2. Consider Tying Compensation To Billed Revenue Rather Than The Contract

Companies tend to struggle when variability is injected into compensation plans, which DiMisa said most frequently occurs when payment for a solution is tied to consumption, usage or bandwidth.

Some companies have tried to mitigate this by tying sales compensation not to the contract signing, but rather the actual billing of the customer for the service.

Tying payment to billed revenue aligns the interests of senior management and sales reps, but might diminish motivation for sales reps by taking away the instant gratification.

“Many sales reps are coin-operated,” DiMisa said. “They like to have a clear line of sight; they like to know how much they get paid if they sell something today.”