Is your sales strategy outdated? Redesigning sales org and compensation for consumption-based business models

The shift toward consumption-based pricing (CBP) has introduced a fundamental challenge for B2B software companies, how to motivate sales teams when revenue is no longer recognized upfront. As more organizations move away from traditional subscription models, compensation structures built around annual contract value and upfront bookings are no longer sufficient. Sales leaders must now design incentive models that reflect the realities of usage-driven revenue, balancing immediate impact with long-term customer success. This transition is not just a sales issue; it’s a strategic imperative that affects revenue forecasting, talent retention, and customer lifetime value.

Shift in pricing models: The B2B software industry is shifting from subscription-based pricing to CBP, which aligns customer costs with usage and reduces upfront commitment. This is further compounded with the introduction of AI agents and applications licensed based on outcomes. CBP is becoming increasingly popular, with 61% of SaaS companies using or testing it, leading to higher revenue growth compared to traditional models.

Sales process transformation: CBP disrupts traditional sales processes and metrics, requiring changes in compensation models, sales roles, and quota setting. Sales roles are evolving, with a shift from hunters (focused on large, upfront deals) to account management teams that focus on ongoing customer engagement and usage growth.

Sales incentive conflict: Traditional sales models incentivize upfront payments, but CBP delays revenue recognition and commissions, causing friction with sales teams. Sales reps may resist promoting CBP due to delayed and uncertain compensation, jeopardizing the adoption of this pricing model. If not solved, recruiting and retaining may become more challenging for CBP-only companies.

Evolving compensation models: Companies are experimenting with compensation models that balance upfront commissions with ongoing payouts based on customer usage. These models can be complex to manage, requiring careful alignment between sales incentives and actual revenue recognition.

Framework for evaluating the right compensation model design for Consumption-Based Pricing Model

This framework offers a structured approach to creating a usage-based sales compensation plan that aligns sales incentives with customer success, ensuring that sales reps are motivated to drive the best outcomes for both the customer and the company.

Step 1: Determine Where Your Sales Team Adds Value to Customer Success

1. Understand Customer Value Creation:
   • Recognize that in usage-based pricing, customer value is directly tied to product usage. The more the customer uses the product, the more revenue the company generates. Understanding and articulating customer outcomes and value created by faster adoption is critical to align objectives.
2. Map the Customer Journey:
   • Signup: Analyse how customers find and sign up for your product. Identify channels, decision-making processes, and steps to long-term customer status. Determine where sales add value—typically in acquiring new customers and assisting with the initial setup.
   • Onboarding: Examine how customers transition from initial purchase to active use. Determine if your sales team is crucial in guiding customers through this stage or if customers largely self-onboard.
   • Expansion: Identify why customers use more of your product and how the sales team influences this. Assess whether sales (sales, customer success, and/or professional services) drives broader adoption, or if the product itself promotes increased usage.
3. Identify Sales Impact:
   • Pinpoint the specific stages where the sales team significantly accelerates or expands customer usage. This will guide where to focus sales incentives.

Step 2: Prioritize the Most Impactful Sales Activities

1. Rank Sales Activities:
   • Evaluate the sales activities identified in the customer journey to determine which have the highest impact on customer success and key company metrics e.g. bookings, new logo, acquisition, NRR, RPO etc.
2. Set Compensation Weights:
   • Assign weights to these high-impact activities to reflect their importance in achieving business goals. For example, a company with down market focus would be more weighted on acquisition, while a company focused on upmarket might be more weighted on expansion and cross-selling. The weighting system should be agreed upon by key stakeholders (e.g., CFO, CRO).
3. Example Weights:
   • For a company focused on market share capture:
     • Acquisition: 75%
     • Onboarding: 25%
     • Expansion: 0%
   • For a company focused on driving continuous usage:
     • Acquisition: 0%
     • Onboarding: 30%
     • Expansion: 70%

Step 3: Choose the Right Compensation Levers

1. Design Signup Incentives:

• New Customer Signups: Consider compensating reps based on the number of new customers acquired, especially if the initial revenue is minimal.
• Minimum Committed Spend: Incentivize reps based on the dollar value of any upfront commitments, crediting them for the full annual value.
• Hybrid Approach: Combine both methods if necessary to motivate a balanced approach.

2. Structure Onboarding Incentives:
   • Year 1 Revenue: Compensate based on the actual revenue attained during the customer’s first year, encouraging reps to drive early success.
   • Key Milestones: Offer incentives for achieving significant milestones, such as the first deployment, as an alternative or complement to time-based incentives.
3. Develop Expansion Incentives:
   • Overall Incremental Revenue: Base incentives on the net incremental revenue generated by customer usage, directly linking sales efforts to revenue growth.
   • Revenue Above Minimum Commit: Focus on compensating for any revenue generated beyond the initial committed spend.
   • Additional Products: Consider separate incentives for selling additional products to encourage cross-selling and upselling.

Step 4: Monitor and Adjust the Compensation Plan

1. Review Performance:
   • Regularly assess the effectiveness of the compensation plan in driving desired sales behaviours and achieving business objectives.
2. Refine and Iterate:
   • Adjust weights, incentives, and strategies based on feedback, market changes, and evolving business priorities to ensure continuous alignment with customer success and company goals.

Step 5: Engage and Train the Sales Team

1. Communicate the Plan:
   • Clearly explain the new compensation plan to the sales team, highlighting how it aligns with customer success and long-term revenue growth.
2. Provide Ongoing Support:
   • Offer training and resources to help the sales team adapt to the new compensation structure and excel in their roles.

Learnings from benchmarking companies deploying usage based, consumption based, and hybrid business models

Sales Organization Model

In evaluating organizational designs for sales teams, companies typically adopt one of three primary structures, each suited to different business maturity levels and strategic priorities.

The first organizational design involves the Account Executive (AE) managing the entire customer lifecycle from a commercial standpoint, sharing adoption responsibilities with roles such as Customer Success Managers (CSMs), Technical Account Managers (TAMs), or Solutions Engineers (SEs). About 35% of surveyed companies—mainly smaller to medium-sized organizations in growth phases—use this structure. It offers clear benefits, such as reducing redundant roles and improving communication with customers. It also aligns sales representatives' goals closely with overall company objectives, encouraging them to secure long-term deals. However, this structure requires salespeople to possess diverse skill sets to manage existing accounts effectively while simultaneously pursuing new business opportunities. Additionally, shifting responsibilities may lead to increased turnover among Account Executives.

The second design clearly differentiates roles, with Account Executives dedicated to new customer acquisition and handling initial commercial activities, typically within the first six months post-sale. After this period, Account Managers (AMs), Solutions Engineers (SEs), and Customer Success Managers (CSMs) take over managing the ongoing commercial and customer experience aspects. Around 55% of surveyed respondents, typically larger and more mature organizations, utilize this structure. Its strengths lie in allowing specialized roles—"hunters" focused on new customer acquisition, and "farmers" dedicated to nurturing long-term relationships and driving consumption. This clearly defined division enhances accountability and efficiency. However, the approach incurs higher costs due to compensating multiple specialized sales roles, and there is potential misalignment if Account Executives prioritize low-quality accounts with limited potential for expansion.

The third design, used by fewer than 10% of surveyed respondents, primarily smaller or early-stage companies serving customers through self-service models, employs Customer Success Managers (CSMs) or Account Managers (AMs) to oversee the entire customer lifecycle. In this structure, there is no distinctly defined "hunter" role, as the focus is fully on driving product consumption and maximizing customer value. This simplifies organizational structure by eliminating the need for multiple specialized sales roles. However, the absence of a dedicated new customer acquisition role can hinder the organization's overall growth potential.

Sales Compensation Model

For organizations that continue to place a strong emphasis on new logo acquisition and have a “hunter” focused account executive team, a blended variable compensation plan is most effective. A mixed variable compensation plan that incentivizes both new bookings and consumption, aligns objectives and activities for both sellers and the organization. This approach can soften the transition to consumption-based pricing for “hunters” who can still see a path to earnings on acquisition activities while building up their skillset related to adoption responsibilities, if applicable.

For organizations that are structured with more emphasis on post-sale adoption and expansion roles i.e., account management and/or customer success, a variable compensation plan that incentivizes these activities will be most effective. If variable compensation is heavily weighted or entirely consumption based, it incentivizes sellers or post-sales roles to bring in "good deals” that are advantageous for both parties, sellers and organization. This structure also inherently puts the focus on adoption and customer experience related activities.

Overall, a sales organization structure and compensation plan should be considered in tandem and be designed to best enable customer success and organizational goals.

Example Case Study: Sales Compensation in a Consumption Pricing World

Snowflake, a data warehousing company, recognized the need to adjust its sales compensation strategy to reflect the realities of a consumption-based pricing model. The company introduced a hybrid compensation plan that incorporated elements of both traditional bookings and consumption. Snowflake created territory profiles to align compensation with the nature of the sales territory, emphasizing bookings in greenfield areas and consumption in mature territories. This approach allowed Snowflake to match sales talent to customer needs, ensuring that reps were incentivized to support ongoing customer usage and expansion rather than just closing initial deals. The company also invested in tooling and infrastructure to monitor customer consumption, providing sales reps with the data needed to drive informed, value-focused conversations with customers.

The implementation of a consumption-based compensation plan at Snowflake, while disruptive at first, eventually led to significant improvements in aligning sales efforts with customer success. Sales reps became more engaged in the entire customer lifecycle, focusing not only on closing deals but also on ensuring that customers realized ongoing value from their product usage. This shift resulted in stronger customer relationships, increased trust, and greater customer retention. Snowflake’s approach also facilitated better revenue forecasting and quota setting, allowing the company to fine-tune its compensation plan over time. While the transition required iterative adjustments and learning, the outcome was a more effective sales strategy that aligned closely with both customer needs and Snowflake’s long-term business objectives.

Sales compensation in CBP models requires thoughtful design. Aligning incentives with customer success ensures sales teams are motivated to drive adoption and usage, setting the foundation for sustainable growth. A well-structured plan doesn’t just reward sales, it accelerates organizational success.

Designing the right sales compensation model is critical for achieving success with CBP. Connect with our expert team to learn how these strategies can help your organization align sales incentives with growth goals, ensuring sustainable revenue and stronger customer relationships. Reach out today to get started on your path to success.

About the authors

Abde Tambawala is a Partner in the Technology, Media, and Telecom practice. He works in our San Francisco office, where he supports our clients on Revenue Strategy and Monetization. Abde brings comprehensive experience crafting and executing effective go-to-market strategies, optimizing sales productivity, and enhancing growth through monetization efforts. Additionally, he has developed high-performing revenue teams in key leadership roles for industry-leading organizations. Prior to joining Simon-Kucher, Abde was Global VP of Revenue Strategy & Operations and Enablement at Klaviyo, where he played a strategic role in preparing the company for a successful IPO and beyond. He has also held key leadership positions with Atlassian, Intercom, and Cisco Systems.

Brian Kelly is a seasoned executive with expertise in go-to-market strategy and sales leadership. Currently a strategic advisor and board member, he has over 20 years of experience helping B2B technology companies scale sales teams and optimize revenue operations. Brian has led multiple high-growth initiatives at companies like Snowflake, particularly in the shift toward consumption-based revenue models. A frequent contributor on sales transformation, he is passionate about aligning sales strategies with dynamic customer buying behaviours.

Special thanks to Jeremy Phillips (Manager, Chicago) on researching / benchmarking and collaboration with the authors.