Sales Contest: Sales Compensation Plans Explained

5 min read

Sales Contest: Sales Compensation Plans Explained

Sales contests are a strategic tool used by businesses to motivate their sales teams and drive performance. They are a form of sales compensation that rewards salespeople based on their performance in specific areas, often over a set period. This article will delve into the intricacies of sales contests, their role in sales compensation plans, and how they can be effectively utilised.

The world of sales compensation can be complex, with various strategies and mechanisms in place to incentivise and reward salespeople. Among these, sales contests stand out for their ability to create a competitive environment that encourages salespeople to push their limits and achieve higher sales. Understanding how these contests work and how they fit into the broader sales compensation plan is crucial for any business looking to maximise its sales potential.

Understanding Sales Contests

Sales contests are competitions organised within a sales team, where the participants compete against each other to achieve specific sales targets. The winners of these contests are typically rewarded with prizes, bonuses, or recognition. These contests can be designed in various ways, depending on the goals of the company and the nature of its sales team.

The primary purpose of sales contests is to motivate salespeople to increase their sales performance. By creating a competitive environment, sales contests can encourage salespeople to put in extra effort and strive to outperform their peers. This can lead to increased sales for the company and higher earnings for the salespeople.

Types of Sales Contests

There are several types of sales contests, each with its own unique characteristics and benefits. Some common types include quota-busting contests, where salespeople are rewarded for exceeding their sales quotas; head-to-head contests, where salespeople compete directly against each other; and team-based contests, where sales teams compete against each other.

Each type of sales contest has its own advantages and disadvantages. For example, quota-busting contests can be highly motivating for salespeople who are close to reaching their quotas, but they may not be as effective for those who are far from their targets. On the other hand, head-to-head contests can create a highly competitive environment, but they may also lead to unhealthy competition if not managed properly.

Designing Effective Sales Contests

Designing an effective sales contest requires careful planning and consideration. The contest should be designed in a way that aligns with the company's sales goals, motivates the salespeople, and promotes healthy competition. This can involve setting clear and achievable targets, offering attractive rewards, and ensuring fair competition.

One of the key factors in designing an effective sales contest is setting the right targets. The targets should be challenging enough to motivate the salespeople, but not so difficult that they become demotivated. Similarly, the rewards should be attractive enough to incentivise the salespeople, but not so large that they overshadow the intrinsic motivation to sell.

Role of Sales Contests in Sales Compensation Plans

Sales contests play a crucial role in sales compensation plans. They serve as a supplementary incentive mechanism that complements the regular salary and commission structure. By offering additional rewards for exceptional performance, sales contests can help to motivate salespeople and drive sales performance.

While the regular salary and commission provide a stable income for the salespeople, sales contests offer the opportunity for additional earnings based on performance. This can be particularly motivating for high-performing salespeople who are able to consistently exceed their sales targets. Furthermore, by tying the rewards to specific sales targets, sales contests can help to align the interests of the salespeople with the goals of the company.

Integration with Other Compensation Elements

Sales contests should be integrated with the other elements of the sales compensation plan to ensure a cohesive and effective incentive system. This means that the goals of the sales contest should align with the overall sales goals of the company, and the rewards should be consistent with the overall compensation structure.

For example, if the company's goal is to increase sales of a particular product, the sales contest could be designed to reward salespeople who sell the most units of that product. Similarly, if the company's compensation plan includes a high commission rate, the rewards for the sales contest could be in the form of bonuses or other non-monetary incentives to avoid overcompensation.

Measuring the Effectiveness of Sales Contests

Measuring the effectiveness of sales contests is crucial for ensuring that they are achieving their intended goals. This can involve tracking the sales performance of the participants, surveying the salespeople to gauge their motivation and satisfaction, and analysing the return on investment of the contest.

By monitoring the sales performance, companies can determine whether the sales contest has led to an increase in sales. Surveys can provide insights into the motivational impact of the contest and whether it has led to any unintended consequences, such as unhealthy competition or demotivation. Finally, analysing the return on investment can help to assess the financial viability of the contest and whether it is worth continuing in the future.

Practical Examples of Sales Contests

There are many ways in which sales contests can be implemented in practice. Here are a few examples:

  • A software company organises a quarterly sales contest where the salesperson who sells the most subscriptions wins a trip to a popular holiday destination. This contest motivates the salespeople to increase their sales and rewards the top performer with a significant prize.
  • A car dealership runs a monthly sales contest where the salesperson who sells the most cars receives a bonus on top of their regular commission. This contest incentivises the salespeople to sell more cars and provides an additional source of income for the top performer.
  • A telecommunications company holds a team-based sales contest where the team that sells the most phone contracts in a month wins a team outing. This contest encourages teamwork and cooperation among the salespeople and rewards the entire team for their collective performance.

These examples illustrate the versatility of sales contests and how they can be tailored to suit the specific needs and goals of a company.


Sales contests are a powerful tool for motivating salespeople and driving sales performance. They offer a competitive and rewarding environment that encourages salespeople to push their limits and achieve higher sales. When integrated effectively into the sales compensation plan, sales contests can significantly contribute to the success of a company's sales strategy.

However, designing and implementing effective sales contests requires careful planning and consideration. The goals and rewards of the contest must align with the company's sales goals and compensation structure, and the contest must promote healthy competition among the salespeople. By understanding the intricacies of sales contests and how they fit into the broader sales compensation plan, companies can leverage this tool to maximise their sales potential.

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