The Best Sales Compensation Plans to Combat Turnover

A sales team in the planning processResources on the most effective sales compensation plans typically focus on maximizing revenue. The goal of these efforts is to incentivize salespeople to sell more to drive revenue growth. And while revenue generation is a goal inherently shared by all for-profit companies, a new goal is emerging these days. Today’s tight labor market has companies reconsidering their goals, causing them to prioritize employee retention.

Why is retaining employees emerging as a top business priority? The simple answer is that employee turnover is a growth killer. Churn is expensive and disruptive. High employee turnover costs money and time when new employees must be recruited, hired, and trained. It distracts management, pulling their focus away from other revenue-generating activities. It takes a toll on the loyal employees that choose to stay, making them more likely to burnout. It damages a company’s reputation, making it more difficult for them to attract top talent. For all these reasons, churn stalls growth initiatives.

In that light retaining employees is an intrinsic component of building and sustaining revenue. And yet, structuring your sales compensation plans to combat turnover requires a different approach than a revenue-maximizing approach.

Now, these two approaches can be congruent if a company is sincere about growing revenue and maintaining company culture. However, many companies that claim they want to maximize revenue also put a cap on earnings because leadership at the top does not want to “overpay” their salespeople. Organizations looking to get the most out of their salespeople without paying them “too much” ultimately end up demotivating their salespeople, stymieing the company’s growth potential in the process. But when executive management takes the goal of revenue growth seriously, they value their employees in a way that allows them to put aside their pride about earnings, prioritizing the overall strength of the company. When this happens, sales compensation plans can improve employee retention while also increasing revenue.

Use this guide to help you retain salespeople and grow sustainable revenue:

Identifying a Turnover Problem

In order to understand whether you have a sales turnover problem, you need to understand who is on your team. Every sales team is composed of three types of salespeople:

  • Rock Stars – These are your few top performers (your “rainmakers”) that consistently exceed their sales goals. They are not satisfied with just meeting their sales goals. Instead, they want to crush them.
  • Core Performers – These are typically the largest segment of your sales team. They aim to hit their sales goals and consistently do so.
  • Laggards – These are your lowest performing group and include less talented, less motivated, and new salespeople.

There will always be turnover with salespeople, that is just the nature of sales. But when you start losing new salespeople, core performers, or more than the occasional one-off rock star, it is likely a red flag that you have (or are beginning to have) a turnover problem.

As the saying goes, “When a company is in trouble, the first one that leaves wins.” This rings true because if a company is in a decline, the pie gets smaller and smaller the longer an employee stays, continually shrinking their individual piece of it. As a result, it is crucial to halt a turnover problem immediately before more salespeople start to question whether they should be leaving as well.

As with anything else, it is always better to be proactive rather than reactive when structuring your sales compensation plan. If this is not an option, then you will need to act quickly to get on top of the situation. The tactics will be the same whether you are able to take a proactive approach or not, but the communication around it will be different and your recruiting activities will be less urgent.

Understanding Who is Leaving (And Why!)

Laggards are most likely to leave because they have the least invested in their roles. And while you may not be especially hurt to see them go, the more of them that are out there looking, the more quickly the word will get around that there is a problem internally.

Core Performers are likely the most in tune to the “writing on the wall” and will keep their options open if they sense a cultural or environmental change that may threaten their position. Additionally, they understand their worth and will start quietly looking around if they feel underappreciated even in the absence of a major business change.

Rock Stars may be less likely to leave than Core Performers because they are so invested in their current company making it difficult for them to go somewhere where they will need to start over. If they do decide to leave it will be for more money elsewhere. However, they will require that they can write their own ticket, or else they will not leave.

It is crucial to understand why salespeople are leaving and what the internal chatter is around why they are leaving. Is it because of culture, compensation, recognition, tools, support, management, or something else entirely? Sometimes all it takes to stir up churn is just uncertainty. For instance, if sales compensation plans change too frequently, sales reps may worry that the company is unstable and begin to look elsewhere. Similarly, if a key product launch fails, salespeople may worry about the company’s future is in jeopardy and start looking for a new job.

Creating a Winning Compensation Plan

A sales compensation plan must reward and recognize each sales personality type to be successful. That fact has not changed. However, the types of compensation components being utilized has changed.


Before COVID contests were frequently used to reward salespeople with things like valuable trips and exclusive experiences. Sales incentive travel programs have changed significantly since travel restrictions were imposed and people’s perceptions around traveling changed. These days companies are taking creative steps such as:

  • Offering nearby getaways and admission to local attractions
  • Allowing salespeople to bring their families on reward trips
  • Cashing out winners for the value of the trip if they cannot or do not want to travel
  • Opting for luxury online shopping experiences instead


In an age where many organizations are still not back in the office full-time, recognizing employees is more challenging. However, it is just as important as ever. Employers are now doing more offsite recognition-focused functions, such as team dinners at restaurants and awards banquets. And while employees are still largely resistant to coming back into the office, these types of functions typically have high engagement.


Cash bonuses are just as sought after as ever before, making them the most widely used form of performance-related compensation on sales teams. However, hiring bonuses are becoming more common than ever before.

Tools and technology are being used transactionally to reward performance, even among remote workers. Things like office chairs, standing desks, premium headsets, and smart watches are being gifted as sales incentives. As such, this is one area where an increased retention strategy and a revenue-maximizing strategy work together wonderfully because recognizing salespeople in this way also increases their performance.


Technology can also be used in a non-transactional way to support salespeople, increasing job satisfaction, and improving business outcomes. The right use of AI, predictive algorithms, and omni-channel conversion tracking to source better opportunities for your sales team is key. Providing them with better leads means more deals closed, which increases both their earnings and the company’s bottom line.

Mitigating Risk

It is important to remember that structuring your sales compensation plan around the goal of employee retention is not a risk-free tactic. To be effective it requires a firm understanding your customer journey so that you can reward the behavior you want to see. Otherwise, you may end up giving away money at the wrong points of the sales cycle or giving away too much money for the value of the sale.

For more detailed information on compensation plans, download a free whitepaper here: Sale Compensation Plans – Examples, Templates & Software Options

If you want more information on how to strengthen your sales strategy in today’s tight labor market, please reach out to me. I would be happy to discuss your organization’s needs and put together a plan to help you achieve your business goals!

Topics: Sales Strategy