B2B Sales Incentive and Compensation Models: Are They Costing You Millions?

What if the very system meant to motivate your B2B sales team is actually costing you revenue? A poorly designed compensation model can do just that — turning top performers into order-takers, demotivating teams or organisations, and costing them millions in missed opportunities. The key isn’t just paying commission; it’s creating a model that aligns with the business strategy, encourages the right behaviours, and most importantly, motivates the team.

Founding Partner at Emmet Consulting, Lisa Edmonds, and Steve Adnitt, Senior Consultant at Emmet Consulting, discuss the costs of poorly designed sales compensation models and how to get them right.

The B2B Sales Organisation

In B2B sales organisations, the sales team’s performance directly impacts revenue, market share, and overall business growth. High-performing B2B sales teams don’t just close deals; they often need to effectively manage long sales cycles, negotiate complex contracts, and deliver value-driven solutions that transform a company’s products and services into tangible financial results.

Performance bonuses are common.

Most B2B organisations motivate their sales teams. Well-designed sales compensation or performance programs should serve as a powerful tool to encourage desired behaviours and business outcomes.

The key to effective performance or compensation models isn’t just about paying more; it’s about developing systems that align business strategy with the one factor that truly drives performance: human motivation. Financial rewards can sometimes be counterproductive, especially in complex B2B solution sales*.

“It’s crucial to consider the type of sales team, the product or service, and the level of selling, solution finding, and creativity required to ensure models are built to work effectively and promote high performance by fostering a sense of autonomy and supporting self-development,” Lisa Edmonds, Founding Partner. 

Successful compensation models hinge on understanding what drives revenue and profit and then designing a sales compensation model that encourages teams to achieve it.

So, how do you build a model that works? Sense-check your approach across six key areas.

1. Begin with the commercial challenge.

The initial step in any compensation design is to set clear goals and a strong go-to-market strategy. When sales and growth align with the broader purpose, it becomes a powerful motivator*.

Define the strategy you want the team to follow, such as market penetration, market development, or product expansion, and make sure the incentives are aligned. For example, a model focused on gaining market share might offer higher commissions to attract new customers, while promoting cross-selling usually helps increase product penetration. Set achievable and realistic goals. If goals are not realistic, they can demoralise the team, create distrust, and lead to disengagement.

Compensation models must be a direct tool for executing your strategy.

2. Use data and make it easy.

Don’t guess. Without data, you risk compromising profit and performance. Invest time in understanding what’s really happening with customers, sales teams, and the market. Look beyond basic sales figures and analyse metrics such as deal-size trends, sales-cycle durations, and acquisition costs. Model different scenarios and forecast their impact before making any changes.

Make sure your model is simple to build, straightforward to understand, and easy to report on using current metrics and reports; otherwise, a human will need to oversee it.

3. Consider your people, capabilities and motivation.

A compensation model is only as effective as the team it’s built for; overshooting or expecting too much will only work to disengage the team.

Consider what genuinely motivates them. While this may sound fluffy, if the passion or love isn’t there, the sales team won’t perform – regardless of the incentive. Leadership, direction, and culture are the foundation of sales success. Half the challenge is getting teams to understand what they need to do and feel they have the autonomy to deliver.

4. Make sure to build in success.

A great model goes beyond simply reaching quotas. Depending on the challenge, models can include overachievement multipliers, team-based bonuses to promote collaboration, or long-term success rewards such as customer satisfaction or customer acquisition aligned with the brand. The main point is to avoid overcomplicating the scheme or its measures — the more metrics you use, the less motivating each one becomes, so choose them carefully.

5. Easy to communicate and easy to understand.

We see many falling at this last hurdle. Even the best model can falter without a solid communication plan. Don’t just announce the new plan; explain the ‘Why’ behind it. Roll it out with clear, transparent communication to set expectations and build trust. Make sure to communicate regular open performance reports so employees can track their progress and learn from top performers.

Communications and reporting formats are often overlooked in the rush to prepare the model for the upcoming financial year, leaving even the best compensation models losing their sizzle and, ultimately, costing companies millions in lost revenue opportunities. 

6. Test, learn, and review.

What worked last year may not work this financial year. To keep sales teams engaged, it’s essential to keep compensation models fresh and top of mind. However, if a change is necessary in the business, there’s a risk that your compensation scheme will keep the team focused on the old approach and hinder the needed shift to a new priority.

“At the end of the day, pay will override leadership statements. Flexibility to ride a period of change will make the transition easier and not act as a blocker. Our recommendation: stop guessing and start building a sales compensation model that truly works”

Ready to transform your sales performance? Contact us today to learn more about our sales audits to see if your sales incentives and compensation models are costing you millions. 

*Daniel Pink. To Sell is Human