Imagine a salesperson responsible for a highly specialized piece of medical imaging equipment. Each unit sells for $65,000, which is a meaningful, high-margin transaction that can significantly impact quarterly results. But the story doesn’t end at the point of sale. The same salesperson is also responsible for the replacement and maintenance components that keep the equipment running at peak performance. Those parts average just $250 each, yet they are critical to the customer’s experience and the company’s long-term reputation.
In many organizations, this is not a hypothetical scenario. It is a daily reality. Companies often depend on a blend of large, capital equipment sales and steady, lower-dollar recurring revenue from parts, service, or subscriptions. Both streams are essential. The capital sale drives short-term revenue and market penetration, while the ongoing components ensure performance, customer satisfaction, and repeat business. When either side of that equation fails, the result is not just lost revenue… It is a lost customer, and sometimes, negative publicity that can ripple across the market.
This dynamic creates important organizational design questions. Should equipment and parts sales sit in separate departments, even when they serve the same product and customer base? Should a hospital or enterprise client interact with two different sales representatives—one focused on the initial purchase and another responsible for the ongoing lifecycle of the product? These are structural decisions that directly influence accountability, customer experience, and growth.
For compensation professionals, however, the challenge becomes even more nuanced. The core question is simple: how do you design an incentive plan that encourages balanced behavior across both revenue streams?
A straightforward commission or revenue-growth plan naturally pushes a salesperson toward the highest-value transactions. In this case, that would mean focusing almost exclusively on the $65,000 equipment sale while neglecting the $250 replacement parts that keep the customer satisfied. Introducing quotas for parts may seem like a solution, but it can create its own unintended consequences—such as incentivizing unnecessary sales unless those parts are clearly recommended at defined service intervals.
This is where traditional incentive models often fall short. In complex revenue environments, compensation plans must extend beyond simple top-line metrics. Effective plans frequently incorporate broader performance indicators such as customer retention, satisfaction scores, service compliance, or even the frequency and quality of client interactions. These measures help align the salesperson’s behavior with the company’s long-term objectives, not just its immediate revenue targets.
Perhaps the most important principle, though, is consistency and clarity. Few things are more demotivating to a sales professional than an incentive plan that is confusing, unattainable, or constantly changing. When compensation structures shift every year or two without clear rationale, trust erodes and performance suffers.
Designing an effective incentive plan requires more than a formula. It demands a clear understanding of the organization’s revenue model, growth strategy, and customer lifecycle. Only then can leaders build a plan that rewards the right behaviors, balances short-term wins with long-term value, and ultimately supports sustainable growth.
For more information about our approach to designing sales incentive plans, please contact us at info@locushumancapital.com.