Key Performance Indicators in Sales Incentive Plans

A key performance indicator or a KPI can be defined as a reliable measure of performance for a role. A performance indicator in any field tells us about the progress achieved to reach any company’s business goal and is often shortened to KPI. Ensuring that your employees’ hard work towards achieving KPI targets is being appreciated can be achieved through well thought out incentive plans. This will drive them to put their best effort into work and achieve goals that align with the company’s motives. Incentive plans are a guiding force for sales representatives that motivates them and builds an encouraging, friendly, and supportive environment where they can professionally grow. Incentive programs are intended to help companies build profitability and revenue season after season. Measuring performance in an incentive plan is dependent on predetermined key performance indicators. They play an essential role in an incentive program since they keep track of the success achieved through the Incentive plan. . Every program contains KPIs that track participation, success, and total sales profitability and growth.

Leading KPIs

Now that it is established that KPIs play an essential role in making an Incentive plan, let us see some of the leading Key performance indicators in incentive plans:

1. Sales Growth

The main aim of every project, every strategy, every idea in the Sales world is to increase Sales. Sales growth thus makes for a very important and effective performance indicator when talking about designing an Incentive plan. This factor comes into play as the Sales growth is calculated through understanding the percentage increase in all purchases made by all clients throughout the purchasing period. This factor is compared to the previous period’s sales outcomes, which is used as a benchmark.

2. Goals Achieved

The percentage of goals/targets achieved makes for a key performance indicator as it simply highlights that your program is successfully rewarding the performance that is being expected of the participants. This promotes a sense of encouragement and boosts the morale of employees. Their hard work and dedication should continuously be rewarded.

An Incentive program can be customized in multiple ways. It can motivate participants to redeem points earned and unlock non-monetary rewards such as travel prizes, shopping discounts, a paid off-day, permanent parking spot, etc. This will motivate the workforce to put all efforts and work towards earning those points. In other plans, the achievement against a target is used to determine attainment against on-target earnings against a curve or scale popularly known as the payout curve. Organizations put a great deal of thought into payout curves since that’s a key factor that contributes to the excitement in an incentive program.

3. Conversion Rate

It comes as no surprise that not all the people you sent an invitation to will respond or not every cold call you make will convert. Even if they do respond, they do not need to enroll in your program/scheme or buy your product/service. This difference between the number of people whom you sent an invite to or the number of cold calls you performed for the program versus the number of people who went through it, by showing up, actively participating or purchasing can also serve as a major KPI in designing a Sales Incentive plan. The greater this number is, the better. To obtain better sales growth, you would be required to improve your conversion rates across the organization. Hence it’s a KPI that’s worth rewarding your sales reps for. Most call centre managers for example consider call volume to be valuable and prefer to allocate a larger number of calls to those who have better conversion rates. Hence tracking, incentivizing and actively working towards improving conversion rates are critical.

4. Productivity of Sales Reps

Another aspect of improved sales growth for a company is the productivity of sales reps. A sales rep who knocks on more doors gets more conversations and hence gets more proposals out the door and hence gets more conversions. Thus a key KPI to track in sales incentive plans is the productivity of sales reps. This may be through the number of calls made, the number of proposals submitted, the number of tenders bid for, etc. Especially for a more inexperienced salesforce adding KPIs on productivity ensures sales rep discipline improving sales performance.

5. Engagement

A very important indicator that can help forecast the chances of success or the outcome of a project in its early execution stages is Engagement. It is measured by various factors such as the open rate for emails, engagement rates of cold calls, marketing campaign click-through rates or impressions, the number of times a client visits the company’s website, etc. It can give the company an idea of whether their reps will accomplish or exceed their goals during the bonus term. Such KPIs can improve employees’ effectiveness in such campaigns and programs so that they try to push the engagement rates in order to gain higher incentives.


There goes a lot behind designing and implementing an Incentive Plan. Some of the key performance indicators are mentioned in this blog which may ease the process for you and result in better and more effective incentive plans.

About Author

Sumeet Shah

Chief Growth Officer @Incentivate, has over 15 years of experience in management consulting, product engineering, and analytics, working with clients across multiple countries, functions, and domains.