Why Past Incentive Design Structures Don’t Work in 2026 and How to fix it

We’ve built incentive design plans around attracting, motivating, and retaining talent to drive changes in sales behaviour and support revenue growth for decades.

Old school plans that worked 5 years ago will not work in 2026.

Factors such as market volatility, hybrid selling teams, AI powered buyer journeys, and distributed revenue “ownership” across the organization have fundamentally changed how we generate revenue.

It’s time for Sales & Revenue Operations leaders to rethink how they approach traditional sales incentives.

Let’s look at why previous incentive structures don’t work in today’s complex commercial environment AND what Sales & Revenue Ops need to start thinking about when updating your plan for 2026 and beyond.

Why Past Incentive Design Structures Don’t Work 

1. Individual Quota Accelerators 

The industry standard plan for decades has been to pay reps based on whether they achieved quota.

The old-school thought process: 

“If we pay them when they hit quota, they’ll do whatever it takes to hit quota.”

This model ONLY works if your organization operates in a transactional sales environment where one person owns the revenue.

Reality in 2026: 

Revenue is owned by multiple teams: 

a. SDRs own pipeline 

b. Marketing owns velocity 

c.  Solution Consultants own value realization 

d. Customer Success owns expansion 

Real-World Example: Pipeline quality began to suffer at a SaaS business we worked with where the only individuals incentivized for closed revenue were Account Executives.

SDRs were selling literally anything they could to book deals since no conversion criteria were applied to their metrics.

Solution – Measure and reward the right activity to drive pipeline quality AND hold Account Executives accountable for overall closed deal quality.

 2. Static Annual Plans 

Sales plans used to be built out once per year and then set it and forget it.

If market conditions changed or your go-to-market strategy evolved, you still had ONE plan.

This plan doesn’t work anymore because: 

Products come and go in less than 365 days.

a. Business priorities can shift every quarter. 

b. Markets don’t wait for your fiscal year calendar to dictate their movements.

C. Planning needs to be agile. 

Real-World Example:  A cybersecurity company we worked launched a new AI-based product platform in Q2.

However, since the annual plan was already “set in stone”, sellers kept pushing legacy products that held more incentive accelerators.

Leadership needed to shift urgency to this new product line ASAP.

Solution – Build out quarterly plans with AI-powered forecasting and attainment modelling. Stay nimble and change incentives as business priorities shift.

3. Revenue is the ONLY Measure of Success 

How do you measure your sellers’ success? Hint: It shouldn’t just be revenue. 

If your compensation plan rewards behavior that generates pure revenue acceleration at any cost, that’s what your sellers will do.

But, what about profitability? 

a. Renewals? 

b. Pipeline depth? 

c. Contract length? 

If your sellers only care about revenue, your company will have significant issues when it comes to profitability and predictable revenue recognition.

Real-World Example:  We once sat across from a leader whose margins dropped 12% because his sales team was discounting too aggressively to hit incentives.

 Solution- Incorporate profit-based metrics into your plans. Hire sellers who care about your business’s bottom line.


4. Incentivize Post-Sale Activities? 

Who owns the customer after the sale? 

This was never incentivized in legacy plans because “someone else” owned it.

However, that’s simply not true in 2026. 

a. Expansion? Owned. 

b. Adoption? Owned. 

c. Renewals? Owned. 

And they’re a huge percentage of your company’s revenue.

Real-World Example:  Do you know what percentage of ARR is generated from upsells and cross-sells?

At one biz we consulted, it was **65%**. Yet, their Customer Success team didn’t have any variable payout attached to expansion.

 Solution – Consider what happens after the sale. Incentivize those activities too. 

 5. Built and Modeled in a Spreadsheet 

We’re not knocking spreadsheets, but if your plan is only built and modelled inside of a spreadsheet, chances are your design is lacking.

In today’s age, you need tools that allow you to model in real-time as changes are made.

Not only does this save you time, but you’ll be able to:

a. Predict attainment levels 

b. Detect rep behavior (sandbagging, deal sucking) 

c. Alert overpayments before they happen 

Oh yeah, and avoid HUGE headaches at plan “audit” time.

The Aspects Sales & Revenue Operations Should Be Thinking About For 2026 Incentive Plans

1. Team Attainment 

a. Selling doesn’t happen in a silo. Stop incenting it that way. 

b. Plans need to reward activities that occur across multiple teams.

c. Whether that’s shared pipeline incentives, collaborating on deals, or even specialty bonuses for certain team members.

d. Plans that emphasize team play will drive collaboration.

Real-World Example:  We worked with a cloud company that implemented a 20% team attainment modifier.

Deal win rates increased by 17% because the teams started holding each other accountable to close.

 2. Quarterly Plans 

a. Annual Plans are outdated. 

b. Plans should be built out on a quarterly basis to account for new product/service launches, pricing adjustments, go-to-market strategy pivots, etc.

c. Leaders can better signal urgent priorities with this type of plan structure.

Real-World Example: A FinTech we worked with introduced a mid-year incentive for selling their digital wallet.

Sales accelerated 2.3x within 2 quarters. 


3. Profit and Value-based Metrics 

a. Sell hardware? Attach incentives to gross margin%. 

b. Heavy software? Index deals based on profitability. 

c. Longer contract length? Incent that too. 

d. Plans don’t have to solely be tied to accelerating top-line revenue.

Real-World Example: A logistics company paid 1.5x incentives on deals that were multi-year and met a minimum gross margin threshold.

AVG contract value increased by 31%. 

 4. Customer Lifecycle Incentives 

As mentioned above, you need to consider what happens after the sale.

Hopefully, you offer your customers additional products or services that they can adopt.

a. Expansion? Incent that. 

b. Renewals? Definitely incentivize them. 

c. The purchase isn’t the finish line. Plans need to reflect that. 

d. Purchase equals or greater than Retention Bonus for New Logo, Upsell and  Renewal 

 5. Using AI to Govern Plan Performance 

a. Best-in-class plans no longer just “govern” plan performance.
b. Incorporate AI to detect behavioral patterns, forecast attainment, and alert you to potential overpayments BEFORE they happen.
c. Governance needs to be approached proactively versus reactively.

Real-World Example: Did you know your reps could be sandbagging deals into the next quarter to manipulate their payout?

We implemented AI insights for a Fortune 500 customer and discovered this was happening. Plans were adjusted to correct this behaviour. 

 6. SPIFFs & Micro-Incentives 

a. Maybe you want to drive demand for a new product? Offer SPIFFs. 

b. Need inventory clearance? Micro-incentives. 

c. Want to push a vertical? Provide a short-term incentive. 

Sales leaders should have flexibility with creating short-term incentives (3-months or less) to meet various business needs.

Real-World Example:  A hardware company offered 60-day SPIFFs to reach overbooked sales goals for a newly launched device.

Sales doubled and hit 140% of their original goal.

 7. Governance & Compliance 

a. More regulations equals more plan audits. 

b. Plans need logical documentation as to “why” certain decisions were made.

c. Integrate automation to flag payout anomalies and enforce policy-based exceptions.

There’s nothing worse than “losing” money due to plan overpayments that could’ve been prevented.

The NEW Incentive Design Framework for 2026 

a. Individual Performance plus Team Contribution 

b. Profitability Impact plus Customer Lifecycle Activities 

c. Product Strategy Alignment plus Real-Time Plan Adaptability 

Companies that have multiple dimensions to their plans have seen drastic improvements in seller engagement, predictable revenue, and plan disputes.

Conclusion 

a. Incentive plans from years past were built for an entirely different environment.

b. Markets were stable. Selling was linear. One person owned revenue generation. 

c. Flash forward to 2026 and none of those things are true.

d. S&RO teams need to evolve their plans to be agile, data-driven, and aligned to the full revenue lifecycle.

Plans need to drive collaboration between teams, focus on profit acceleration, and incorporate AI tools to analyse seller behaviour.