Developing a Data-Driven Sales Compensation Process

  • Paul Reiman is the Founder & Managing Partner of Novo Insights, an HR consulting and technology services company that helps growing organizations address their people’s priorities.
  • He recently spoke with Justin Lane, host of The Sales Compensation Show to discuss the challenges and approaches to developing a data-driven sales comp process, the metrics that should be used to design your plan, the inspiration for his new company, and more.
  • Justin and Paul dive deep into the world of HR, sales incentives, and performance management for an in-depth, data-driven conversation.
  • Visit the Podcast homepage to hear more episodes.

Developing a Data-Driven Sales Compensation Process

Having spent more than a decade as an HR executive, Paul Reiman has a unique perspective on how organizations work and can invest in growth. A self-confessed “huge data nerd,” Paul’s team, co-workers, and clients can attest to the impact he makes.

In a conversation with Justin Lane, Paul shares his thoughts on data-driven sales compensation and his approach to improving the process.

Paul, introduce yourself to the audience.

I’m a data nerd who likes to apply the skill in as many settings as possible. I recently started my own company, Novo Insights, which aims to help organizations use data to make better people decisions.

It’s the third act of my career. I’ve spent 10+ years as an HR consultant, and I’m re-entering the world of giving advice. I’m hoping to be a better advisor now that I’ve done the work for the past decade.

But, my passion in life has always been data, and I’m excited to apply that with my clients.

What did you learn about sales compensation from a data-driven perspective while consulting?

It’s the only way to understand what is happening in your sales organization.

We analyzed the top-performing reps, but the data wasn’t predictive, so it wasn’t easy to understand their behaviors. This was before all of the technological advancements we have now. These days, a lot of innovative work is happening in that space, and some companies are starting to find solutions.

But the biggest challenge for these organizations has always been understanding the data they have.

Why do you think it’s so hard to show causation in sales compensation?

We don’t have a rigorous test environment to control the sales compensation experiment, so we can’t prove anything.

So many different events happen throughout a sales cycle that can produce a desired outcome. Sure, it may have been the money that motivated the reps—but it also could have been the manager’s attention, the payment amount, or any other event.

"There’s no such thing as a best practice. Just because it worked once [in sales compensation], doesn’t mean it will always work." - Paul Reiman, Novo Insights

But I don’t think that’s a problem with sales compensation. Your goal as a sales leader is to create a more productive sales organization. If you can achieve higher productivity through a set of interactions, it would be nice to know which one caused it, but as long as you have met your goals, you shouldn’t worry about the cause.

From an HR perspective, how important is geography when it comes to recruiting and retention in a remote sales environment?

Most sales organizations are forgoing the concept of geography. In this remote climate, it’s more about productivity and paying for the rep’s performance.

The problem I see, however, is that most organizations are too myopic about performance. They want to pay reps for the sales they make in each quarter. But what if a representative that consistently exceeds OTE has a slow quarter? Should they not still be compensated? How can your top performers win under this plan?

"Don't pay your reps for performance, promote them." - Paul Reiman, Novo Insights

Sales organizations need to be looking at the bigger picture. Your top performers should be rewarded with promotions when they’ve shown consistent results beyond a single sales cycle.

What do you hope to achieve with your new company, Novo Insights?

There is so much data out there — almost too much — but what insights can you get from the data?

My goal is to help people understand their data, formulate critical insights from it, and help them draft a course of action to make a real impact in their organization.

I love finding the hidden nugget of insight in the data, and that’s my mission with Novo Insights.

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