[Feedback] Restructured our sales commission plan in Q2. Numbers and lessons 8 months in.
5-person B2B services firm. 3 of us are billable, 2 are sales. By Q1 last year our sales comp was a mess - one rep on percentage of deal value, one on flat per-close, both grandfathered from different hires.
Why the restructure.
The comp gap between the two reps was about $40k/year for similar performance. Unfair.
Neither structure aligned with the deals we wanted. The percentage-of-deal-value comp pushed toward large deals regardless of fit. The flat-per-close comp pushed toward volume regardless of value.
Both reps had quiet resentment that was starting to surface.
New structure (implemented Q2).
Common base ($65k each, equal).
Common commission: 10% of deal value at close. No tier breaks.
Quarterly bonus: $5k if quarterly bookings target hit, $10k if exceeded by 20%.
Annual bonus: $15k if annual target hit, scaled up for over-performance.
What I expected.
Both reps would push back initially.
The percentage rep would feel demoted (they had earned more under the old plan).
The flat-fee rep would feel less certain (they liked the predictability).
Comp would normalize over a quarter as the new structure settled.
What actually happened.
Both reps initially pushed back for different reasons.
The percentage rep ended Q2 making LESS than under the old structure because their largest deal slipped. Frustration was real.
The flat-fee rep ended Q2 making MORE than the old structure because the 10% scaled with their performance.
A Q3 deal closed contractually in the last week of the quarter but the paperwork lagged into Q4. We honored the quarterly bonus anyway. The lesson was that the cutoff language needed real work.
8 months in.
Total sales comp paid is roughly 6% higher than the old structure. About what I expected.
Quarterly bookings are up about 30% year over year. Hard to attribute to comp alone, but the structure helped.
Both reps report higher satisfaction. The fairness factor mattered more than the dollar value.
I've had to make two judgment calls on edge cases neither of us anticipated. Both went well, but the comp document didn't cover them.
Lessons I'd transfer.
Equality of structure mattered more than I expected. The reps wanted to know they were on the same playing field. The differential they had been okay with on paper produced resentment in practice.
Tier breaks (accelerators and decelerators) felt right in design and we removed them. Simpler is better at small scale.
Quarterly bonuses created urgency behavior that was both helpful (closing deals before quarter end) and concerning (occasionally pushy with prospects). Net positive but watch for it.
The annual bonus was the most appreciated feature. The quarterly bonus drove behavior. The annual bonus drove retention.
What I'd do differently.
Define edge cases in the contract document upfront. "Deal closed contractually but payment delayed beyond quarter end" should have been written in advance, not improvised.
Have a quarterly comp review built in. Mine is annual which is too long if something isn't working.
Communicate the structure change with more context. I rolled it out as "the new plan" without enough framing of why. The reps interpreted the change through self-interest first, which was predictable but avoidable.
For folks who have rebuilt comp plans for small sales teams - what edge cases bit you. Specifically the ones the framework articles don't cover. My guess is most teams hit these and adjust quietly without anyone writing it down.