Sales compensation season is open

By: David Cichelli Sales Compensation

Each year, over 90% of companies change their sales compensation plans.  Anticipating the start of a new fiscal year, sales organizations update their sales compensation plans well in advance.  This makes the fourth quarter of the fiscal year:  “Sales Compensation Season”.

Most changes deal with the plans’ performance measures, which makes sense.  As a company’s sales focus changes, the sales compensation performance measures will change too.  While sales revenue is normally a constant performance factor, sales management will make changes to other measures such as product mix, profitability, new accounts and contract terms.

Our research confirms that among the 90% of the companies making changes; about 15% to 20% will make significant changes to their pay programs.  That means almost every five to six years, on average; sales departments perform a major overhaul to their sales compensation plans.  These efforts include a top-to-bottom review of all plans; a necessary exercise to keep the program in alignment with corporate objectives.

However, absent a major review, sales compensation plans typically get many minor adjustments during the interim.  The trick here is to make sure these minor adjustments, sometimes called “tweaks,” are logical and compatible with existing plan features.  While a “minor” change might seem insignificant, unforeseen outcomes can occur if the plan testing is not comprehensive.  A noteworthy place where “surprises” lurk is any change to the sales crediting practices, or ‘who gets paid for what’.  Whenever sales management considers such a change, follow the money to make sure it’s fully accounted and not over-credited.

Learn more about our Sales Compensation practice.


David Cichelli

David Cichelli contributes his revenue growth knowledge and experience to a wide array of sales organizations. His clients include leading companies in technology, telecommunications, wholesale/distribution, financial services and healthcare. David helps clients redefine and deploy go-to-customer solutions to ensure optimal revenue performance. By applying the Alexander Group’s Revenue Growth Model™, he helps companies achieve their revenue objectives through the coordination of marketing, sales and service resources. These efforts include revenue planning, customer engagement design, sales force configuration, and program design and management. He is the Alexander Group’s sales compensation practice leader.

Widely recognized by national professional associations and trade publications for his work in linking sales compensation to management’s objectives, David is a frequent speaker on sales compensation topics. He is author of Compensating the Sales Force (3rd edition) and The Sales Growth Imperative, published by McGraw Hill. He serves a leadership role in the design of the firm’s revenue growth conceptual models. David is an officer of the company. He is also the author of the 2018 Sales Compensation Almanac, published by AGI Press.

Prior to joining the Alexander Group in 1985, David served for five years as a national practice manager in sales compensation for a leading compensation consulting firm. Previously, he had spent seven years providing support to the field sales organization of a multinational Fortune 200 chemical company. David has a B.A. from Pennsylvania State University and an M.S. from Michigan State University.