Sales Incentives

The key to building a high-performing sales organization lies in crafting an incentive structure that is simple and clearly tied to measurable outcomes to drive growth while taking into consideration the unique objectives of each role.

A well-designed structure should aim for variable compensation to make up approximately 60% of total earnings, striking the right balance between predictability and performance-based rewards. The variable component should be paid out in the form of quarterly commissions, maintaining a short feedback loop between results and rewards.

In this section we focus on volume-based products however the learnings on commission curve design and target setting are applicable also to traditional SaaS products.

Incentive Building Blocks

A successful incentive system is modular, allowing customization for different roles while maintaining a consistent logic. At its core, the system relies on four components for the final commission calculation.

While the foundational logic behind these components is fixed, their specific design - such as quota levels, payout curves, or KPI requirements - can be adjusted to reflect the unique objectives of each role.

Gross Profit Focus

Using gross profit instead of revenue as the main metric for determining sales commissions ensures that sales incentives are directly tied to the business's profitability, not just top-line growth. Revenue alone can be misleading, as it doesn’t account for the costs of delivering the product. For example, at Revolut, the main costs include payments to suppliers and fees to protect against fraud.

Another example of using a metric other than revenue is focusing on upfront payments. For businesses prioritizing cash flow, commissions can be tied to cash received at the time of the sale, encouraging Account Executives to drive faster cash conversion cycles and reduce payment delays.

Quota-based Multiplier

Every salesperson has quarterly quotas they’re expected to achieve, determining what their immediate contribution should be to the company’s results. These quarterly quotas form the foundation of the incentive structure, ensuring everyone has clear, measurable targets to drive performance and promoting the short-term priorities of the team (e.g. new business generation, upselling etc.).

While quotas can be set over different timeframes, quarterly quotas strike an optimal balance for growing companies. Monthly quotas can feel too short, failing to account for natural fluctuations in deal cycles, while annual quotas risk demotivating teams if they fall significantly behind or surpass targets early in the year.

The quota achievement rate measures how much of an individual’s gross profit quota has been met and is linked directly to the commission rate:

• As the achievement rate increases, so does the commission rate, up to a certain threshold of achievement rate, after which commission rate remains constant
• Commission curves employ a cliff, with a minimum threshold (e.g. New Business AEs get 0% commission until they pass a 50% quota achievement) to disincentivise poor performers and build teams with fewer, but high performers

Commission Pool

The commission pool represents the total potential earnings a salesperson can unlock and can be a fixed or variable amount depending on the role. This pool is often tailored to reward specific strategic objectives and incentivise longer-term goals and quality of revenue (e.g. account retention or incremental product adoption).

For many roles at Revolut, the commission pool is based on the gross profit earned from a salesperson’s accounts over a pre-defined period. The length of this period is critical to shaping sales behaviour. For example, if the commission pool is tied to a very short period, it risks incentivizing "whale hunting," where AEs focus only on landing large accounts with immediate returns rather than nurturing smaller accounts with long-term growth potential. By extending the period - e.g., 6-12 months for roles like New Business AEs - the structure encourages landing high-quality accounts that may start small but generate significant, sustained value over time.

Secondary KPIs

Secondary KPIs are designed to align Account Executive performance with broader business objectives, encouraging balanced growth and efficiency. These KPIs go beyond basic quota attainment to reward outcomes that drive sustainable, long-term success.

Secondary KPIs act as a constraint, ensuring that compensation above 100% of quota attainment is only unlocked if specific strategic objectives are met. This also ensures that sales efforts maximize revenue without compromising on compliance or quality.

Examples of Secondary KPIs include:

• Diversified Account Growth: Requiring AEs to onboard a minimum number of new accounts per quarter to avoid over-reliance on a few large clients
• Efficiency Metrics: Setting thresholds such as a 20% minimum 30-day conversion rate to ensure timely deal closures and a focus on high-quality opportunities

Deep-dive example

Setting the targets

Quotas are set each quarter using a data-driven and collaborative approach to ensure they are both achievable and aligned with business objectives. The process includes the following steps:

1. Historical Performance Analysis: Targets are based on the gross profit generated in the previous quarter plus a 10% increase
2. Simulations and Distributions: Sales enablement runs simulations to model expected performance distributions. These simulations help predict how many AEs will achieve certain levels of target attainment (e.g., 25% exceeding 100% of their target) and ensure the overall target pool is achievable across the organization.
3. Qualitative Adjustments: Leadership considers qualitative factors, such as market conditions and specific opportunities within regions or segments, to refine targets further. This includes consulting with business heads to identify markets that may warrant higher or lower growth expectations.
4. Segment-Specific Adjustments: Different segments (e.g., SMB, Mid-Market, Enterprise) have tailored target-setting methodologies reflecting their sales cycles. For example:
   • SMB Teams: Quotas may be lower due to faster sales cycles and lower average deal sizes
   • Enterprise Teams: Quotas are adjusted for longer sales cycles, with higher incremental targets reflecting large accounts’ potential