2025: 13 steps to reviewing your sales commission plan. Access tips from experts in top companies.
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1. Identify the reasons for the review
Revising a sales commissions plan is not a task to be taken lightly. It often comes at a critical time in a company's life, when a number of internal and external factors converge to signal the need for adaptation.
Understanding the reasons behind this review is the first crucial step towards developing a more effective remuneration plan that is better aligned with the company's strategic objectives. Here are the main reasons that may trigger a review of this kind.
a. Analysis of triggers
There are a number of signals that may indicate that it is time to review a sales commission plan. One of these is poor sales reps. A discrepancy between the targets set, and the results achieved may suggest that the financial incentives are no longer sufficiently motivating or adapted to the realities on the ground.
What's more, a poorly calibrated remuneration plan can become too complex. Sales reps need to have a simple understanding of how their remuneration is calculated. If the structure is too opaque, it can lead to frustration.
Figures to remember
24% of sales reps were able to calculate their commissions easily, according to a Gartner study, underlining the importance of simplicity in these systems.
b. Objectives of the review
Faced with these problems, there are several objectives that can guide the revision of the sales commission plan. The first is to simplify the model.
"It's essential to keep things simple in order to clarify the indicators that govern sales commissions. An overly complex plan distracts sales reps from their core missions and makes it harder to achieve strategic objectives."
Aude Cadiot, Revenue Operations Lead at Spendesk
Another key objective is to ensure better adaptation to market realities. A company in the acquisition phase, like Hubspot in its early years, will focus its remuneration plan on rapid customer acquisition. On the other hand, a more mature company will be able to focus more on customer retention and sustainable profitability. Hubspot, for example, has changed its commission model to focus on retention, reducing customer churn by 70% in just six months.
A review can also be aimed at improving the motivation of sales reps. Sales rep motivation is often directly linked to their remuneration. When the plan is outdated or poorly designed, staff turnover can skyrocket. In France, the turnover rate for sales reps often exceeds 50%, a figure that can partly be attributed to unsuitable remuneration systems. Adapting remuneration packages to market dynamics and team needs is therefore becoming a crucial lever for retaining talent.
Finally, the revision of a remuneration plan should always be aimed at strategic alignment. The sales rep strategy changes, whether through entry into new markets, the launch of new offerings, or a change in business model. For example, when Hubspot switched to an annual subscription model, it adapted its remuneration plan to encourage its sales reps to favor long-term contracts. Without this revision, the sales reps would probably have continued to sell monthly subscriptions, which are less profitable in the long term.
To sum up, revising a sales commission plan is essential to keep in step with the company's internal and external developments. From simplifying the plan to adapting it to market realities, these adjustments help to keep teams motivated while aligning their objectives with the overall strategy.
To find out more
Read our article "When should you change your sales commissions plan?", and find out in detail about Hubspot's different sales commissions plans according to its different stages of development.
2. Forming a cross-functional project team
The creation of a cross-functional project team is a crucial step in the review of a commission plan. By bringing together members from different departments, the organization can ensure that every aspect of the plan is carefully evaluated, contributing to a more balanced and effective design.
a. Roles of the various departments
Sales reps: Identifying the expectations of sales teams and understanding current obstacles
The sales reps play a vital role in this process. The sales teams are the ones who will interact directly with the new compensation plan, so it's crucial to understand their expectations and concerns.
Best practice
Organize feedback sessions, such as focus groups or anonymous surveys, where sales reps can share their views on which elements of the current plan are working well and which are causing problems.
A Gallup study shows that employees who take part in designing their sales commissions are 3 times more likely to be satisfied with their jobs and to stay with the company. Involving sales teams not only provides valuable information, but also strengthens their commitment to the new plan.
Operations : Ensuring the operational feasibility of the planned modifications
The Operations department is responsible for assessing the feasibility of changes to the plan. This includes reviewing existing processes to ensure that they can accommodate the new remuneration structures. A thorough analysis must be carried out to identify potential obstacles to implementation, such as logistical or technological constraints.
It is advisable to use modeling tools to simulate different remuneration options. For example, software such as Tableau can be used to visualize the impact of changes on the company's profitability and to forecast training requirements for implementing these changes.
Finance: Ensuring the financial viability of the new plan
The role of the finance department is to ensure that the new remuneration plan is financially viable. This involves calculating the costs associated with implementing the new system and forecasting its impact on profitability. Financial simulations should be carried out to compare the different remuneration options and their effects on profit margins.
It is also crucial to ensure that the remuneration plan respects the established budget. A proactive approach is to establish Key Performance Indicators (KPIs) that track the financial results of the changes made. For example, by incorporating KPIs such as cost per customer acquisition or sales team ROI, companies can better align their financial objectives with new remuneration strategies.
The practical tool
Qobra is a platform that aligns all of an organization's stakeholders on the topic of commissions. Qobra enables the Operations department to optimize its commission management processes, the Sales reps department to exceed its targets thanks to increased visibility, and the Finance department to manage and control commissions with confidence.
b. Importance of project team leadership and collaborative decision-making processes
The success of the project team depends on strong leadership and collaborative decision-making processes. A good leader must not only have a clear vision of the objectives of the compensation plan review, but also be able to unite and motivate members of different teams around this vision. Open communication is essential; decisions must be taken collectively, taking into account the contributions of each department.
Best practice
Set up regular meetings to monitor the progress of the project and adjust strategies based on feedback from the teams. By creating an environment where everyone feels listened to and valued, you'll encourage buy-in to the new plan.
3. Analyze the performance of the current plan
To effectively revise a sales commission plan, it is essential to carry out an in-depth analysis of the performance of the current plan. This includes gathering relevant data and feedback from sales reps and managers to identify the strengths and weaknesses of the current system.
a. Data collection
Analysis of sales reps against targets
The first step is to review the performance of the sales reps against the targets set. This can include assessing sales achieved, quotas reached and variations from forecasts. It is useful to segment the data by product, region or team to gain finer insights.
Assessment of the costs of the current plan
Analyzing the costs associated with the sales commission plan is also crucial. This involves comparing the commissions paid with the sales generated to determine whether the return on investment (ROI) is positive. A study carried out by Xactly revealed that, in many cases, companies spend an average of 10-15% of turnover on sales compensation.
In addition, it is advisable to calculate indicators such as cost of sales (CoGS) in relation to sales, which can highlight unprofitable or overpaid segments. This type of analysis can also help to identify elements of the plan that are not contributing to profitability, enabling targeted changes to be made.
The practical tool
Qobra gives sales reps, operations and finance teams the visibility and control they need to make strategic decisions about the financial health of their organization. With just a few clicks, they can access individual and team commission reports, track indicators by plan and period to ensure accurate forecasting and pipeline management.
Comparison of remuneration trends with market practices
A comparison with market trends is essential to ensure that the remuneration plan is competitive. This may involve studying sector benchmarks and analyzing competitors' practices.
It can be useful to consult market studies, remuneration reports or even participate in professional networks to gather relevant data. A proactive approach is to request studies specific to your sector, which can provide a better understanding of expectations and standards.
b. Gathering feedback from sales reps and managers
Internal interviews or surveys to identify areas of friction, motivation and discouragement
Feedback from sales teams and managers is invaluable in understanding the limits of the current plan. Internal interviews or surveys can be used to gather qualitative and quantitative data. Platforms such as SurveyMonkey or Typeform can facilitate the creation of anonymous surveys, encouraging honesty and transparency in responses.
It's a good idea to ask targeted questions about motivators and barriers to performance.
Figures to remember
According to a Salesforce study, 70% of sales reps would be more motivated if their remuneration was aligned with clear and transparent performance criteria.
Behavioral analysis: what behaviors does the current plan encourage?
It is crucial to look at the behaviors encouraged by the current remuneration plan. For example, if the plan only encourages short-term sales, this could lead to overselling or a deterioration in customer relations.
Best practice
Examine sales trends, such as the length of sales cycles or customer retention rates. An effective approach is to cross-reference this data with the feedback results to get an overview of the behaviors encouraged by the plan.
In short, analyzing the performance of the current sales commissions plan is a key step that requires a methodical approach. By collecting quantitative and qualitative data, and ensuring that feedback from sales reps and managers is taken into account, companies can identify relevant and strategic improvements to their remuneration plan.
