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Named a Strong Performer in “The Forrester Wave™: Sales Performance Management Platforms, Q1 2023”

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5 Trends Redefining Incentive Compensation Management

Table of Contents

In today’s unpredictable macroeconomic environment, it’s no longer enough to simply manage incentive compensation. Now, it’s crucial that business leaders determine how to best optimize incentive compensation, using it as a strategic lever that efficiently motivates GTM teams while at the same time keeping sales spend in check.

With this in mind, the CaptivateIQ team identified five key trends that are redefining how high performing organizations today are striking the right incentive compensation balance:

  • Efficiency-led performance strategies replace a growth-at-all-costs mindset: While growth at all costs may have been feasible in rosier times, today — as layoffs and budget cuts have become the reality — effective business leaders are looking more closely under the hood, determining and implementing more sustainable performance strategies by asking themselves: How can we drive revenue more efficiently, without burning out the resources that remain?
  • Compensation plan evaluations & modifications become more frequent: In today’s ever-changing business landscape, regularly reviewing your sales performance and understanding how your compensation strategy contributes is crucial for running a sustainable revenue engine. Compensation plan modifications allow a company to course-correct when the incentives and actions of their sales teams aren’t in line with or effectively driving towards company goals.
  • Finance-GTM alignment makes the CFO an incentive compensation hero: Averaging roughly 40% of total sales costs, variable compensation is the largest sales expense for many businesses. But if the right incentives have been put in place to drive behaviors that benefit the bottom line, it also has the potential to be the expense with the highest ROI. This highlights the delicate balancing act for finance teams as they determine budget allocation and ROI, and the importance of optimizing costs across the organization by cutting unnecessary spend while also betting on the right categories. By working in close partnership with Go-to-Market counterparts to incentive the right behaviors, Finance teams can ensure optimization and effective performance of the compensation strategy.
  • AI and other innovative advancements in ICM help organizations 10X revenue performance: It used to be that when managing commissions, businesses either had to rely on inefficient and error-prone spreadsheets, or clunky legacy solutions that require shelling out resources on costly consultants to implement and manage incredibly rigid and convoluted tools lacking flexibility, customization, and internal ownership. Today, fortunately, more modern ICM solutions are innovating at a rapid pace to automate the most painful manual tasks, motivate reps with more transparency, and offer speed and flexibility in data management and processing to up-level the entire end-to-end process. 
  • Incentive compensation optimization becomes a strategic lever for business success: Today’s most forward-thinking ICM solutions are helping organizations future-proof their revenue operations by turning compensation strategies into a lever for business growth. With the right program in place – including workflow automations, cross-functional visibility, and easily accessible real-time insights – revenue teams are now well-equipped to forecast and drive results.

Download the full report to take a deeper dive into each of these trends – including tips for how to implement each one into your own incentive compensation program – and inform your strategy as you plan your incentive compensation program for 2024.

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