Game-Changing Sales Compensation Strategies for Technology Leaders

Six Priorities for XaaS Sales Comp Leaders

1. Increase the pay curve in both directions

64% of technology companies changed their plans to drive stronger pay for performance in 2026, up from 58% in 2025. The most common moves include higher pay for over-performance (27%) and reduced pay for under-performance (23%), with 30% doing both simultaneously.

This indicates that the industry is moving away from linear pay curves that softens the relationship between results and reward. Leaders should assess whether the current upside meaningfully motivates above-quota performance and whether the downside creates real accountability and protects mediocre results.

2. Map measures to the coverage model, not just the customer lifecycle

The ILAER framework (identify, land, adopt, expand, renewal) provides the right architecture for the customer journey, but the corresponding plan measures have to match the actual coverage model. A bifurcated, land-only Account Executive (AE) should not carry renewal accountability but a single account owner should. A cooperative model requires a different set of shared or split measures.

The most common gap Alexander Group sees is limited or no renewal accountability in AE sales compensation plans when AEs manage the ongoing client relationship. As NRR declines across XaaS segments—XaaS infrastructure from 121% in 2021 to 108% in 2025, and XaaS application from 112% to 105%—this gap is becoming increasingly difficult to ignore.

3. Credit what the seller controls

Deciding what to credit and when is the hardest plan design question for companies running both subscription and consumption models. The answer depends on the contract type and the seller’s actual sphere of influence.

For committed spend, companies need to measure both committed spend and consumed revenue to drive both selling motions. But for uncommitted and pay-as-you-go models, consumed revenue is the dominant measure. Companies may also consider an activation bonus to drive new logo acquisition. The failure to avoid is crediting consumption contracts on bookings only and then wondering why usage never materializes.

4. Audit add-on mechanics and cut the ones that aren’t yielding the desired ROI

The most common driver of increased sales comp costs is the accumulation of add-on mechanics (e.g., multi-year bonuses, product uplift SPIFs, cloud migration accelerators, quarterly kickers) that build up over time and rarely get sunsetted. Most add-ons were reasonable responses to a specific business problem at a moment in time, but few are still driving the incremental behavior change that justified adding them.

A systematic audit of additive earnings opportunities, assessed against whether they are changing seller behavior or simply layering cost onto outcomes that would happen anyway, is one of the highest-value actions a sales comp leader can take in the near term.

5. Move AI in the sales comp function beyond communications content

62% of organizations are now using AI for training and communications content, up from 20% in 2025, making it the most widely enabled workflow in sales comp. While it’s a reasonable place to start, the more consequential applications are further along the adoption curve: 48% are using AI for data analytics and insights; 40% for predictive forecasting and budgeting; and 33% for quota setting.

Leaders should build a deliberate AI roadmap for the sales comp function itself, prioritizing workflows where speed and accuracy create the most leverage (e.g., plan modeling, quota calibration and dispute resolution) rather than defaulting to the easiest implementation first.

6. Redesign jobs before redesigning plans

The best plan design starts with a clear definition of each sales role. Alexander Group’s research projects that AI will lead 53% to 68% of current GTM activities by 2028, depending on the role. As AI absorbs more routine tasks, sellers will spend more time on judgment, relationship management and complex solution design—the areas where incentive plans should focus.

Plans that pay for activities (that AI will soon automate) are working against the job redesign effort. Leaders who update their plans without first updating job design will find themselves revisiting the same problems in 18 months.

The Stakes

Sales compensation is more than a reward mechanism. Used well, it is the clearest signal a company sends about what it values and the most direct lever for translating strategy into seller behavior. In a market moving this fast, getting that signal right is not optional.