Your company's strategic priority is expanding into mid-market manufacturing. Product marketing built positioning, created industry-specific content, and trained sales on the value proposition. Six months later, manufacturing pipeline hasn't budged.
The problem isn't the strategy or execution. It's the compensation plan. Sales reps earn the same commission rate for a quick $30K SMB deal as a complex $150K manufacturing deal requiring twice the effort. They chase SMB because the economics favor it.
Sales compensation isn't just a finance or sales ops function. It's a strategic lever that either enables or undermines product marketing's priorities. When PMM participates in compensation design, you create incentive structures that reward behaviors aligned with your GTM strategy.
Why PMM Should Influence Compensation Design
Sales reps optimize for what they're paid to do. If your comp plan and your product marketing strategy point in different directions, compensation wins every time.
Segment prioritization through SPIFFs and accelerators. If PMM identifies mid-market as your highest-potential segment, compensation should reward mid-market wins more generously. Without financial incentives, segment strategy remains theoretical.
Product mix management. When launching new products or solutions, standard commission rates don't incentivize reps to learn and sell them. PMM knows which products need adoption acceleration. Compensation can accelerate or throttle product mix.
Deal quality over deal quantity. Comp plans often reward revenue regardless of customer quality. PMM knows which customer types have strong retention and expansion potential versus which churn quickly. Compensation can reward lifetime value, not just initial booking.
Strategic account focus. Landing whale accounts or displacing key competitors might warrant special compensation treatment. PMM identifies which accounts or competitive wins are strategically valuable beyond their dollar value.
Pricing discipline. Heavy discounting to close deals destroys margins and sets bad precedents. PMM's pricing strategy should be reinforced through comp plans that penalize excessive discounting.
Retention and expansion incentives. If your business model depends on expansion revenue, but comp plans only reward new logos, reps neglect existing customers. PMM's customer lifecycle strategy should inform expansion incentives.
PMM Contributions to Compensation Planning
Product marketing shouldn't design compensation plans—that's finance and sales leadership's job. But PMM should provide critical input.
Segment weighting recommendations. Present data on which segments have the best unit economics, retention rates, expansion potential, and strategic value. Recommend commission rate variations that incentivize focus on high-value segments.
Product launch acceleration incentives. For new products needing rapid adoption, propose temporary SPIFFs or accelerators. "For the next six months, new Product X deals pay 1.5x standard commission to drive learning and market traction."
Competitive displacement bonuses. Identify strategically important competitive displacements that warrant additional incentives. "Displacing Competitor A from their installed base is worth $1K bonus per deal because it weakens their market position."
Deal quality criteria. Define what constitutes a high-quality vs. low-quality deal based on ICP fit. Recommend that commission rates vary by quality score, rewarding reps who close ideal customers.
Discount governance input. Provide market intelligence on appropriate discount thresholds. "In mid-market, average discount is 12%. Deals discounted >20% have 40% higher churn rates. Recommend requiring VP approval for >20% discounts and reducing commission by 2% for every 5% over 15% discount."
Multi-year deal incentives. If your strategy favors longer contract terms for predictability, recommend bonuses for multi-year agreements or annual upfront payment.
Expansion revenue compensation. Provide data on expansion attach rates and revenue potential by segment. Recommend expansion commission structures that align with customer lifecycle economics.
Common Compensation Design Mistakes
Uniform commission rates across all segments. If every dollar of revenue pays the same commission regardless of customer fit, margin, or strategic value, you're optimizing for revenue volume, not strategic revenue.
No penalties for poor quality deals. When high-churn customer deals pay the same as sticky customer deals, reps have no incentive to qualify rigorously. Build quality gates into compensation: lower rates for deals with low ICP fit scores.
Rewarding behaviors you want to discourage. If your goal is land-and-expand but you only pay commission on initial deal size, reps will push for bigger initial commitments that might hurt expansion potential.
SPIFFs that conflict with strategy. End-of-quarter SPIFFs that reward any closed deal regardless of quality encourage reps to push marginal prospects across the line, creating support burden and churn.
Ignoring market economics. Setting the same commission rate for $20K deals and $200K deals when the $200K deal requires 5x the effort means reps will always choose volume over deal size.
Compensation complexity. Plans with seventeen different accelerators, product-specific rates, and intricate calculations become impossible to understand. Reps can't optimize for incentives they don't comprehend.
Implementation Approach
PMM doesn't unilaterally change compensation. You provide strategic input to the cross-functional team that owns comp design.
Annual compensation planning participation. Request a seat at annual comp planning discussions, typically led by CRO, CFO, and sales ops. Present 15-20 minutes on strategic priorities and recommended incentive alignments.
Data-backed recommendations. Don't just advocate for what you want. Show economics: "Mid-market customers have 2.3x higher LTV than SMB. Increasing mid-market commission from 10% to 12% would improve rep take-home by $15K annually if they shift focus, and improve company LTV by $200K per rep."
Pilot before full rollout. For material changes, propose piloting with one sales team before company-wide implementation. This tests whether incentives drive desired behaviors without betting the entire comp plan.
Align with sales leadership first. Don't surprise sales leaders with comp recommendations in planning meetings. Socialize ideas in advance, incorporate their feedback, and present jointly when possible.
Monitor behavioral response. After comp changes, track whether behaviors shifted as predicted. Did reps actually focus more on the incentivized segments or products? If not, the incentives may not have been compelling enough or other barriers exist.
Balancing Strategic Priorities
Compensation can't optimize for everything simultaneously. Work with sales and finance leadership to prioritize.
Choose 2-3 strategic levers. Don't try to incentivize ten different behaviors. Pick the most important: perhaps segment focus, new product adoption, and deal quality. Build compensation around those priorities.
Simplicity over perfection. A simple comp plan that reps understand and can optimize for beats a sophisticated plan that accurately reflects every strategic nuance but confuses everyone.
Time-box special incentives. When using SPIFFs to drive specific behaviors—new product adoption, strategic account penetration, competitive displacement—make them temporary. Permanent special compensation stops being special and becomes expected baseline.
Measuring Impact
Compensation changes should demonstrably drive desired behaviors.
Track pipeline mix shifts. If you increased commission rates for mid-market, measure whether mid-market pipeline generation and win rates increased within 1-2 quarters.
Monitor product attach rates. If you added incentives for new product sales, track whether attach rates and rep adoption of the new product increased.
Analyze discount patterns. If you built discount penalties into compensation, confirm that average discount rates declined and deals stayed within target ranges.
Survey rep satisfaction. Compensation changes affect morale. Ensure reps understand the strategic rationale and feel the plan is fair. Resentment about comp changes damages productivity even if the economics work.
Calculate ROI of incentive changes. Did the increased commission cost for strategic segments generate proportionally more valuable revenue? Good incentive design pays for itself through improved customer mix and deal quality.
Getting Started
If PMM currently has zero input to compensation design, start by building the business case.
Analyze current comp plan's strategic alignment. Review your existing plan and identify misalignments: "We say mid-market is our priority, but mid-market and SMB pay identical rates. This creates no incentive for reps to pursue more complex mid-market deals."
Quantify the opportunity. Calculate what would happen if comp changes shifted rep behavior: "If we could shift 30% of rep capacity from SMB to mid-market using compensation incentives, we'd increase average deal size 40% and LTV 2x."
Propose one focused change. Don't try to redesign the entire comp plan. Propose one strategic adjustment for next year's plan: higher rates for strategic segment, SPIFF for new product, or quality-based commission tiers.
Partner with sales ops and finance. Frame recommendations as collaboration, not mandate. "I'd like to discuss how we could align compensation more closely with our mid-market expansion strategy. Can we explore options together?"
Sales compensation is one of the most powerful tools for aligning execution with strategy. When product marketing contributes market intelligence and strategic context to compensation design, you create financial incentives that make strategic behaviors profitable for individual reps. That's when strategy stops being aspirational and becomes operational reality.