Your Sales Comp Plan May Be Killing Revenue Growth
Sales compensation plans with accelerators that reward performance above quota motivate top performers to keep selling and generate highly profitable incremental revenue. Once a company covers its fixed costs through base quota achievement, additional sales carry substantially higher margins, making it economically sound to pay stronger commissions on above-quota performance.
Summary
Kevin Lawson and Sean O'Shaughnessy discuss how poorly designed compensation plans can inadvertently demotivate top salespeople once they hit quota early in the year, causing them to reduce effort or pursue other opportunities. The core problem is that flat commission structures without accelerators eliminate financial incentives to exceed targets, leading high performers to disengage.
The hosts explain the economics behind compensation accelerators: once a company generates enough revenue to cover fixed costs (salaries, benefits, rent, overhead), all incremental sales above quota carry minimal additional costs. For products with low incremental delivery costs—particularly software and insurance—revenue above quota becomes essentially high-margin "free money" that flows directly to the bottom line. This means companies can afford to pay higher commission rates on above-quota sales while still increasing profitability.
The conversation emphasizes that compensation plans should be designed to incentivize specific business outcomes the company needs most. For example, if a company relies heavily on recurring revenue from existing customers, the comp plan should create bonuses for net new logos or incremental growth rather than just total revenue. This prevents salespeople from defaulting to easier existing customer sales and ignoring growth opportunities.
The hosts challenge the misconception that salespeople can be "paid too much" on variable compensation. They argue this concern typically misplaces itself on base pay rather than commissions. They also reference three recent research papers demonstrating that flat commission structures actively encourage top performers to stop selling, that removing accelerators causes measurable revenue drops, and that accelerators work through both financial incentives and human psychology.
The episode concludes by positioning better compensation plan design as part of broader business systems alignment—connecting comp plans to sales playbooks, marketing, and company goals—which ultimately increases business valuation and operational efficiency.
About this episode
<p dir="ltr">What happens when your best salesperson hits quota in October? A poorly designed compensation plan may quietly tell them to slow down. In this episode of Two Tall Guys Talking Sales, Kevin Lawson and Sean O'Shaughnessey examine why sales compensation accelerators can be one of the most profitable tools available to a sales leader. They break down the economics behind above-quota sales, explain why fixed costs make incremental revenue especially valuable, and challenge the common fear that high-performing salespeople can somehow be "paid too much." For CEOs, CFOs, sales managers, and any VP of Sales preparing next year's compensation plan, this conversation connects sales management, revenue management, sales motivation, and business valuation in a very practical way.</p> <h2 dir="ltr">Key Topics Discussed</h2> <p dir="ltr">Why Sales Compensation Plans Need Accelerators — 00:49<br /> Sean opens the discussion with a simple problem: once a salesperson reaches quota, what reason have you given them to keep selling? A flat commission structure can unintentionally create a ceiling. Properly designed accelerators reverse that incentive, giving salespeople a financial reason to keep pushing beyond 100% rather than protecting deals for the next compensation period.</p> <p dir="ltr">Incentivize the Outcomes the Business Actually Needs — 03:08<br /> Kevin argues that compensation should do more than reward revenue. It should reinforce the sales strategies that matter to the business. If existing customers will continue buying with relatively little selling effort, paying disproportionately for those transactions may not produce the growth the company needs. Sales processes and compensation design can deliberately incorporate net-new logos, incremental growth, renewals, or other strategic outcomes.</p> <p dir="ltr">Why Above-Quota Revenue Can Be Exceptionally Profitable — 05:24<br /> Sean explains the financial logic behind accelerators. By the time the company reaches its planned revenue target, much of its fixed-cost structure—base salaries, benefits, rent, and other operating expenses—has already been covered. In businesses with low incremental delivery costs, additional revenue can therefore carry significantly higher margins. Paying a salesperson a higher commission rate on that additional business can still generate substantially more profit for the company.</p> <p dir="ltr">Using Compensation Tiers to Drive Sales Success — 07:08<br /> Salespeople tend to be competitive and goal-oriented. Sean describes how graduated accelerators at levels such as 80%, 100%, 120%, and even 140% of quota give sellers another target to pursue. Instead of compensation becoming static once quota has been achieved, the plan creates another scoreboard. That makes the compensation plan part of the company's broader Sales Enablement system, not merely an accounting mechanism.</p> <p dir="ltr">Stop Worrying That Top Salespeople Are Making "Too Much" — 08:27<br /> Kevin challenges one of the most persistent assumptions in sales management: that a high commission check means the company is overpaying the salesperson. If the compensation structure is properly modeled, exceptional variable compensation should indicate exceptional company performance. The more important questions are whether the seller is generating profitable revenue, whether the plan rewards the right behaviors, and whether the economics work for the business.</p> <p dir="ltr">Better Sales Systems Can Increase Enterprise Value — 10:14<br /> Compensation design does not exist in isolation. Kevin connects the comp plan to the sales playbook, marketing, company objectives, customer acquisition costs, customer lifetime value, and the larger operating model. A more intentional and predictable selling system can create a more efficient company—and potentially a more valuable one.</p> <h2 dir="ltr">Key Quotes</h2> <p dir="ltr">Kevin Lawson — 03:08</p> <p dir="ltr">"Incentivize the outcomes you want."</p> <p dir="ltr">That may be the episode's central principle. Compensation is not simply how a company divides up the money after a sale. It is a management system that tells sellers which results matter most.</p> <p dir="ltr">Sean O'Shaughnessey — 07:08</p> <p dir="ltr">"You can actually afford to pay more money on your variable compensation…because it's going straight to your bottom line."</p> <p dir="ltr">Sean's point reframes accelerators as an investment in profitable incremental revenue rather than simply an additional sales expense.</p> <p dir="ltr">Kevin Lawson — 04:43</p> <p dir="ltr">"If there's no additional trophy case winnings for going over quota, they'll stop."</p> <p dir="ltr">The language is colorful, but the management lesson is serious: once the economic incentive disappears, leaders should not be surprised when discretionary selling effort disappears with it.</p> <p dir="ltr">Sean O'Shaughnessey — 07:30</p> <p dir="ltr">"They want to achieve the next goal. They want to make the next score."</p> <p dir="ltr">An effective compensation plan gives high performers somewhere else to go after they reach quota.</p> <h2 dir="ltr">Additional Resources</h2> <p dir="ltr">Sean references several pieces of research supporting the use of sales accelerators and the risks associated with flat commission structures:</p> <ul> <li dir="ltr"> <p dir="ltr">Do Bonuses Enhance Sales Productivity? A Dynamic Structural Analysis of Bonus-Based Compensation Plans - <a href="https://pubsonline.informs.org/doi/10.1287/mksc.2013.0815">https://pubsonline.informs.org/doi/10.1287/mksc.2013.0815</a></p> </li> <li dir="ltr"> <p dir="ltr">Kinks as Goals: Accelerating Commissions and the Performance of Sales Teams - <a href="https://ideas.repec.org/a/inm/ormnsc/v71y2025i6p4622-4642.html">https://ideas.repec.org/a/inm/ormnsc/v71y2025i6p4622-4642.html</a></p> </li> <li dir="ltr"> <p dir="ltr">Motivating Salespeople: What Really Works - https://store.hbr.org/product/motivating-salespeople-what-really-works/R1207D</p> </li> </ul> <p dir="ltr">Sean also invites listeners who are working through compensation plans, revenue generation challenges, and related B2B sales management questions to continue the discussion in the B2B Sales Lab at b2b-sales-lab.com.</p> <h2 dir="ltr">A Significant Actionable Item from this Podcast</h2> <p dir="ltr">Before finalizing your next sales compensation plan, examine what happens economically and behaviorally when an AE reaches 100% of quota.</p> <p dir="ltr">Do not stop at asking whether the commission percentage seems reasonable. Model what happens to company gross profit on the next dollar of revenue after the planned fixed costs have already been covered. Then ask what behavior your existing plan encourages at 100%, 120%, and 140% attainment.</p> <p dir="ltr">If the salesperson receives essentially the same economic reward for the next deal after reaching quota—or worse, has a reason to push that deal into the following year—you have built a sales management problem into the compensation plan.</p> <p dir="ltr">Consider creating meaningful acceleration tiers above quota and tying selected incentives to the outcomes the company actually needs: net-new logos, incremental revenue, profitable growth, renewals, or another strategically important result. Compensation should align the salesperson's preferred behavior with the company's preferred outcome.</p> <h2 dir="ltr">Summary</h2> <p dir="ltr">Sales compensation is not simply an HR exercise or a spreadsheet owned by finance. It is one of the most direct ways a company communicates its priorities to the sales organization. In this episode, Kevin and Sean explain why well-designed accelerators can improve Sales success while simultaneously increasing profitability, strengthening sales culture, and encouraging top performers to keep producing after quota has been reached.</p> <p dir="ltr">They also dismantle the assumption that a large commission check is inherently bad for the company. When the economics are designed correctly, the opposite should be true: the salesperson makes substantially more money because the business is making substantially more money.</p> <p dir="ltr">If you are a CEO, CFO, sales manager, or VP of Sales responsible for B2B revenue generation, this episode offers a valuable framework for evaluating your next compensation plan. And if you are an AE wondering why your incentive plan seems to run out of ambition the moment you hit quota, you may want to send this episode to your boss.</p> <p><strong id="docs-internal-guid-4bd7f80a-7fff-130e-8cbd-42308e7d2e51"><br /> <br /></strong></p>
Key Insights
- Once a company achieves quota and covers all fixed operating costs (salaries, rent, utilities, overhead), incremental sales above quota carry substantially higher profit margins because fixed costs don't increase with additional units sold.
- Top-performing salespeople are coin-operated and highly competitive; without accelerators rewarding above-quota performance, they become demotivated and may seek compensation opportunities elsewhere or deliberately reduce effort.
- Compensation plans should target specific business outcomes (such as net new customer logos or incremental growth) rather than just total revenue, because salespeople will focus their effort on whatever the comp plan incentivizes.
- The belief that salespeople can be 'paid too much' is often misplaced; concerns about overpaying should focus on base salary structure rather than variable commission, where higher payouts for exceeding quota still improve company profitability.
- Research demonstrates that flat commission structures (without accelerators) quantifiably decrease total company revenue, while above-quota accelerators leverage human psychology and financial incentives to drive continued selling effort from high performers.
Topics
Transcript
What happens when your best salesperson hits quota early and suddenly has no reason to keep pushing? In this episode of Two Tall Guys Talking Sales, Kevin Lawson and Sean O'Shaughnessy explain how sales compensation accelerators can motivate top performers to keep selling while generating some of the most profitable revenue a company can produce. You'll hear why paying a salesperson more above quota can actually improve the company's bottom line, and how compensation plans should be designed to reward the specific outcomes the business needs most. If you are responsible for sales management, revenue growth, or building next year's compensation plan, this is a conversation you'll want to hear before you finalize the numbers. Welcome back to Two Tall…
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