Sales Operations teams are often the nucleus of a company’s revenue strategy. But the role of Sales Operations goes beyond reporting results. They must also determine which KPIs truly drive growth and which do not. However, most companies suffer from “data overload”—a seemingly endless list of attractive metrics that ultimately drive little to no business impact.

The key is understanding the difference between “growth-driving” KPIs and “vanity” metrics that distract or misalign. When Sales Operations gets it right, it can design sales incentive plans that align the field’s sales behaviour with corporate strategy.

This article discusses how Sales Operations teams can winnow, validate, and act on KPIs that matter. It also covers how these KPIs can be translated into sales incentive structures to move sales teams in the field.

Why the Selection of KPIs Matters

Example:

a. Wrong KPI: number of client meetings booked.
b. Behavior: sales reps book as many meetings as possible with prospects, even low-value leads, to “meet” the KPI.
c. Right KPI: percentage of meetings with qualified prospects that convert into pipeline.
d. Behavior: sales reps think twice before booking a meeting, and focus on quality instead of quantity. Result: they spend time with the highest-value prospects, driving actual revenue.

The effectiveness of a sales compensation plan hinges on the KPIs chosen. Are they selected properly and directly linked to business outcomes?

Step 1: Sort KPIs into Two Buckets

a. KPIs Driving the Business – KPIs that directly drive growth, profitability, or customer success. These are KPIs Sales Operations should focus on.

Examples: Net new revenue, pipeline-to-close conversion rate, average deal size, customer retention rate.

b. KPIs Not Driving the Business (Noise Metrics) – Metrics that are good for operational tracking, but don’t directly drive revenue. Useful, but not incentive plan material.

Examples: Number of calls made, social media activity, demo invites (without conversion tracking).

Step 2: Use Data Validation to Test KPI “Movement”

Sales Operations teams must validate the cause-effect relationship between KPIs and business results.

Data Validation techniques to apply:

a. Correlation analysis: Test whether increases in a KPI (e.g. deal velocity) correlate with higher revenue.
b. Cohort analysis: Identify which cohorts of reps beat revenue targets and what KPIs they score high on.
c. Historical trend review: Review the past 2–3 years of KPIs to see which have been the best business predictors.

Example: A software company noticed that the reps booking the most customer demos were not their top performers. A closer look at historical data showed that reps with the highest demo-to-close ratio consistently over-performed and beat quota. The company tweaked its incentive plan to reward “conversion” instead of “volume” and immediately changed rep behavior.

Step 3: Align KPIs with Business Strategy

Not all KPIs are created equal. Nor are they always relevant in the same market conditions. Sales Operations should also match KPIs to the company’s strategic focus.

a. Growth phase: Net new logos, pipeline creation, average deal size.
b. Retention phase: Customer lifetime value (CLV), renewal rates, upsell KPIs.
c. Profitability focus: Margin per deal, product mix sold, discount allowed.

Example: A SaaS company needed to shift focus to profitability. Sales Ops discovered that the current incentive plan was skewed to top-line bookings, leading to massive discounting by reps to hit their numbers. Sales Ops worked with the business to re-weight the plan towards “revenue booked at or above list price” and “expansion sales” to protect margins while still driving growth.

Step 4: Translate KPIs into Incentive Plan Design

Sales Operations must then embed KPIs into the design of the sales incentive structure. It is the only way to ensure sales reps not only know what matters but have a financial incentive to prioritize it.

Best Practices for Translating KPIs into sales Incentive Plans

a. Simplicity: The plan should have no more than 3–4 KPIs. Focus on the few metrics with the biggest impact. The more complex the plan, the harder it is for reps to understand.

b. Weighting: Allocate more incentive weight to the KPIs with the highest business impact (e.g. 60% revenue, 20% customer retention, 20% new product adoption).

c. Behavioral alignment: Ensure that KPIs are under the control of the sales rep. Incentivizing uncontrollable metrics just creates frustration.

d. Time-bound milestones: Quarterly KPIs help ensure short-term alignment with the business.

Example: A medical device company wanted to grow share of wallet in a new segment. Instead of broadly incentivizing “total sales,” Sales Ops added a new KPI for “% of sales from new product line.” As a result, reps shifted their focus to the new offering and accelerated adoption, aligning field behavior with the business growth strategy.

Step 5: Review KPIs Regularly

The business changes quickly. A KPI that is critical to success this year may be obsolete next year. Sales Operations teams must review the KPIs used at least annually, if not quarterly.

Questions to ask:

a. Did incentivized KPIs correlate to revenue and profitability?
b. Did the plan inadvertently create negative behavior (e.g. sandbagging, over-discounting)?

c. Are there any KPIs that should be rebalanced or removed?

Example: A retail chain found that store managers were overstocking to improve “sales per square foot,” an initial KPI on the incentive plan. The chain adjusted the metric to “profitable sales per square foot” and balanced growth with margin control.

Pitfalls to Avoid

Sales Operations teams often make the following mistakes:

a. Overloading KPIs: Plans with 6–7 KPIs bewilder the rep.
b. Picking vanity metrics: Incentivizing “activities” instead of “quality” behavior.
c. Neglecting controllability: Rewarding reps on metrics they have no influence over (e.g. corporate-level customer churn).
d. Letting old KPIs linger: Failing to remove KPIs no longer relevant to business strategy.

H2 Conclusion

Selecting the right KPIs is a critical component of effective Sales Operations incentive design. The steps include:

a. Classifying KPIs into drivers vs. non-drivers.
b. Validating KPI business movement through data.
c. Aligning KPIs with the business’s strategic priorities.
d. Embedding KPIs into incentive plan design to shape field behavior.
e. Reviewing and refining KPIs used regularly.

Done properly, it can turn incentive compensation from a “mechanical” payout system into a strategic lever that shapes and motivates sales teams to focus on what matters for business outcomes.

Sales Operations teams that can execute on this discipline don’t just measure field performance. They shape it, ensuring each rep in the field is aligned with the company’s growth path.