I’ve been looking at sales compensation plans for a long time now, and there’s this thing that keeps showing up. Companies pay their sales teams pretty well, sometimes really well, and the teams still feel flat. Like there’s no energy there.
What usually happens is a rep closes a decent quarter, gets their commission check, and that money just disappears into normal life. It pays the mortgage. Covers groceries. Maybe they buy something nice but three weeks later they can’t remember what it was. And then you’re back in the next quarter wondering why nobody seems particularly motivated to do the work.
I don’t think it’s usually about the actual dollar amount. I’ve worked with teams pulling in $150K who seem checked out, and other teams making $90K who are totally engaged. The money just goes into a bank account and becomes invisible almost immediately. There’s nothing about a direct deposit that creates any kind of story or memory for the person who earned it.
Obviously commission and bonuses matter. You can’t run a sales org without solid cash compensation. But if you’re relying entirely on cash to keep people motivated through these long sales cycles where most of the actual work happens in months two through five and the payout only comes at the end, you’re probably noticing that effort levels drop off pretty hard in between commission periods.
The Research That Changed How I Think About This
A field experiment published in The Accounting Review by Kelly, Presslee and Webb in 2017 put this to the test in a real sales environment. The researchers ran two consecutive sales tournaments at a wholesaler, with one group competing for cash rewards and the other for non-cash tangible rewards like gift cards. In the second tournament, the non-cash group significantly outperformed the cash group. What was particularly interesting was that the effect was driven by the first-round losers, who pushed considerably harder when a non-cash reward was on the line than their counterparts competing for cash.
Supporting research by Choi and Presslee, published in Accounting, Organizations and Society in 2022, ran four experiments with over 320 participants and found consistent results: non-cash hedonic rewards generate greater effort than equivalent cash rewards, because people mentally categorise them differently from salary. When you earn cash, your brain files it in the same account as your regular pay. When you earn something experiential or tangible, it goes somewhere else entirely.
I think what’s happening is when you’re working purely for cash, your brain just does the transaction math. You’re doing the thing for the money. That’s fine but it doesn’t really stick with you. When you’re working toward something else, there’s this whole different experience around it. You think about it before you get it. There’s usually an actual moment when you receive it. And then you remember it later, sometimes for months. A $3,000 commission check gets absorbed into your life and forgotten pretty quickly.
What’s Actually Working
I’ve seen a few companies handle this in ways that got real results.
Workiva had a problem where their BDRs and AEs were just stuffing their pipeline with junk to hit activity metrics instead of focusing on quality opportunities. They built a SPIFF program where you had your individual target but also this bigger team goal. If you hit your number you got something, but if the whole team hit the collective goal everyone got something bigger on top of that.
Maria Oczko-Canant who runs their sales planning said what worked about it was that it wasn’t just about individual motivation. People started actually talking to each other about pipeline health because everyone had a stake in the team number. The other thing that mattered was the metrics were really clear and easy to track. If you can’t tell whether you’re winning or losing, motivation falls apart fast.
There’s this other example from a company that ran a contest across 450 businesses in their distribution network. The deal was if you hit certain sales targets over six months, you got a trip. Not some conference disguised as a vacation, an actual trip. 14 companies qualified. Those 14 companies grew their average sales by 105% during the contest period. The top performer hit 138% growth.
They sent out a survey after the trip and every single person said it made their relationship with the company stronger. Everyone said they were more motivated to qualify the next year. One person wrote “trips like this bring everyone together” which could sound like generic feedback but apparently it was genuine. The CFO said something like “it’s obvious, the trip pays for itself and we make additional margin on top.”
Those people are probably still talking about that trip. Nobody’s talking about a commission check from eight months ago.
JCB North America did something simpler. They moved from their old cash bonus setup to using structured debit card rewards instead. Cut their program costs by 13%, and more importantly their sales team stayed engaged without the company having to increase anyone’s base pay or commission rates. Sometimes just having better structure matters more than having bigger rewards.
How To Actually Set This Up
Most people get stuck thinking they have to pick one or the other. Like you’re either a company that does cash compensation or you’re one of those places with ping pong tables and bean bags everywhere. You need both things. They just serve different purposes.
Your cash compensation has to be connected to closed revenue. Margin, deal quality, whatever the important metrics are for your business model. This is the foundation. If your commission structure doesn’t work, you can’t paper over it with gift cards and trips.
Where non-cash rewards actually make sense is for all the stuff that happens before deals close. Good discovery calls. Keeping your CRM updated so your forecast isn’t complete fiction. Following up consistently. Actually learning new skills instead of winging every demo. These behaviors lead to revenue but they happen weeks or months before any money changes hands.
Non-cash rewards work well here because they don’t mess up your commission math and they don’t create this weird dynamic where people start expecting money for everything. You can give someone a $100 gift card for doing five really solid discovery calls this week without them thinking they’re going to get $100 every single week forever.
The timing piece matters more than most people realize. Doing one big reward at the end of the year sounds impressive but it doesn’t do much for someone’s motivation on a random Tuesday in March when everything feels slow. Smaller, more frequent stuff keeps energy up. Here’s roughly what seems to work based on what I’ve seen:
Every week, call out specific good work in your team meeting or in Slack or however you communicate. Sometimes that’s just public recognition. Sometimes it’s a small gift card or something. Doesn’t have to be expensive.
Every month, this is when you’re doing your normal commission and performance bonus payouts.
Every quarter, if someone blows past their quota you can hit them with accelerators or bigger rewards. This is where you’ve got more room to do creative non-cash stuff that costs more.
Once or twice a year, do something actually memorable. President’s Club trips. Exclusive dinner with executives. Something people will remember and talk about later.
That rhythm keeps people relatively engaged instead of having these huge spikes where everyone’s fired up for two weeks and then completely flat for three months.
Stop Assuming You Know What Everyone Wants
Using the same fixed reward for everyone is lazy. You’re assuming you know what motivates every person on your team. You don’t.
I’ve seen reps who would rather have an extra week of PTO than $5,000 in cash. I’ve seen reps who just want budget to go to a specific industry conference. Some people want new tech gear. Some people want to donate their reward to a charity they care about. Some people mostly just want public recognition from the CEO or company leadership.
The programs that work best give people some structured options. Not complete chaos where anyone can pick whatever they want, but a curated set of choices that still fit within your budget and company values.
Both the Workiva SPIFF and that customer contest I mentioned had this built in. Winners got different reward tiers based on their performance level, and within each tier they could choose what actually mattered to them personally.
This does a couple things. The perceived value of the reward goes up for people without your actual costs going up. And you avoid the really bad situation where someone “wins” something they didn’t want. I’ve literally seen companies give trips to people who hate traveling. That’s worse than not giving them anything.
What This Means If You’re Running Sales
If your team gets paid pretty well but seems disengaged, you’re probably not being cheap. The money itself is likely fine. How you’re structuring and delivering that money might be the actual problem.
I see this all the time with founders and sales leaders. They think motivation is just about dollars. Pay more, get more effort. That works up to a point and then you’re just spending more money without getting better performance.
The teams that do well consistently aren’t always the ones getting paid the most. They’re usually the ones where the compensation design actually matches how people stay motivated over longer periods of time. Cash gets people to show up and do the baseline requirements of their job. Recognition and experiences are what keep them actually pushing when things get difficult in the middle of a quarter and there’s no commission check anywhere on the horizon for another six or eight weeks.
Worth mentioning that Aberdeen Strategy & Research, now a division of Spiceworks Ziff Davis, found that non-cash rewards cost around $0.04 per dollar of performance improvement, while cash rewards cost $0.12 for the same improvement. So you’re getting better results for less money when this is set up correctly. That should matter if you’re trying to run an efficient business and not just throw money at problems.
Most compensation plans only really address one dimension of how motivation works. You can probably fix that without having to completely blow up everything you’re already doing.
