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Introduction to Sales Compensation Benchmarking
Paying salespeople well does not automatically create a high-performing sales team. Paying them too little can make recruitment difficult and increase the risk of losing good people. Paying too much without linking reward to the right results can simply increase costs. Sales compensation benchmarking helps businesses understand where their pay, commission and incentive structure sits against the wider market.
The challenge is that a headline salary rarely tells the whole story. Two sales roles with the same basic salary can offer very different earning potential once commission, bonuses, targets, benefits and territory potential are considered. Businesses therefore need to compare the complete package rather than one number.
Effective sales compensation benchmarking gives leaders better information for making those decisions. It can help you recruit stronger candidates, retain good salespeople and create a reward structure that supports the commercial results you actually want.
What Is Sales Compensation Benchmarking?
Sales compensation benchmarking is the process of comparing your sales pay structure with relevant external market data. This normally includes base salary, commission, bonuses, target earnings, benefits and the balance between fixed and variable pay.
The objective is not simply to discover what competitors are paying and copy them. A useful benchmark provides context. It helps you understand whether your package is broadly competitive for the role, market, location and level of responsibility involved.
A salesperson responsible for developing new enterprise accounts has a very different job from someone managing established customers. An account manager, business development manager and sales director may all contribute to revenue, but their influence over results and the risks attached to their roles are different. The same principle applies to specialist roles shaped by wealth management client segmentation, where responsibilities can vary according to the clients being managed.
That means good sales compensation benchmarking needs to compare genuinely similar jobs rather than relying on broad sales salary averages.
Why Does Sales Compensation Benchmarking Matter?
Compensation affects more than payroll. It can influence who applies for a role, who accepts an offer, how long good salespeople stay and what behaviours your team prioritises once they are employed.
A package that has gradually fallen behind the market may make recruitment harder long before management recognises pay as the problem. Strong candidates may decline offers, existing employees may leave and vacancies may take longer to fill.
Harvard Business Review explains how aggregated market data can be used to establish competitive rates of pay.
There is another side to the problem. Paying above the market is not automatically beneficial. A generous package that rewards the wrong activity can increase sales costs without producing better commercial results.
Sales compensation benchmarking should therefore help answer two different questions: are we paying competitively, and are we rewarding the things that matter?
Are You Paying Your Salespeople Enough?
This sounds like a simple question, but it cannot be answered by looking at basic salary alone. Salespeople usually judge an opportunity by the complete earning proposition.
Imagine one company offers a £45,000 basic salary with realistic on-target earnings of £70,000. Another offers £50,000 basic pay but has targets that very few people achieve. The second employer may appear to pay more while providing a less attractive opportunity in practice.
This is why sales compensation benchmarking should examine several elements together: fixed salary, target variable pay, realistic earnings, commission rates, bonus opportunities, accelerators, benefits and the proportion of employees actually achieving target.
You also need to consider what you are asking the salesperson to do. A complex B2B role involving long buying cycles, senior decision-makers and significant account responsibility may require a different package from a high-volume transactional role.
For businesses investing in Sales training London, compensation and capability should also be considered together. Increasing pay will not solve unclear messaging, poor sales conversations or weak management.
What Should You Compare When Benchmarking Sales Compensation?
A single salary figure gives you very limited information. Effective sales compensation benchmarking looks at the different components that determine what a salesperson can realistically earn.
Start with base salary. Compare equivalent roles at a similar level of seniority, in similar sectors and geographical markets. A national average may be of limited value if you are recruiting for a specialist position in a highly competitive market.
Next, examine variable compensation. How much can somebody earn at target? What happens when they exceed target? Is commission capped? Are there accelerators for exceptional performance? Is there a minimum threshold before commission starts?
Then look at the measures behind those payments. Some businesses reward revenue. Others use gross profit, new customers, recurring revenue, account growth or a combination of measures. The appropriate approach depends on what the business needs the salesperson to influence.
Benefits also matter. Development can form part of that wider proposition too, particularly where ongoing financial adviser CPD supports professional requirements and career progression. Pension contributions, car allowances, private healthcare, additional holiday and flexible working arrangements can all affect the perceived value of the overall package.
Finally, compare actual earnings with advertised earning potential. If on-target earnings look attractive but only a small proportion of the team ever reaches target, the headline figure may give a misleading picture.
This is particularly important when developing people through Sales training courses London. Salespeople need both the capability and a realistic opportunity to achieve the performance expected of them.
Should You Benchmark Base Salary Or On-Target Earnings?
Ideally, both. Looking at either figure in isolation can produce the wrong conclusion.
Base salary tells you how much guaranteed income you are offering. On-target earnings show what someone should earn when delivering the level of performance expected from the role.
The balance between those figures matters as well. A role with a high basic salary and relatively small bonus places less income at risk. Another position may offer lower guaranteed pay but considerably greater upside for strong performance.
Neither model is automatically right or wrong. The appropriate balance depends partly on how much influence the salesperson has over the final result.
If a salesperson controls most of the sales process and can directly influence revenue, a larger variable element may make sense. If success depends heavily on marketing, technical teams, long implementation processes or wider account relationships, placing too much compensation at risk can create frustration.
Sales compensation benchmarking becomes more useful when businesses compare pay mix as well as total earnings. That gives you a clearer picture of how much risk and reward competing employers are placing on their salespeople.
How Can Sales Compensation Benchmarking Improve Recruitment?
A strong candidate is unlikely to assess your vacancy in isolation. They may be comparing your opportunity with several other roles and, if already employed, with the package they would have to leave behind.
If your compensation is noticeably below comparable opportunities, you may lose good candidates before you have the chance to demonstrate everything else the business can offer.
The opposite problem can happen too. Increasing salaries every time recruitment becomes difficult can create internal pay inconsistencies and unnecessary costs.
Sales compensation benchmarking gives hiring managers a stronger starting point. This is particularly relevant to financial adviser recruitment, where firms compete for people with the right technical, client and commercial skills. Instead of choosing a salary based on the previous employee, an old job advert or instinct, you can make a more informed decision about what the market currently expects.
That does not mean compensation becomes the only recruitment tool. Good candidates may also consider management quality, development opportunities, company culture, product strength, flexibility and career progression.
A capable Sales trainer London can help develop the people you recruit, but development starts with attracting people who have the potential to perform in the role.
Can The Wrong Sales Compensation Plan Encourage The Wrong Behaviour?
Yes. People naturally pay attention to the activities and outcomes that affect how they are rewarded.
If a compensation plan heavily rewards revenue regardless of margin, salespeople may become more willing to discount. If new business receives all the attention, existing accounts may be neglected. If individual performance is rewarded without recognising collaboration, people may become reluctant to share opportunities or support colleagues.
This is why sales compensation benchmarking should not become a simple exercise in matching percentages and commission rates.
You first need to decide what successful selling looks like inside your business. Only then can you determine whether the compensation structure supports it.
For example, a business focused on profitable growth may want incentives linked to margin as well as revenue. A subscription business may care about recurring revenue and retention. An account-led business may want to recognise growth within existing customers as well as new logos.
The principle is straightforward: compensation sends a message. Across sectors, incentives should reinforce useful customer-facing behaviours, including the skills behind effective travel agent sales conversations. Make sure the message matches your commercial strategy.
This connection is particularly important when designing Corporate sales training London. Training people to sell on value while financially rewarding heavy discounting creates two conflicting instructions.
Why Do Sales Compensation Benchmarks Need To Match The Role?
One of the biggest benchmarking mistakes is comparing job titles instead of jobs.
Titles can be misleading. A business development manager in one company may spend most of their time prospecting for new customers. Somebody with exactly the same title elsewhere may manage established accounts and receive regular inbound opportunities.
The earning opportunity should reflect those differences.
When conducting sales compensation benchmarking, compare the responsibilities behind the title. Consider deal size, sales cycle, territory, account ownership, lead generation responsibility, technical complexity, customer seniority and the salesperson’s influence over the final decision.
Seniority matters too. A salesperson expected to manage complex negotiations with senior executives is not directly comparable with someone selling a relatively straightforward product through shorter conversations.
Geography can further affect the comparison. Compensation expectations in London may differ from those in other parts of the UK, particularly for specialist or senior roles.
For teams considering B2B sales training London, the same principle applies to development. The skills required should reflect the real sales role rather than a generic definition of selling.
How Often Should You Review Sales Compensation?
Sales compensation should not be set once and forgotten for years. Markets change, responsibilities evolve and a package that was competitive when somebody joined may gradually fall behind.
An annual review provides a sensible opportunity to examine market position, internal fairness and whether the compensation plan still supports business priorities.
That does not mean changing commission structures every year. Frequent unnecessary changes can make compensation difficult for salespeople to understand and reduce confidence in the plan.
Instead, use sales compensation benchmarking as an early warning system. Look for meaningful changes in market rates, recruitment difficulty, employee turnover and the availability of people with the skills you require.
Pay particular attention when a role changes significantly. Changes in the wider market, including developments such as targeted support in financial services, can also change what firms expect from customer-facing roles. If somebody moves from managing existing customers to generating new business, takes responsibility for larger accounts or begins selling a more complex solution, an old compensation benchmark may no longer be relevant.
Sales leaders should also listen to managers and salespeople. Compensation complaints do not automatically mean the plan is wrong, but repeated concerns can identify areas worth investigating.
What Data Should You Use For Sales Compensation Benchmarking?
The quality of the benchmark depends heavily on the quality of the data behind it.
Broad online salary estimates can provide an initial indication, but they should not automatically determine your compensation plan. Job titles, sectors and responsibilities vary too widely for a single average to tell you exactly what a role should pay.
Use several sources where possible. These may include specialist salary surveys, recruitment data, industry reports, compensation studies and information gathered from recent recruitment activity.
Internal data matters as well. Look at employee turnover, offer acceptance rates, time required to fill vacancies, target achievement and the earnings distribution across your existing sales team.
If good candidates repeatedly reject offers because of compensation, that is useful information. If your best performers are regularly approached with substantially higher packages, that deserves attention too.
Sales compensation benchmarking becomes much stronger when external market information is combined with evidence from your own business.
The same evidence-led approach should apply to Sales coaching London. Decisions about development are more useful when based on observed performance rather than assumptions about what the team needs.
What Are The Common Sales Compensation Benchmarking Mistakes?
The first mistake is treating the market average as the correct answer. An average is a reference point, not an instruction.
The second is comparing roles by title alone. Two people called account managers may have completely different commercial responsibilities.
The third is focusing only on base salary. Commission, bonus potential, benefits and the probability of achieving target can materially change the value of a package.
Another mistake is copying a competitor’s compensation plan without understanding its strategy. Their sales model, margins, customer acquisition costs and sales cycle may be completely different from yours.
Businesses can also overlook internal fairness. You may discover that new recruits now require higher salaries than established employees doing equivalent work. Ignoring that difference can create retention problems later.
Finally, do not assume compensation can repair every sales performance problem. Poor management, unrealistic targets, weak positioning, inadequate lead generation and unclear sales conversations will not disappear because commission increases.
That is where compensation strategy and In-house sales training London need to support each other. Pay can influence motivation, while training and management help people develop the ability to perform.
How Do You Build A Better Sales Compensation Benchmarking Process?
Start by defining the role properly. Document what the salesperson is responsible for, what they can influence and what successful performance should look like.
Then establish the current package. Include base salary, commission, bonuses, benefits, accelerators and realistic total earnings rather than simply recording the maximum theoretical amount.
Next, identify genuinely comparable external roles. Match them as closely as possible by responsibility, seniority, sector, geography and sales complexity.
Compare the findings with internal evidence. Are you struggling to recruit? Are good salespeople leaving? Is target achievement realistic? Are high performers earning materially more than average performers? Is the plan encouraging profitable sales or simply more sales?
Once you have that information, decide whether anything actually needs changing. Sales compensation benchmarking does not have to result in higher salaries. It may show that your package is already competitive but that the way it is communicated, structured or connected to performance needs improvement.
Finally, explain the plan clearly. Clear expectations also make it easier to distinguish genuine timing objections such as we’re not ready yet from weak follow-up or poor sales execution. Salespeople should be able to understand what they are expected to achieve, how performance is measured and how that performance affects their earnings.
A compensation plan nobody understands is unlikely to influence behaviour in the way management intended.
Sales Compensation Benchmarking FAQs
What is sales compensation benchmarking?
Sales compensation benchmarking is the process of comparing your complete sales pay structure with relevant market data for genuinely comparable roles. It covers base salary, commission, bonuses, on-target earnings, benefits and the balance between fixed and variable pay. Accurate benchmarking also considers seniority, sector, geography, responsibilities and sales complexity so you can judge whether the package is competitive.
Why is sales compensation benchmarking important?
Sales compensation benchmarking replaces assumptions about sales pay with evidence. It can reveal when salaries or OTE have fallen behind comparable roles, identify recruitment and retention risks, expose internal pay inconsistencies and show whether incentives still support the commercial results the business wants.
What should be included in a sales compensation benchmark?
A useful sales compensation benchmark should include base salary, commission, bonuses, on-target earnings, accelerators, benefits and actual target achievement. It should also compare responsibilities, seniority, sector, location, sales-cycle complexity and the salesperson’s influence over results. Comparing job titles alone can produce misleading conclusions.
How often should sales compensation benchmarking be carried out?
For many businesses, sales compensation benchmarking should be reviewed at least annually. An additional review may be useful when recruitment becomes harder, employee turnover rises, market salaries move significantly, responsibilities change or the sales strategy changes. The aim is to identify when the package has become uncompetitive or poorly aligned, not to redesign commission unnecessarily.
Should sales compensation be above the market average?
No. Sales compensation does not automatically need to sit above the market average. The right position depends on skill scarcity, recruitment difficulty, role complexity, expected commercial contribution and the wider employment proposition. Paying above market rates can help attract scarce talent, but the extra cost should be sustainable and justified by the value the role can create.
Should commission be included when benchmarking sales salaries?
Yes. Commission should be included because base salary alone does not show the true earning opportunity. Two roles with identical basic salaries can have very different OTE, commission rates, accelerators and probabilities of reaching target. Benchmark fixed pay alongside realistic variable earnings and, where possible, the proportion of salespeople who actually achieve the advertised OTE.
What are on-target earnings?
On-target earnings, or OTE, are the expected total annual earnings of a salesperson who achieves 100% of their agreed performance target. OTE normally combines guaranteed base salary with the commission or bonus payable at target. For example, a £45,000 salary plus £25,000 target commission gives £70,000 OTE. The target should also be realistically achievable.
Can a sales compensation plan affect employee retention?
Yes. Compensation can affect employee retention when good performers find comparable roles offering materially higher salaries or more achievable earning potential. Pay is not the only factor; management, progression, culture, flexibility and development also matter. But compensation becomes a significant retention risk when employees believe their contribution or market value is no longer reflected fairly.
Can sales compensation affect customer behaviour?
Yes, indirectly. Sales compensation influences what salespeople prioritise and can therefore affect customer experience. Heavy rewards for short-term revenue may encourage faster closing or discounting, while incentives linked to margin, retention or account growth can create different behaviours. Businesses should consider the customer consequences of whatever their plan rewards.
Does higher sales compensation automatically improve performance?
No. Higher sales compensation does not automatically improve performance. Competitive pay can help recruit and retain capable people and reinforce priorities, but it cannot fix poor management, weak sales skills, unrealistic targets, inadequate lead generation or an unclear proposition. Sustainable performance depends on compensation, leadership, process, opportunity quality and development working together.
Are You Paying Enough To Attract And Keep The Right Salespeople?
That is ultimately the question sales compensation benchmarking should help you answer.
The aim is not to become the highest-paying employer in your market. It is to understand what comparable roles are worth, what your salespeople can realistically earn and whether your compensation structure supports the performance your business needs.
Look beyond the headline salary. Compare total earnings, responsibilities, targets, benefits and the amount of influence each salesperson has over the results they are expected to produce.
Then consider the wider sales environment. Competitive pay can help you attract capable people, but those people still need clear expectations, effective management, a strong proposition and the skills to have better conversations with prospects and customers.
When compensation, management and development work together, salespeople have a clearer reason to join, a stronger reason to stay and a fair opportunity to be rewarded for performing well.
B2B Sales Training London That Improves Conversion
We offer sales training in London for businesses that want clearer, more effective conversations. This includes sales coaching, corporate sales training for teams, and practical sales workshops designed around real scenarios. Our consultative selling training supports London businesses in simplifying their message and closing better-fit deals. We also work with teams across the UK who want to improve how they communicate value, reduce confusion, and win more of the right work without relying on pushy sales techniques
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