Sales Operations teams are at the intersection of data and strategy. In addition to analyzing sales processes, many SO teams now also influence and shape the sales incentive programs that drive behaviours in the field.

In a previous article, we talked about how Sales Operations can determine which Key Performance Indicators (KPIs) really matter and which ones don’t. But KPI analysis doesn’t end with identifying vanity metrics. The true value is in how Sales Ops teams can leverage that KPI data to help design effective and motivating sales incentive plans.

In this article, we’ll show how Sales Operations can convert KPI insights into rewards. Let’s dive in.

Incentivize the right field behaviours

Sales incentives are about motivating and rewarding action — not just sales results. If a plan is focused on wrong KPIs or vanity metrics, it will likely drive unproductive behavior and misaligned activities in the field.

Here are a couple of examples:

a. Wrong KPI Incentive: Counting all calls placed, not just qualified opportunities called

b. Correct KPI Incentive: Recognizing revenue from new customers, not just total gross margin

Aligning the incentive plan to the right KPIs helps drive and reinforce the desired field behaviour.

Connect the KPIs to the business strategy

Not all KPIs need to, or should, be included in an incentive plan. But the Sales Operations team must be able to identify which KPIs matter most to the business strategy and where the potential is for influence and improvement.

Sales Ops needs to clearly understand the distinction between “tracking metrics” and “performance metrics”.

Tracking metrics — things like emails sent, calls booked, product demos — while useful for coaching and activity management, shouldn’t factor into sales rep pay.

Performance metrics — such as revenue attainment, gross margin performance, renewals — should have a direct, causal link to company goals and be included in incentive plan design.

Let’s look at a quick example:

Business goal: Growing the business in a new market

Target: Sign new customer accounts

Focus of incentive plan: New account KPIs with a heavier weighting in the plan, not renewals or existing business

In this example, the business goal is strategic expansion in new markets. While renewals and existing business are important, the incentive plan should give more credit for new customer acquisition and motivate reps to focus on new logos.

Use KPIs as a foundation for incentive plan elements

Sales Operations teams that have done their homework on KPIs are now armed with the right data to help influence incentive plan elements.

a. Use KPIs to inform elements of a sales plan such as quotas and targets, accelerators, balanced scorecards and so on.

b. Set quotas and targets

c. Align KPIs with realistic and motivating quota and target levels.

Example: If cross-selling new products is a priority, define a quota and specific quota credit for attached products

d. Use accelerators and multipliers

e. Accelerators and multipliers are used to recognize and reward overachievement in critical KPIs.

Example: A gross margin target that is exceeded by 120% receives a higher multiplier than a sales volume target exceeded by 120%

f. Design balanced scorecards


g. Sales plans with a large number of KPIs can cause “single-metric tunnel vision” and incentive gaming. Avoid that by using a balanced scorecard approach.

Example: A balanced plan could have 60% weight on revenue attainment, 20% on profitability and 20% on customer retention

h. Avoid vanity metrics in sales plan design

The No. 1 mistake that sales incentive plans make is rewarding vanity metrics.

Sales Ops should be able to quickly eliminate KPIs that look like vanity metrics by identifying those that have a clear cause-effect relationship with business results.

Examples of vanity metrics to avoid include:

a. Number of client meetings booked
b. Social media engagement and views created by sales reps
c. Product demos completed (without conversion)

Sales Operations needs to avoid tying pay and incentives to vanity metrics. As a result, sales reps will easily “game the system” and optimize the sales plan by only hitting the easy targets.

Use KPIs for dynamic adjustments

Sales incentive plans often don’t change much after they are designed and distributed at the start of the year. But business and market conditions change. That’s why many businesses include a process to make dynamic adjustments to plan focus mid-year.

Sales Ops can leverage their KPI analysis to support quick adjustments to the incentive plan that don’t require a full plan overhaul.

Examples of mid-year adjustments include:

a. Margin focus: Adjusting incentive weights to increase focus on profitability over volume
b. Retention focus: Adding customer retention bonuses in mid-cycle
c. Product launch: Layering a short-term SPIFF to support adoption of a new product or feature.

All of these adjustments to incentive plans help maintain agility and ensure that the plan is relevant and aligned to current business needs.

Motivate and reinforce with the right KPIs

Ultimately, the goal of putting KPIs into a sales incentive plan is to ensure that the sales rep knows exactly which behaviours will help them achieve their goals and get paid.

KPIs should not just measure performance but clearly guide reps in the field.

If a business goal is to increase retention, design the incentive plan to reward renewals, upsells and make sales reps more likely to work on customer relationships than chase new business logos.

If reps cannot easily explain how the plan works and what KPIs matter, the plan is too complex and likely needs to be simplified.

Once the right KPI is linked to pay, it can motivate and drive the field behaviors that result in revenue growth.

Best Practices for Sales Ops

For Sales Operations to ensure KPI data gets turned into effective incentives, here are some best practices to follow.

a. Keep it simple: Focus on only 3–4 top KPIs in any incentive plan. Three KPIs is ideal. Add more KPIs and you lose focus.

b. Test drive: Sales Ops should conduct regular KPI reviews quarterly to test assumptions and alignment to business performance.

c. Run scenarios: Test a variety of “what if” outcomes. What happens if reps focus only on KPI A or B?

d. Tell a story: Help sales reps understand the story of the incentive plan, and how and why each KPI matters.

Conclusion

Sales Operations teams should not only understand the difference between vanity metrics and the KPIs that really matter, they need to know how to turn KPI data into effective incentives that motivate sales reps and drive results.

By avoiding vanity metrics, Sales Ops can help link incentives directly to the top-performing KPIs that will best move the needle.

By using the KPI insights from their analysis to design and influence sales incentive plans, Sales Operations teams can help align the field behavior of sales reps with business strategy and objectives.

In today’s hypercompetitive market, the role of Sales Operations teams can and should be to convert hard data into meaningful motivation and thereby become true revenue growth architects.