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5 important factors to consider when evaluating your sales incentive models
This fall, we brought together all the VPs of Sales from the Viking Venture portfolio to discuss the pros and cons of different sales incentive models and the key rationale behind the models.
For Business-to-Business (B2B) SaaS companies, aligning sales and customer success efforts with long-term business goals is critical for driving organic growth. In today’s challenging market conditions, ensuring that your incentive models promote the behavior you need to reach your goals is more important than ever. In this short article, we share key insights from the workshop to help you refine your incentive strategies for sales and customer success teams in 2025.
Written by: Eivind Moseng, Investment Associate at Viking Venture (Header Image)
1. Regular adjustments keep incentive models effective
Firstly, suppose you want to use your incentive model as a tool to promote behavioral changes to achieve your business goals. In that case, it is necessary to ensure that employees are used to regular changes. Aim to establish a culture where adjustments to incentive models are seen as normal and not inherently negative. To foster this mindset, keep the changes small to minimize friction and use them as an opportunity to observe and understand the behaviors they drive.
2. Align incentive models with business goals
Today, many of our companies are adjusting their incentive models to align sales behavior with company goals. For example, to achieve this alignment, you offer higher incentives for annual contracts with upfront payment rather than monthly paid contracts, which is valuable for companies to fund their growth. Additionally, various Annual Recurring Revenue (ARR) bonus schemes are employed to strike the optimal balance between focusing on new sales and upselling, and collaboration across customer success, sales, and marketing during the sales cycle. The key lies in finding the ARR bonus level that scores a healthy balance between the different sales activities and company objectives.
3. Use balanced based salaries in incentive models
Avoid the trap of offering sellers a high base salary. Instead, motivate them with a balanced approach: a fair base salary complemented by a performance-driven incentive system. A high base salary can diminish the drive to pursue new sales, which is often better fueled by ARR-based incentive models. It is, however, important to keep a fair base salary to give employees a sense of security during tougher sales periods.
It is also important to recognize that sellers are more motivated by financial incentives than customer success employees, necessitating different approaches to bonuses and fixed salaries between departments. Across our portfolio, we have found that customer success teams typically have higher base salaries than sales teams, reflecting their distinct roles and motivations.
4. Align quota periods to match the sales cycle
The bonus model and sales quota must align with the sales cycle to prevent opportunistic behavior, such as delaying deals to fulfill quotas in a future period or rushing deals prematurely to meet current targets. By aligning quota measurement periods with the sales cycle duration, you can encourage consistent performance and ensure that individual and company goals are met effectively.
5. Address incentive models challenge during M&A integration
Mergers and acquisitions often introduce a more complex salary structure. This structure creates challenges when establishing a unified incentive scheme across acquired companies and geographies, both in terms of actual salary and culture. Developing a plan to address these differences during the due diligence phase is crucial for ensuring a smooth transition.
Additionally, there are three common timings for bonus payouts
The timing of bonus payouts can influence the development of the deal cycle, the types of customers signed, and the sellers’ motivation. Here are the three most common payout timings seen in our portfolio, along with the pros and cons of each:
| Sales bonus paid at contract signing | Sales bonus paid at contract start | Sales bonus paid at first payment | |
| Pros | Immediately visible for salespeople, which is highly motivating Easy for finance functions | Reduces risk for the company and has a liquidity effect Motivates salespeople to get customers starting | “Cash in, cash out”, most robust in terms of liquidity Motivates salespeople to target ICP and shorten the time until revenue realization |
| Cons | Company is acting as a “bank” Can result in signing non-Ideal Customer Profile customers with low lifetime value Risk of “Claw back” if customers do not pay | More demanding for finance functions as they need to link bonus payout with customer activation Risk of “Claw back” if customers do not pay | Demanding for finance functions as they need to link bonus payout with invoicing Potentially long time from sale happens until sellers gets paid, which can be unmotivating |
Conclusion: Improve your incentive models for success in 2025
Year-end is an excellent time to reflect on and adjust your company’s incentive models. By aligning your strategies with your 2025 goals, you can drive better outcomes for your sales and customer success teams. Use the insights shared here to refine your approach and reach the full potential of your incentive models.