Best Practice Report

Sales Compensation Plan Design: Margin Performance Measures

January 1st, 2018
Seth Marrs, Principal Analyst
Seth Marrs Principal Analyst

Summary

Unfortunately, many B2B sales leaders believe that the panacea for improving margins is to set a sales quota (performance measure) for it. Although this approach can work under the right circumstances, it’s a mistake to assume that the lack of a margin performance measure in a sales compensation plan is the cause of lackluster margin results. Factors outside sales reps’ control (e.g., product maturity, market maturity, cost inefficiencies, competition) also must be considered. In this report, we explain when to use — and when not to use — margin performance measures, and how to deploy them to improve margin results.

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