TREX Sales Incentive Plan Design 2 — Questions and Answers
Question 1: Which pay mix ratio is most appropriate for a sales role with a long sales cycle, high complexity, and significant non-selling responsibilities?
- 50/50 base-to-incentive
- 70/30 base-to-incentive
- 80/20 base-to-incentive (Correct answer)
- 40/60 base-to-incentive
Correct answer: 80/20 base-to-incentive
Roles with long cycles, complexity, and non-selling duties warrant a higher base (80/20) because the rep has less direct control over short-term results.
Question 2: A 'kicker' in a sales incentive plan refers to:
- A penalty applied when quota is missed by more than 20%
- An additional bonus paid for selling a specific high-priority product (Correct answer)
- The threshold level below which no incentive is earned
- A cap placed on total incentive earnings
Correct answer: An additional bonus paid for selling a specific high-priority product
A kicker is a special bonus designed to focus rep attention on a strategic product or behavior beyond the standard plan mechanics.
Question 3: What is the primary risk of setting sales quotas too low across the sales force?
- Increased voluntary turnover among top performers
- Underutilization of the incentive budget and inflated payouts (Correct answer)
- Lower customer satisfaction scores
- Higher territorial overlap conflicts
Correct answer: Underutilization of the incentive budget and inflated payouts
Quotas set too low cause most reps to exceed target, resulting in budget overruns and payouts that exceed planned incentive spend.
Question 4: In a split-credit plan, when should equal credit be given to both the account manager and the overlay specialist?
- When the overlay specialist closes the deal independently
- When both roles contribute measurably to a single sale (Correct answer)
- When the account manager requests a commission waiver
- Only when total deal value exceeds a predefined threshold
Correct answer: When both roles contribute measurably to a single sale
Equal split credit is appropriate when both roles have defined, measurable contributions to winning the same opportunity.
Question 5: Which term describes the percentage of the sales force expected to achieve quota in a well-designed plan?
- Leverage ratio
- Quota attainment distribution (Correct answer)
- Plan participation rate
- Commission pool allocation
Correct answer: Quota attainment distribution
Quota attainment distribution describes the expected spread of performance across the sales force, with ~60% at or above quota being a common benchmark.
Question 6: A 'clawback' provision in a sales incentive plan is primarily used to:
- Accelerate commissions for overperformers
- Recover paid commissions when deals are cancelled or customers default (Correct answer)
- Establish a floor below which base salary cannot fall
- Prevent reps from earning more than 300% of target incentive
Correct answer: Recover paid commissions when deals are cancelled or customers default
Clawbacks allow the company to recover commissions already paid when a sale is reversed, cancelled, or the customer fails to pay.
Question 7: Which of the following best describes 'decelerators' in a sales incentive pay curve?
- Higher commission rates that activate above quota
- Reduced commission rates applied after a rep reaches a defined cap threshold (Correct answer)
- Minimum guaranteed payouts during ramp periods
- Multipliers applied to bonuses when multiple products are sold together
Correct answer: Reduced commission rates applied after a rep reaches a defined cap threshold
Decelerators lower the commission rate once a rep surpasses a certain performance level, often used to manage cost or prevent windfall gains.
TREX Sales Incentive Plan Design 2
Which pay mix ratio is most appropriate for a sales role with a long sales cycle, high complexity, and significant non-selling responsibilities?