Latest / Sales Leadership with Fexingo: Quota Carriers, Sales Managers, and Revenue Teams / How Sales Teams Fix Broken Incentive Structures
Transcript
- Lucas: We need to talk about the moment a top performer stops trying. Not because they’ve burned out, or left, or even missed quota. But because the math stopped making sense for them relative to the company’s actual strategic needs. It happens quietly. One quarter, everything looks fine. Attainment is high. Pipeline is full. Then suddenly, your star rep is spending forty percent of their time on low-margin deals that don’t stick, just to hit a number that no longer rewards effort. Luna: Right, and the leader watches this happen with total confusion because the dashboard says the rep is hitting one hundred and twenty percent of plan. So why are they disengaged? Lucas: Because the incentive structure is misaligned with the business reality. Let’s take a look at a common pattern in SaaS sales today. You have a comp plan that pays heavily on new logo acquisition. That’s great for year one. But by September of 2026, if your renewal rate drops below eighty-five percent, those new logos are bleeding cash faster than they’re bringing it in. The rep knows this. They see the churn risk. But the commission check only cares about the signed contract. So they sell the deal that closes fastest, not the deal that lasts longest. Luna: That creates a ghost pipeline. Looks healthy on paper, hollow in practice. Have you seen companies try to fix this by simply lowering the quota instead of changing the payout logic? Lucas: All the time. And it never works. Lowering the quota just makes the target easier to hit, which means more people get paid, but you still get the same bad behavior. The rep still chases the easiest close. The real fix is usually much uglier in the short term. You have to introduce clawbacks or deferred commissions tied to net revenue retention. That scares leaders because it feels like punishment. But it’s actually alignment. You’re telling the rep, I want you to care about what happens after the signature. Luna: But doesn’t that kill momentum? If I tell a rep they might lose money later, do they even bother chasing the deal now? Lucas: It kills bad momentum. It filters out the hunters who treat every account like a transaction. What you gain is the farmers who build relationships. And honestly, in this market, the farmers are worth more. Look at the broader economic environment right now. Companies aren’t buying more seats; they’re optimizing what they have. Your sales team needs to reflect that shift. If your comp plan is still built for 2019 expansionary growth, you’re going to get 2019 results in a 2026 economy. Luna: So we’re talking about restructuring the entire payout curve, not just tweaking the accelerator threshold? Lucas: Exactly. Most leaders tweak the accelerator. They say, okay, if you hit one hundred and ten percent of quota, you get double commission on the next dollar. That’s a carrot. But it doesn’t address the stick. The real leverage is in the base commission rate for renewals versus new business. If you make renewal retention equally lucrative as new logo acquisition, the rep’s daily behavior shifts instantly. They start checking in with customers before the contract expires. They start upselling features that solve actual problems, not just adding seats to pad the initial deal size. Luna: That sounds like a lot of operational overhead to track. How do you even measure that fairly without creating disputes? Lucas: You use the same CRM data you already have. Net revenue retention is a standard metric. If a customer churns, cancels, or downgrades within twelve months, that’s a negative event in the system. The comp plan just needs to link that event to the original seller’s commission. It’s transparent. It’s automated. The dispute comes when leaders try to hide behind subjective evaluations. If the code says the commission is withheld because of churn, there’s no arguing with the database. The friction is upfront, but the clarity is permanent. Luna: I’m curious about the mid-tier rep though. The ones who aren’t stars, but aren’t bottom performers either. Where do they fall in this model? Lucas: This is where most plans break. Mid-tier reps are often caught between two worlds. They aren’t elite enough to negotiate custom terms, so they rely on volume. If you remove the easy volume plays by tightening quality standards, they feel crushed. The solution isn’t to protect them from hard choices; it’s to give them a clearer path. Maybe you create a separate tier for service-heavy accounts. Or you offer a smaller, immediate bonus for successful onboarding completion. You need to reward the behaviors that lead to long-term success, even if the big commission check takes longer. Luna: So you’re essentially asking leaders to redefine what a win looks like for different types of reps. Lucas: Precisely. A win isn’t just a closed deal. A win is a retained, expanding account. If your definition of winning hasn’t changed since last year, your reps will keep playing the old game. And they’ll beat the game perfectly, while your business loses. Luna: That’s a sharp distinction. Playing the game perfectly while losing. How do you communicate that shift to a team that’s already stressed? Lucas: You don’t frame it as a penalty. You frame it as a correction. Say this: we used to pay for speed. Now we pay for stability. The market has changed, and our income security depends on building a foundation that lasts. When you tie the conversation to job security and sustainable income, it resonates. Reps are tired of the churn and burn cycle too. They want to know that the customer they sold to today will still be paying tomorrow. Give them that certainty, and you’ll see engagement rise. Luna: It’s interesting that you mention income security. That feels like a rare honest moment in sales conversations. Lucas: It is. Because usually, sales talks about hunger and aggression. Those are temporary fuels. Security is a lasting one. If you can align your comp plan with the desire for predictable, long-term earnings, you change the entire dynamic of the floor. Luna: Before we go deeper into the mechanics of this, I want to pause for a second. If these conversations have moved your work forward in some small way, consider supporting the show directly. Listener support is what keeps Fexingo ad-free and allows us to dig into these structural details without sponsor pressure. You can find us at buy me a coffee dot com slash fexingo. It helps us keep the lights on and the research sharp. Lucas: Yeah, and it lets us focus on the stuff that matters, like fixing broken incentive models, rather than chasing clicks. Thanks for keeping this independent. Luna: Absolutely. It makes a difference. Now, back to the mid-tier challenge. You mentioned giving them a clearer path. What does that look like in a weekly rhythm? Lucas: It starts with the forecast call. If your manager is only asking about deal size and close date, the rep is only thinking about those things. Change the question. Ask about implementation readiness. Ask about stakeholder alignment. When you force the rep to articulate the post-sale journey during the pre-sale phase, you’re embedding retention into the sale itself. It becomes a habit, not an afterthought. Luna: So the management style drives the comp effectiveness. You can’t just drop a new spreadsheet on the team and expect behavior change. Lucas: Correct. The comp plan is the law. The manager is the judge. If the judge ignores the law, the law doesn’t exist. Leaders have to actively coach against the old behaviors. If a rep brings in a deal that’s profitable but risky, the manager should push back. Not to block the deal, but to highlight the risk. Make the trade-off explicit. That coaching moment is where the culture shifts. Luna: That requires managers who are comfortable having difficult conversations about potential failures before they happen. Lucas: It does. And many aren’t. They’d rather celebrate the close and worry about the churn later. But that’s a recipe for disaster. You need managers who view themselves as portfolio managers. They’re managing a book of risks and rewards. Their job is to balance the mix. If the book is too heavy on risky deals, they intervene. That intervention protects the rep’s future commissions and the company’s future revenue. Luna: So we’re really talking about elevating the role of the sales manager from scorer to strategist. Lucas: Yes. And that’s a hard lift. Most managers were top reps themselves. They know how to sell. They don’t necessarily know how to manage a complex incentive ecosystem. That’s a training gap. We need more investment in sales leadership development, not just sales skill development. Teaching managers how to read a comp plan and coach around it is critical. Luna: If you were advising a VP of Sales today, looking at their team’s numbers, what’s the first thing they should audit? Lucas: The correlation between new logo growth and net revenue retention. Plot them on a chart. If one is going up and the other is flat or down, you have a leak. Find out exactly where the money is leaving. Is it product fit? Is it pricing? Is it service? Then look at who is selling those bad deals. Are they all junior reps? Or are your seniors doing it too? If your seniors are selling bad deals and getting paid well for it, you have a cultural rot. That’s the priority fix. Luna: Cultural rot masked by good commission checks. That’s a terrifying realization for any leader. Lucas: It is. But it’s fixable. Once you identify the rot, you adjust the incentives. You slow down the payout for risky deals. You accelerate it for safe, sticky ones. It sends a signal. The market responds to signals. Your team will adjust. It won’t be instant. But within two quarters, you’ll see a different kind of rep stepping up. One who cares about the whole lifecycle. Luna: And that rep becomes the new archetype for the team. Lucas: Exactly. You stop rewarding the cowboy and start promoting the architect. The cowboy gets fired or leaves. The architect stays and builds. That’s how you build a resilient revenue engine. Not by chasing more volume, but by securing more value. Luna: It feels like we’re moving away from the hype of growth at all costs toward something more durable. Lucas: We are. And durability is the new currency. In a tight market, predictability is worth more than potential. If your comp plan reflects that, you’ll attract the right talent. If it doesn’t, you’ll keep burning through good people who realize the game isn’t worth playing. Luna: So the final test is simple. Does your incentive structure make it easier to do the right thing, or harder? Lucas: If it makes the right thing harder, you’re fighting human nature. And you will lose. Align the payout with the outcome you actually want, and the rest follows naturally.