Sales compensation structures in Australia are under more pressure than ever. A recent global study found that the pay gap between top-performing and lower-performing sales reps has widened to nearly $200,000, with companies pouring resources into veteran talent while cutting back on early-career investment. That kind of shift doesn’t just affect individual pay packets — it reshapes how businesses build their sales teams for the long haul. Here’s what you actually need to know.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
These figures come from Xactly’s 2026 State of Sales Compensation Report, which draws on over 20 years of proprietary data. What stands out is the concentration of rewards at the top. Companies are betting bigger on proven revenue producers, but that strategy carries its own risks — especially for the pipeline of future talent. If you’re running a business or managing a sales team in Australia, the way you structure compensation today will determine whether you’re building a sustainable engine or just chasing short-term wins. For more context on how broader workforce trends are playing out, it’s worth looking at Australia’s workforce challenges and solutions.
How Sales Compensation Shapes Your Business Pipeline
The core concept here is compensation cost of sales (CCOS) — the percentage of revenue spent on sales pay. What the data shows is that CCOS for top-tier account executives has risen steadily over five years, while CCOS for lower performers has dropped. That sounds efficient on paper, but it creates a structural problem. When you concentrate reward at the top, you’re effectively telling everyone else that their ceiling is lower. Over time, that message filters through your entire hiring and retention strategy.
What I tend to notice in conversations with business owners is that many don’t realise how quickly a compensation imbalance can affect team culture. When junior reps see their earning potential shrinking relative to veterans, motivation drops. And when motivation drops, so does performance — creating a self-fulfilling cycle. The data from Xactly shows this isn’t hypothetical; it’s already happening across global organisations. For Australian businesses already dealing with talent shortages, this is a risk worth watching closely.
Why This Compensation Shift Matters for Australian Businesses
The real-world consequence is straightforward: if you’re a business owner or sales leader, your compensation structure is quietly shaping who stays, who leaves, and who even applies. The Xactly report shows that early-career account executives with 1–3 years of experience saw their on-target earnings decline across every percentile. That means even the best junior reps are earning less than they would have a few years ago. Meanwhile, reps with five or more years gained an average of $26,000.
Consider what that does to your hiring funnel. A university graduate or career-changer looking at sales sees a shrinking earning path. They may choose a different field entirely. For businesses that rely on a steady stream of new talent to fill junior roles, this creates a bottleneck. And when you combine that with the broader cost-of-living pressures affecting consumer spending, the stakes get higher.
One angle that doesn’t get enough attention is the role of account managers. Their pay gap peaked at $181,500 before narrowing to $162,000 in 2025. That’s still a massive spread, but the fact that it’s narrowing suggests companies are starting to recognise the value of mid-level relationship management. Whether that trend continues depends on how seriously leadership takes the pipeline problem.
Where Sales Compensation Strategies Go Wrong
Overweighting Veteran Performance at the Expense of Development
The most common mistake I see is treating compensation as a pure reward mechanism rather than a strategic tool. When companies pour resources into top performers while cutting back on junior development, they create a short-term boost in revenue but a long-term gap in capability. The Xactly data shows this pattern clearly: CCOS for top-tier AEs has risen, while CCOS for lower-tier reps has fallen. That might look like efficiency, but it’s actually a bet that your current top performers will never leave or decline. History suggests that’s a risky assumption.
Ignoring the Ramp-Up Problem for New Hires
Early-career reps with 1–3 years experience are seeing declining OTEs. That means the financial incentive to join a sales team and stick with it through the learning curve is shrinking. If your compensation model doesn’t account for the ramp-up period — the months when a new rep is learning your product, your market, and your process — you’ll struggle to attract anyone who isn’t already established. For businesses that need fresh perspectives and energy, this is a blind spot. A tool like JustAnswer Business can help you get quick guidance on structuring fair compensation plans without committing to expensive consultants.
Treating All Sales Roles the Same
Account managers and lead generation roles saw their CCOS rise steadily until 2024, then fall sharply in 2025 to below 2021 levels. That volatility suggests companies are still figuring out how to value different sales functions. If you’re paying your lead generation team the same way you pay your closers, you’re likely misaligning incentives. Lead gen is about volume and qualification; closing is about negotiation and relationship. Different work, different compensation logic.
Failing to Model Long-Term Pipeline Health
When you concentrate pay at the top, you’re implicitly deciding that developing future talent isn’t your priority. But every veteran rep was once a junior rep who needed time to grow. If the pipeline dries up, you’ll eventually face a situation where your top performers retire or move on, and there’s no one ready to replace them. That’s not a compensation problem — it’s a survival problem.
→ Scroll right to see all columns
| Role | Pay Gap (2024) | Pay Gap (2025) | Trend |
|---|---|---|---|
| Account Executives (90th vs 25th percentile) | ~$195,000 | ~$200,000 | Widening |
| Account Managers | $181,500 | $162,000 | Narrowing |
| Lead Generation | Rising until 2024 | Fell below 2021 levels | Volatile |
Building a Sales Compensation Model That Works Long-Term
Balance Short-Term Incentives with Long-Term Investment
The data shows that companies are prioritising elite performance over cost efficiency. That’s understandable in a volatile market — you want proven revenue. But the smartest approach I’ve seen involves setting aside a specific percentage of your compensation budget for development. That might mean a lower base for veterans in exchange for higher upside, with the savings redirected into junior training programmes. It’s not about paying everyone the same; it’s about making sure your pipeline has fuel.
Structure Ramp-Up Periods Explicitly
If early-career reps are seeing declining OTEs, the solution isn’t to pay them more from day one — it’s to structure their first 6–12 months with guaranteed minimums that taper off as commission ramps up. That way, you’re not overpaying for unproven performance, but you’re also not asking someone to survive on scraps while they learn. This is where a clear, written plan matters. For businesses that want to get the legal and compliance side right, JustAnswer Business Law can help you review contract terms without a full legal retainer.
Differentiate Compensation by Role Function
Account managers and lead generation roles have different cost structures and different value drivers. Treating them the same leads to the volatility we see in the data — rising costs until a correction, then a sharp drop. Instead, build separate compensation models for each function. Lead gen might include bonuses for qualified appointments rather than closed deals. Account managers might have a higher base with smaller commission, reflecting their relationship-maintenance role.
Use Data to Model Future Scenarios
The Xactly report is based on 20 years of data. You don’t need that much history to start modelling your own pipeline. Look at your current team: who’s approaching retirement? Who’s in the 1–3 year bracket? What happens if your top two performers leave in the same quarter? Running those scenarios now — before they happen — lets you adjust compensation before the crisis hits. For teams that want to improve their sales processes, Shopify’s AI ecommerce tools can help streamline how you track and manage sales performance data.
Watch for Emerging Trends in AI-Enabled Compensation
The report notes that leaders are increasingly using AI-enabled tools to improve productivity and reduce ramp risk. That’s an emerging angle worth watching. If AI can help junior reps perform closer to veteran levels faster, the compensation logic shifts. You might be able to invest more in early-career talent because the ramp-up period shortens. For now, it’s a future-phase consideration, but one that could reshape the entire model within a few years.
Frequently Asked Questions About Sales Compensation
What is a healthy CCOS percentage for a sales team? ▾
How do I handle compensation when a junior rep outperforms a veteran? ▾
Should I reduce base salary and increase commission for new hires? ▾
How often should I review my sales compensation plan? ▾
What’s the biggest risk of ignoring the pay gap between top and bottom performers? ▾
Can AI tools really help reduce ramp-up time for new sales reps? ▾
Your Compensation Model Is Your Growth Strategy
The data from Xactly makes one thing clear: how you pay your sales team is how you shape your company’s future. Concentrating reward at the top may deliver short-term revenue, but it starves the pipeline of new talent and risks leaving you exposed when veterans move on. The businesses that get this right will be the ones that balance performance pay with development investment, differentiate by role, and model their pipeline health before it becomes a crisis. If this was useful, you might also want to read effective strategies for customer service training in Australia.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
Sources and Further Reading
How global markets are shaping Australian business strategies — Explores how international trends, including compensation shifts, affect local decision-making.
Staying compliant with key health and safety regulations — Covers the regulatory side of running a sales team, including employment obligations.
Xactly Corp (2026). 2026 State of Sales Compensation Report. 🔗
