If you’re hiring a salesperson, chances are that part of the compensation you’re planning for them will be variable pay—commissions, bonuses, etc. This may seem like a simple concept. Maybe you’ve already determined you’ll offer a 10% commission on all sales. That’s great, but there are several other crucial factors to consider before hiring that sales role.

Get these things right and you’ll be off to a great start for motivating your salesperson and building trust.

How frequently can the salesperson achieve the objective for variable pay?

Said another way, what’s the sales cycle length and does it fit into your performance period? When deciding on performance management for sales, it’s important to consider the period of measurement. This is the period of time the salesperson has to meet quotas or targets in order to unlock a certain level of payout under the sales incentive plan. 

For example, you may have a quarterly period of measurement in which your salesperson can achieve 10% commission on sales up to a certain target level, and then they unlock a 15% commission on sales past that point. 

In this case, you want to make sure that not only does your salesperson have the ability to reach that objective within the quarterly period of time, but that they have opportunity to exceed that target and achieve greater performance levels and participate in higher levels of pay. Otherwise, you’re offering a reward that’s impossible to achieve, and the individual will ultimately lose their motivation. 

The best practice for the period of measurement is that it should correspond with the ability of the salesperson to manage the transaction within it (or at least the components they manage). Essentially, for the period of time you select, the salesperson should have the ability to do their job from end to end.

Does the performance period provide time for the salesperson to take multiple swings at the bat?

While you don’t want to make it too easy for anyone to achieve their goals, you do want to allow for multiple attempts to close business or attempt to progress a sale across whatever finish line that you have established for the role. 

When considering the performance period, it’s important to consider how many opportunities are possible within the sales incentive plan period as well as how lucrative each opportunity has the potential to be. The distribution of transactions matters because the salesperson should have the opportunity to sell in each period of measurement.

If, as an example, your business is focused exclusively on procuring business in a single annual event or has heavily weighted seasonality, then you either need to acknowledge that with focused periods of measurement that are weighted to those periods of performance, or don’t attempt to carve up an annual plan into smaller performance pieces. 

As a general rule, the distribution of sales activity throughout the fiscal year should align with the performance period selected for the sales incentive plan.

Does the salesperson have the ability to influence the timing of the sale?


The primary reason for creating shorter performance periods into a sales incentive plan is to motivate your salesperson with the possibility of more frequent (and higher) payouts. If your salesperson doesn’t have the ability to influence the timing of a deal closure, there’s not much value in imposing shortened performance periods.

Consider your market, offering, and sales process. Does your salesperson have the power to impact the prospect and close the deal earlier? Can they influence an existing account to move faster or alter the budget cycle? If not, then there’s little reason to break up an annual plan or attempt to incentivize an action that is out of their control.

The ultimate goal of clarifying the performance period is to motivate the salesperson to meet or exceed organizational targets. Make sure they are able to run a full sales cycle from end-to-end within the period of measurement, that they have the capacity to close enough deals to reach or surpass their target within each period, and that they have the power to close deals faster. The ability to ensure that your sales team will feel fully empowered to be successful under the sales incentive plan will put you on a path to have an unstoppable sales force.