You can build the perfect go-to-market strategy. Crisp ICP definition. Thoughtful territory design. A sales process mapped to buyer stages. CRM hygiene that would make a data architect weep with joy.
And a single misaligned comp plan will undo all of it.
Compensation architecture is the most powerful lever in your entire GTM system. And it's the one most companies design last, revisit least, and understand worst.
Every behaviour you see in your revenue org — the good, the bad, the baffling — is a rational response to how people are paid. Not how they're managed. Not what the playbook says. How they're paid.
Reps Are Not Irrational. Your Comp Plan Is.
Let me give you a scenario I've seen a dozen times.
A CRO complains that reps are sandbagging deals. They're holding opportunities back and closing them in the first week of the new quarter instead of pulling them into the current one.
The CRO calls it a discipline problem. A coaching problem. A pipeline management problem.
Then you look at the comp plan.
Accelerators kick in above 100% attainment. A rep who's already at 105% this quarter earns more by pushing that next deal into Q1 — where it counts toward a fresh quota — than by closing it now for marginal incremental pay.
The rep isn't sandbagging. They're doing exactly what the comp plan incentivises them to do.
The behaviour is rational. The architecture is broken.
The Six Ways Comp Plans Quietly Destroy GTM Strategy
Most comp plan failures aren't dramatic. They don't cause blowups. They cause slow, persistent misalignment that shows up as "culture problems" or "execution gaps" when the root cause is structural.
1. They optimise for revenue, not revenue quality
The most common comp plan structure in B2B SaaS: quota based on new ARR, commission paid on bookings.
What this incentivises: close anything that counts. Pull in deals with aggressive discounts. Over-promise to land the contract. Sell annual when the customer wanted monthly. Push multi-year deals with back-loaded pricing that makes the first year look bigger.
What this ignores: deal margin, customer fit, implementation readiness, expansion potential, and churn risk.
If you pay reps purely on bookings and then wonder why NRR is dropping, the comp plan is the first place to look.
2. They create misalignment between new business and expansion
One team owns new logos. Another team owns expansions and renewals. Different comp plans. Different incentives. Different definitions of success.
The new business rep sells aggressively to hit their number. They discount heavily, promise features that don't exist, and set expectations that CS can't meet.
The expansion rep inherits a customer who's already disappointed. Their NRR target is now hostage to a deal they had no input on.
Both reps are behaving rationally within their comp plan. The system is misaligned.
3. They punish the behaviour you actually want
You want reps to qualify rigorously and disqualify bad-fit prospects early. But the comp plan pays on closed revenue. A rep who disqualifies a £60k opportunity to focus on a £40k deal with better fit and higher expansion potential is financially penalised for good judgement.
You want reps to collaborate on complex deals. But the comp plan has a single deal owner and no split credit. So reps guard their pipeline, avoid pulling in specialists, and close deals that would have been bigger with collaboration.
The comp plan doesn't just incentivise behaviour. It defines what "good" looks like. If good judgement costs a rep money, they'll stop exercising it.
4. They create gaming that looks like performance
Accelerators above quota. SPIFs for specific products. Kickers for multi-year deals. Each of these creates a secondary optimisation target that interacts with the primary quota in ways the plan designer didn't anticipate.
I've seen reps split a single large deal into two smaller ones to hit quota in two consecutive quarters. I've seen reps discount a product to near-zero and bundle it with a SPIF-eligible product to earn the bonus. I've seen reps push annual deals into multi-year structures solely for the kicker, creating contract rigidity the company didn't want.
None of this is fraud. It's optimisation. The comp plan created the game. The reps are playing it.
5. They ignore the handoff
Most comp plans treat the deal as the end of the revenue event. Commission triggers at booking or at some variant of a signed contract.
What happens after the handoff to CS? Not the rep's problem. Not in their comp plan. Not their concern.
The result: deals that close but don't implement. Customers that sign but never activate. Revenue that books but churns within twelve months.
You can't fix this with post-sale clawbacks alone. Clawbacks punish bad outcomes. Incentive architecture prevents bad inputs.
6. They're designed in a vacuum
The comp plan is usually designed by finance and sales leadership in a room without RevOps, CS, or marketing at the table. It's modelled on a spreadsheet that assumes reps will behave the way the model predicts.
They won't. They'll behave the way the incentives reward. And if the incentive designers don't understand the full revenue lifecycle, the plan will have gaps you won't see until Q3.
What Incentive Architecture Looks Like
A comp plan is a document. Incentive architecture is a system.
The difference: a comp plan tells reps what they'll earn. Incentive architecture aligns every role in the revenue org around shared outcomes, with structural mechanisms that prevent misalignment before it happens.
Principle 1: Tie compensation to outcomes, not activities
Stop paying on bookings alone. Start incorporating metrics that reflect revenue quality.
- Net revenue retention contribution — give the new business rep a stake in what happens after the deal closes. Not a clawback. A positive incentive for deals that expand.
- Customer activation rate — if the customer doesn't implement within a defined window, the commission calculation adjusts. This aligns the rep with making promises the company can keep.
- Margin-adjusted bookings — a £100k deal at 80% margin is worth more than a £120k deal at 50% margin. The comp plan should reflect that.
These aren't theoretical. They're in production at companies I've worked with. They change behaviour within a single quarter.
Principle 2: Create shared metrics across functions
If marketing is measured on MQLs, sales on bookings, and CS on NRR, you have three teams optimising for three different things. The handoffs will always be painful because each team is incentivised to throw the problem over the wall.
Shared metrics create shared accountability.
- Marketing and sales share a pipeline quality metric — not just volume, but conversion rate and deal velocity from the leads marketing generates.
- Sales and CS share a customer health metric — tied to implementation success, not just contract signature.
- The entire revenue org shares a net revenue target — new plus expansion minus churn. Everyone wins or loses together on the number that actually matters.
When the whole org is aligned on the same outcome, the internal politics fade. Not because people change. Because the incentives change.
Principle 3: Model the second-order effects before you launch
Every comp plan change has unintended consequences. The question is whether you discover them during modelling or during Q2.
Before rolling out a new plan, model these scenarios:
- What happens if reps optimise purely for the highest-paying component? What deals do they chase? What deals do they ignore?
- What happens at the margin? A rep at 98% attainment with one week left — what does the plan incentivise them to do?
- What happens to collaboration? If deal credit is single-owner, will reps avoid complex deals that require multiple contributors?
- What happens to discounting? If the plan pays on bookings without margin adjustment, what's the rational discount strategy?
If you can't answer these questions before launch, you're running a live experiment on your revenue engine.
Principle 4: Build governance into the comp system
The comp plan should be enforced by the system, not by spreadsheets.
Commission calculations should be automated, transparent, and auditable. Reps should be able to see their attainment in real time, model the impact of a deal on their comp, and understand exactly how their payout is calculated.
When comp is a black box that gets reconciled manually at the end of the quarter, trust erodes. Disputes spike. And reps start making decisions based on what they think the plan pays, which is often different from what it actually pays.
Transparency isn't a perk. It's a governance mechanism. Reps who understand their comp plan optimise for it correctly. Reps who don't understand it optimise for what they guess.
The CS Comp Problem Nobody Talks About
While we're here, let's address the elephant in the room.
Most CS teams have terrible comp plans. Or no comp plan at all beyond base salary and a discretionary bonus.
If your CS team owns renewal and expansion revenue but has no variable compensation tied to those outcomes, you're relying on intrinsic motivation to drive millions of pounds in recurring revenue.
That's not a strategy. That's a hope.
CS comp should be structured with the same rigour as sales comp:
- Renewal rate targets with clear, measurable thresholds.
- Expansion revenue targets for CSMs who own upsell and cross-sell within their book.
- Customer health scores that are leading indicators of retention, not lagging vanity metrics.
When CS comp is aligned with revenue outcomes, the team behaves like a revenue function. When it isn't, they behave like a support function. And support functions don't drive NRR.
Why Finance and RevOps Must Co-Own This
Comp plan design is traditionally a finance exercise. Finance builds the model, calculates OTE, sets quotas, and defines accelerator curves.
The problem: finance optimises for cost control and predictability. They design plans that look clean in a model but create perverse incentives in the field.
RevOps sees what actually happens. They see the deal patterns, the gaming, the misalignment between what the plan intends and what the plan produces.
Comp plan architecture requires both perspectives. Finance ensures the economics work. RevOps ensures the behaviour works.
When these two functions don't collaborate on comp design, you get plans that are financially sound and operationally destructive. I've seen it more times than I can count.
The Modelling Layer Most Companies Skip
Here's a specific capability that separates good comp plans from great incentive architecture.
Before you change anything, build a model that simulates rep behaviour under the new plan.
Not a financial model that projects total comp cost. A behavioural model that predicts how reps will actually respond.
- Take your top 20 reps' actual deal history from the last four quarters.
- Apply the proposed plan structure to those deals.
- Identify which deals become more attractive and which become less attractive under the new plan.
- Map the behavioural shift: will reps chase larger deals? Smaller deals? Different segments? More discounting or less?
- Calculate the net revenue impact — not just comp cost, but revenue mix, margin, and retention effects.
This is where AI and data modelling genuinely add value. Not in calculating commissions (that's arithmetic). In simulating the second-order behavioural effects of incentive changes before they go live.
I've built these models. The gap between what leadership expects a comp change to do and what the model predicts it will do is often staggering.
The Annual Comp Plan Review Is Not Enough
Most companies review comp plans once a year. Usually in Q4, under time pressure, with incomplete data.
By the time the plan launches in January, the market has shifted, the product has changed, the territory model has been rebalanced, and half the assumptions in the model are already stale.
Incentive architecture requires continuous monitoring, not annual reviews.
- Track attainment distribution monthly. If 80% of reps are below 50% attainment in Q1, the quotas are wrong. Don't wait until Q3 to find out.
- Monitor gaming patterns in real time. Deal splitting, close-date manipulation, product bundling for SPIFs — these emerge within weeks of a new plan launch. Catch them early.
- Measure outcome alignment quarterly. Are the behaviours the plan incentivises producing the revenue quality you intended? If NRR is dropping while bookings are up, the plan is rewarding the wrong thing.
A comp plan is not a set-and-forget document. It's a living system that needs the same operational rigour as your pipeline, your forecast, and your tech stack.
The Question That Changes Everything
Next time your leadership team discusses GTM execution problems — missed targets, pipeline quality, rep behaviour, CS churn — ask one question before you do anything else.
"What does our comp plan incentivise someone to do in this situation?"
If the answer explains the behaviour you're seeing, the comp plan is the root cause. Not the reps. Not the managers. Not the process. The architecture.
Fix the architecture, and the behaviour changes. Not because you coached harder. Not because you rolled out a new playbook. Because the incentives now point in the right direction.
People respond to incentives. That's not a management theory. It's gravity. You can fight it, or you can design with it.
Design with it.