An uncertain economy is shrinking buying budgets and creating more acquisition and retention pressures for sales teams, according to the annual Sales Compensation Report from Xactly. B2B sales cycles and buying committees are also getting larger and more complex, which is ultimately complicating deal closures.
As a result, the vast majority (87%) of sales teams are struggling to meet or exceed their quota targets. More than half (53%) attribute these challenges largely to external economic conditions.
Successful teams are responding by focusing on what they can control: 40% of salespeople have implemented new tech solutions, such as sales performance management (SPM) tools and AI-driven platforms, to streamline compensation and support evolving goals.
The survey of 160 companies, conducted in partnership with UserEvidence, is segmented by company attributes including company size, average contract value and industry.
Key Takeaways and Implications for Sales Teams
According to Arnab Mishra, CEO of Xactly, companies that embrace innovation, upskill their teams and foster cross-departmental alignment are achieving measurable wins. Those wins include stronger retention rates to more predictable pipelines, positioning them for long-term success despite market turbulence.
“With persistent economic volatility, rising pressures on sales teams and shifting market dynamics, organizations are facing unprecedented challenges in meeting quotas and driving growth,” said Mishra. “This makes it critical to embrace innovative, data-driven solutions that not only attract top talent but also ensure sustainable long-term value.”
Highlights of the report include:
Changes to Performance-Based Pay
In the report, 62% of respondents report shifting to performance-based pay structures as a response to economic instability, enabling cost control while incentivizing top performers. This approach is helping companies remain agile by linking rewards to performance rather than offering fixed increases.
Long-Term Incentives
A shift toward team-based incentives gains traction and continues to grow: 53% of respondents said they’re moving away from individual performance-based compensation. Additionally, 48% of respondents are placing more emphasis on long-term incentives (LTIs) like stock options, restricted stock units (RSUs) and performance shares to drive retention and align with long-term goals.
The Rise of AI Tools
More than two thirds of respondents (64%) use AI-driven tools to forecast sales trends, personalize compensation and predict the most effective incentive structures based on historical data and market conditions.
However, quota attainment remains a significant challenge for many sales organizations, particularly in shifting economic conditions. Technology, healthcare and renewables companies are fast-growing sectors facing aggressive sales targets due to an influx of opportunities.
Click here to download a full version of the Sales Compensation Report.
