback, but that surveys should be an ongoing feedback loop throughout the year, not a one-and-done deal.

Alongside audience engagement, the discussion shifted to whether surveys should be used at all, and alternative methods for getting feedback. Nabeil suggested using data to get more objective feedback alongside the survey’s subjective feedback.  

“We all know that, you know, a survey is gonna produce one result, but are there other metrics that kind of give you the power of a survey but the actual what's happening on the street....Are we as as comp leaders tracking and measuring the behaviors that were intended to be driven through the comp plan and seeing how that maps to the survey that's that we're running with our sales organization? And, you know, they're satisfied with this part of the plan, but actually the behavior that we're intending to drive is not actually being driven, it tells us even more.” - Nabeil Alazzam

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Instead of surveys, a couple audience members suggested panels with reps selected by sales leaders, or simply interviews with sales leaders.

Question 6: Should a sales rep's understanding of the compensation plan be formally tested?

Result: Though answers were close, the majority of both groups said yes. (See recording for full data.)

Initially hesitant toward formal tests, Mike ultimately agreed they’re useful in practice. Though he’s never used one himself, he recounted getting hundreds of questions or disputes after the first payroll cycle, following what he thought was a successful enablement session. Ultimately, the reps just didn’t understand their compensation plans.

Nabeil particularly stressed the importance of formal tests to confirm sales rep understanding of the comp plan, comparing it to passing a written test for a driver's license. Every rep's success hinges on understanding their route to success.

You should also consider the broader culture of the org, Eliot suggests. If there’s mistrust between sales and comp teams, establishing a formal test might be a bad idea. On the other hand, if there isn’t much attention or awareness of compensation in the org, establishing tests could be a great way to bring it to the forefront.

In the chat, audience members suggested that managers be tested rather than (or in addition to) reps to better guide their team, that tests/certifications may take too long to put together and delay rollout, and that reps may not even complete the test.  

Q&A: AI in Sales Compensation

Our discussion concluded with an open Q&A that touched on seller feedback, quota and comp plan integration, ICM solutions, and the potential of AI in sales compensation. These were the questions:

1. “How strongly should seller feedback influence comp plan changes?”

2. “What are some hot tips for improving the alignment of quota setting teams with comp planning teams (getting comp rules reflected in quotas)?”

3. “Our company sets annual goals with the growth factor added on to prior year actuals. Should it instead be added to prior year goals vs actuals?”

4. “Where are the early success stories of AI innovation in sales comp - is it design, is it admin, somewhere else?  Also, what does success actually look like?”

To answer question 4, Nabeil outlined the benefits of AI in harmonizing quota setting with compensation design processes, and automating comp plan configuration, as Forma.ai does. The speed and analysis offered by AI-driven processes can lead to sharper forecasting and enhanced comp plan design. He compared the future of sales to marketing, becoming more data-driven and significant over time.

Watch the recording to hear the full Q&A!

Closing Thoughts

The Sales Comp Showdown event offered valuable insights into the differing priorities of revenue and comp leaders regarding sales compensation plans.  

Our panelists and active audience members highlighted the necessity for a multi-dimensional approach to sales comp, one that balances each stakeholder’s goals with the broader goals of the organization and accommodates both speed and accuracy. Transparency, ongoing feedback, and stakeholder alignment emerged as critical components for the timely and successful rollout of these plans.  

Two solutions emerged for enhancing stakeholder alignment: (1) structured processes, and (2) data and analytics. Both can be refined with AI, a promising tool for improving and quickening sales compensation strategies, helping to streamline processes and refine how teams approach sales comp data.  

Now that the survey results show precisely where to expect comp leaders and revenue leaders to agree and disagree, each stakeholder can better approach these topics with their counterpart, understanding their different priorities and goals, and using data to chart the best path forward.