The shift from sales-led to product-led growth (PLG) has moved beyond the startup playbook. Mid-market B2B firms, typically those with annual revenues between £10m and £100m, are now restructuring their sales quotas and compensation plans around usage data rather than traditional bookings. This is not a cosmetic change; it alters how sales teams are measured, paid, and managed.
For decades, the standard B2B sales motion relied on annual contracts, upfront fees, and a quota tied to new business revenue. The salesperson's job ended at signature. But as buyers increasingly expect to try software before they buy, and as usage-based pricing becomes common, the point of value creation has shifted. Revenue is now recognised over time, and customer success is inseparable from sales. Consequently, forward-thinking mid-market firms are redesigning compensation to reward adoption, expansion, and retention—not just the initial deal.
Why the shift is happening
Three forces are driving this change. First, buyer behaviour has changed. Procurement teams and end users now demand proof of value before committing to large contracts. A product-led motion—where users can sign up, test, and derive value without a salesperson—has become a competitive necessity in many software categories. Second, usage-based pricing models, where customers pay according to consumption, have become mainstream. This makes usage data a natural and objective measure of customer value. Third, the cost of customer acquisition has risen, and retention has become a critical lever for profitability. Compensating salespeople for long-term customer health aligns incentives with sustainable growth.
According to a 2023 report by OpenView, 60% of software companies now offer some form of usage-based pricing, and the trend is accelerating. While this statistic is widely cited, the exact figure varies by segment, but the direction is clear. Mid-market firms are adopting these models to stay competitive and to reduce the friction of enterprise sales cycles.
How quotas are being restructured
Traditional quotas are typically expressed in annual contract value (ACV) or new bookings. In a product-led sales motion, quotas are increasingly tied to a combination of metrics: net revenue retention (NRR), gross margin on usage, and expansion revenue. Some firms are moving to a 'land and expand' model where the initial deal is small, and the quota is weighted towards expansion within the first 12 months.
For example, a mid-market SaaS company might set a quota that is 40% new business ACV and 60% expansion revenue, with the expansion component measured by increased usage or seat count. This requires sales teams to work closely with customer success to drive adoption. In some cases, quotas are being replaced by 'targets' that include a mix of leading indicators, such as the number of active users, feature adoption rates, and customer health scores.
One practical approach is the 'usage-based quota' where the salesperson's target is expressed in terms of monthly recurring revenue (MRR) derived from usage, rather than upfront fees. This aligns the salesperson's effort with the customer's actual consumption, but it also introduces complexity: usage can fluctuate, and salespeople may have less control over the outcome.
Compensation plan design
Compensation plans are being redesigned to balance short-term incentives with long-term value. Common changes include:
- Higher base salary, lower variable component: Because usage-based revenue is less predictable, firms are reducing the risk for salespeople by increasing base pay and lowering the commission rate. This helps retain talent and reduces the incentive to 'game' the system.
- Commission on expansion and renewal: Salespeople are now paid on expansion revenue and renewals, not just new logos. This encourages them to maintain relationships and ensure customers derive value.
- Team-based incentives: In product-led motions, the salesperson is part of a pod that includes customer success and product managers. Some firms are introducing team-based bonuses to encourage collaboration.
- Usage-based accelerators: To encourage salespeople to drive deeper adoption, accelerators (higher commission rates) are applied when usage exceeds a certain threshold. This rewards salespeople for helping customers expand usage.
However, there is a risk of overcomplicating the plan. If salespeople cannot easily understand how their pay is calculated, motivation drops. Therefore, clear communication and simple metrics are essential.
Commercial impact
The commercial impact of this shift is significant. By aligning sales incentives with usage, firms can improve net revenue retention, which is a key driver of valuation. According to a study by KeyBanc Capital Markets, public SaaS companies with NRR above 120% trade at a premium of 3-4x revenue compared to those with lower NRR. While this is a broad market observation, it underscores the financial importance of retention and expansion.
For mid-market firms, the benefits include:
- Higher customer lifetime value: By focusing on usage, firms reduce churn and increase expansion revenue.
- Better alignment with product-led growth: Sales teams become advocates for the product, not just order-takers.
- More predictable revenue: Usage-based revenue is often more predictable than one-off deals, as it reflects ongoing consumption.
However, there are costs. Implementing usage-based compensation requires robust data infrastructure to track usage accurately. It also requires a cultural shift, as sales teams may resist changes to their pay structure. Training and change management are essential.
Risks and unknowns
The main risks are:
- Gaming the system: Salespeople may push customers to overuse the product to hit quotas, leading to customer dissatisfaction and churn. This is a real risk if usage is not aligned with value.
- Data accuracy: Usage data can be manipulated or misinterpreted. Firms need to ensure that the metrics used are reliable and reflect true customer value.
- Complexity: Overly complex comp plans can demotivate sales teams. Simplicity is key.
- Short-termism: If quotas are too heavily weighted towards usage, salespeople may neglect new customer acquisition, which is still necessary for growth.
There is also the unknown of how this trend will evolve. As AI and automation become more prevalent, the role of the salesperson may change further. Some predict that sales will become more consultative, focusing on strategic advice rather than transactional selling. This would require even more fundamental changes to compensation.
FY Outlook
Over the next 12-24 months, we expect more mid-market B2B firms to adopt usage-based compensation, but with a pragmatic approach. Rather than a complete overhaul, many will blend traditional and usage-based metrics. The key will be to find the right balance that drives growth without alienating sales teams.
We also anticipate the emergence of specialised software tools to manage usage-based compensation, as existing commission management systems are often not designed for this complexity. This could create opportunities for vendors in the sales performance management space.
Finally, the shift will likely accelerate as more buyers demand product-led experiences. Firms that fail to adapt may find themselves at a competitive disadvantage, particularly in software categories where PLG is the norm.
Conclusion
The restructuring of quotas and comp plans around usage data is a logical evolution of the product-led sales motion. It aligns sales incentives with customer value, improves retention, and supports sustainable growth. However, it is not without risks. Mid-market firms must implement these changes carefully, with clear communication, robust data, and a focus on long-term customer success.
For founders and operators, the message is clear: the era of the 'hunter' salesperson is fading. The future belongs to those who can sell value, not just contracts. The question is not whether to adopt usage-based compensation, but how to do it effectively.
Why It Matters
For mid-market B2B firms, the shift to usage-based quotas and comp plans is not just a HR exercise. It affects revenue predictability, customer retention, and ultimately company valuation. Investors are increasingly scrutinising NRR and usage metrics, so aligning sales incentives with these metrics can improve fundraising prospects and exit multiples. Moreover, as competition intensifies, the ability to demonstrate product value through usage is a differentiator.
Commercial Impact
Firms that successfully implement usage-based compensation can expect improved NRR, higher customer lifetime value, and more predictable revenue. This can lead to higher valuations and better access to capital. However, there are implementation costs, including data infrastructure and training. The net effect is likely positive for most firms, but the magnitude depends on execution.
Risks / Unknowns
The main risks are gaming, data inaccuracy, and complexity. There is also the unknown of how AI will change the sales function. Firms should monitor these trends and be prepared to adjust their comp plans as the market evolves.
Source Notes
- Editorial note: The OpenView 2023 report on usage-based pricing is a widely cited industry source, but the exact percentage varies by segment. We have not verified the figure independently.
- Editorial note: The KeyBanc Capital Markets study on NRR and valuation multiples is based on public SaaS companies; the correlation is not causal and may not apply to private mid-market firms.
- Editorial note: No direct interviews were conducted for this article. The analysis is based on industry trends and public information.
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