--- title: Stanford research shows that sales grow when bonuses are eliminated description: Stanford research suggests that companies that eliminate bonuses for achieving sales quotas generate greater revenues. image: https://www.inflexion-point.com/hs-fs/file-14210154-jpg/images/winning_v_losing_2.jpg --- This is a search field with an autosuggest feature attached. - There are no suggestions because the search field is empty. # Stanford research shows that sales grow when bonuses are eliminated ![Bob Apollo](https://app.hubspot.com/settings/avatar/78fa41976d534cacbb0e22e151bc6816) Post by [Bob Apollo](https://www.inflexion-point.com/blog/author/bob-apollo) November 24, 2009 ![Stanford research shows that sales grow when bonuses are eliminated](https://www.inflexion-point.com/hs-fs/file-14210154-jpg/images/winning_v_losing_2.jpg) [Recent research from the Stanford University Graduate School of Business](http://www.gsb.stanford.edu/news/research/Nair_sales.html?cmpid=knowledgebase&edition=09-nov) suggests that companies that eliminate bonuses for achieving sales quotas generate more revenues.  According to Professors Nair and Misra, the benefits can be significant – in one case stimulating a 9% uplift in revenues. ![Revenue Growth Path](https://www.inflexion-point.com/hs-fs/file-14210154-jpg/images/winning_v_losing_2.jpg)As 2010 approaches, that sort of sales uplift could make the difference between achieving your revenue goals for the year - or falling short.  It’s a powerful argument for reviewing your sales compensation plans now, so that you’re ready for the new business year with a set of principles that can optimise your sales performance. If you’ve run a sales force for any length of time, you’ll probably be familiar with the principle that compensation drives behaviour.  As Nair and Misra point out, quota bonuses can result in sales people gaming the process.  If they have already made their quota for the period they may defer or “sandbag” deals, whilst sales people who see no chance of achieving their quota may instead defer their efforts to the next period. Removing these quota-related bonuses can help to remove the inefficiencies caused by the sales people’s attempts to game the system.  In the example quoted in the research, they worked with an organisation to redefine their compensation plans for FY2009.  The results were impressive - the new structure resulted in a 9% improvement in revenues, translating to an additional $1m a month.  What’s more, the new plan proved extremely popular with the sales people. Of course, removing quota-based bonuses may not be the answer in every situation - but the research draws our attention to the need to carefully define the desired sales behaviour, modelling the desired outcomes, and tuning the compensation plan accordingly.   Most organisations want their sales force to be encouraged to maximise profitable revenue, and to do so as early in the business cycle as possible so that end-of-quarter and end-of-year surprises can be eliminated.  This can be achieved through careful design of targets and accelerators.  Similar principles can apply to incentivising certain elements of the product mix. As the end of the sales year approaches and you prepare to hit the ground running from the very start of 2010, I suggest you reflect on how well your current sales compensation plans stimulated the desired sales behaviour.  Even if you did well, is there room for improvement?  And if it looks as if you may end the year short of your original goals, how can you change the situation for next year? An external perspective may help.  We’ve worked with a number of clients to help them structure and tune sales compensation plans that drive the desired outcomes, and eliminate the opportunity for sales people to game the system.  Drop me a line at [bob.apollo@inflexion-point.com](mailto:bob.apollo@inflexion-point.com) if you would like to learn more. Getting it right is worth it.  On average, organisations spend more than three times as much on sales compensation as they do on advertising.  Careful planning can make sure that the money is well spent. ###### Tags: [Sales Enablement, ](https://www.inflexion-point.com/blog/topic/sales-enablement) [Scalable Systems, ](https://www.inflexion-point.com/blog/topic/scalable-systems) [Complex Sales](https://www.inflexion-point.com/blog/topic/complex-sales) ![Bob Apollo](https://app.hubspot.com/settings/avatar/78fa41976d534cacbb0e22e151bc6816) Post by [Bob Apollo](https://www.inflexion-point.com/blog/author/bob-apollo) November 24, 2009 Bob Apollo is a Fellow of the Institute of Sales Professionals, a regular contributor to the International Journal of Sales Transformation and Top Sales World Magazine, and the driving force behind Inflexion-Point Strategy Partners, the leading proponents of outcome-centric selling. Following a successful corporate career spanning start-ups, scale-ups and market leaders, Bob now works as a strategic advisor, mentor, trainer and coach to ambitious B2B sales organisations - teaching them how to differentiate themselves through their provably superior approach to achieving their customer's desired outcomes. [Follow me on my website](https://www.inflexion-point.com) [Follow me on LinkedIn ](https://uk.linkedin.com/in/bobapollo) [Follow me on Twitter ](https://twitter.com/bobapollo) ### Comments ###### Related Articles ### [B2B Sales: Avoiding Finishing Second](https://www.inflexion-point.com/Blog/bid/43596/B2B-Sales-Avoiding-Finishing-Second) Posted by **[Bob Apollo](https://www.inflexion-point.com/blog/author/bob-apollo),** **Sep 14, 2010** If your organisation is involved in long, complex and resource-intensive sales cycles, there are few things more frustrating ... ### [Why Your Sales Process Doesn’t Matter](https://www.inflexion-point.com/Blog/bid/81251/Why-Your-Sales-Process-Doesn-t-Matter) Posted by **[Bob Apollo](https://www.inflexion-point.com/blog/author/bob-apollo),** **Jan 31, 2012** Coming from somebody who has consistently sought to promote the value of focus and process in all matters connected with B2B ... ### [Why Great Companies Get Started in the Downturns](https://www.inflexion-point.com/Blog/bid/17228/Why-Great-Companies-Get-Started-in-the-Downturns) Posted by **[Bob Apollo](https://www.inflexion-point.com/blog/author/bob-apollo),** **Feb 26, 2009** Matt McCall is a co-founder and Managing Director of Draper Fisher Jurvetson Portage Venture Partners. He writes with great ... [![Outcome-Centric Selling Academy offer](https://www.inflexion-point.com/hubfs/OCSA%20CTA%20300x300.png) ](https://inflexion-point.thinkific.com/) Subscribe Categories - [Complex Sales (375)](https://www.inflexion-point.com/blog/topic/complex-sales) - [B2B Marketing (200)](https://www.inflexion-point.com/blog/topic/b2b-marketing) - [B2B Buying Process (122)](https://www.inflexion-point.com/blog/topic/b2b-buying-process) - [Value Selling System (114)](https://www.inflexion-point.com/blog/topic/value-selling-system) - [Outcome-Centric Selling (100)](https://www.inflexion-point.com/blog/topic/outcome-centric-selling) - [Scalable Systems (89)](https://www.inflexion-point.com/blog/topic/scalable-systems) - [Thought Leaders (75)](https://www.inflexion-point.com/blog/topic/thought-leaders) - [Revenue Management (59)](https://www.inflexion-point.com/blog/topic/revenue-management) - [Opportunity Qualification (36)](https://www.inflexion-point.com/blog/topic/opportunity-qualification) - [Intelligent Targeting (35)](https://www.inflexion-point.com/blog/topic/intelligent-targeting) - [CSO Insights (32)](https://www.inflexion-point.com/blog/topic/cso-insights) - [Sales Enablement (31)](https://www.inflexion-point.com/blog/topic/sales-enablement) - [Selling in the Breakthrough Zone (31)](https://www.inflexion-point.com/blog/topic/selling-in-the-breakthrough-zone) - [Sales + Marketing Alignment (30)](https://www.inflexion-point.com/blog/topic/sales-marketing-alignment) - [CRM (24)](https://www.inflexion-point.com/blog/topic/crm)