Incentive compensation only works if it’s tied to the right outcomes. That’s where performance metrics come in.
Whether you’re launching a new incentive pay program or refining an existing one, choosing the right KPIs (key performance indicators) is crucial. These metrics are the foundation of incentivized compensation - and the key to aligning employee effort with company goals.
In this article, we’ll walk through:
What performance metrics are
Why they matter in incentive comp
Examples of key performance metrics
How to choose the right ones for your business
Performance metrics are quantifiable indicators used to measure progress toward specific business objectives. In the context of incentive compensation, they serve as the basis for calculating bonuses, commissions, or other rewards.
KPI Key Performance = the measurable outcome of work that’s linked to business success.
If you don’t measure what matters, your compensation and incentives may drive the wrong behaviors - or none at all.
The goal of any incentive pay structure is to motivate the right behaviors. Poorly chosen metrics can lead to:
Short-term thinking
Misaligned priorities
Disengaged employees
Wasted compensation budget
Strong key KPIs ensure:
Transparency and fairness
Line-of-sight between actions and rewards
Goal alignment between leadership and frontline staff
✅ Bentega’s platform helps you link comp directly to performance KPIs - Book a meeting with us to see how it works
Let’s look at performance metrics examples across key business functions. These are commonly used in incentive comp plans.
| Metric | Description |
|---|---|
| Revenue Attainment | Total revenue vs. quota |
| Win Rate | % of deals closed vs. deals pursued |
| Sales Cycle Length | Average days to close a deal |
| Upsell/Cross-sell Revenue | Add-on sales to existing customers |
| New Customer Acquisition | Number of new customers per rep |
These performance metrics are typically used in sales commissions and sales incentive plans.
| Metric | Description |
|---|---|
| Net Retention Rate | Revenue retained after churn/upsell |
| Churn Rate | % of customers lost |
| Customer Satisfaction (CSAT) | Survey-based satisfaction scores |
| NPS (Net Promoter Score) | Customer loyalty score |
| Onboarding Time | Avg. time to get customer live |
These performance metrics are perfect for customer success incentive pay plans.
| Metric | Description |
|---|---|
| MQL to SQL Conversion Rate | Quality of leads passed to sales |
| Campaign ROI | Return on ad or event spend |
| Lead Volume | Total number of new leads generated |
| Website Conversions | Visitors converting to leads |
These performance metrics aligns incentives with lead quality and pipeline growth.
| Metric | Description |
|---|---|
| Feature Delivery Timeliness | Projects shipped on time |
| Bug Fix Rate | Speed and volume of bug resolution |
| Technical Debt Reduction | Quality and codebase improvement |
These performance metrics can support team-based incentive pay or spot bonuses.
Here are key performance measures examples used across industries:
| KPI Category | Common KPIs |
|---|---|
| Financial | Revenue, profit margin, cost savings |
| Customer | Retention, satisfaction, lifetime value |
| Operational | Efficiency, error rate, time to delivery |
| Employee | Productivity, absenteeism, engagement score |
| Growth | Market share, product adoption, expansion |
Need help choosing the right ones?
When building an incentive pay plan, your metrics should be:
Measurable: Data must be objective and accessible
Relevant: Linked to business goals and employee influence
Actionable: Employees can directly impact outcomes
Balanced: Combine quality, quantity, and teamwork if needed
Pro tip: Don’t overload your plan - stick to 2–4 key KPIs for clarity and focus.
| Aspect | Leading KPIs | Lagging KPIs |
|---|---|---|
| Definition | Predictive metrics that signal future performance | Outcome-based metrics that reflect past performance |
| Time Orientation | Forward-looking | Backward-looking |
| Example Use in Comp | Used to proactively reward behavior that drives results | Used to reward results already achieved |
| Control | High — employees can typically influence these directly | Lower — employees have less direct control over final outcomes |
| Examples | - Sales calls made - Pipeline value - Lead conversion rate - Customer onboarding time |
- Revenue booked - Quota attainment - Retention rate - Churn rate |
| Best For | Driving desired behavior and early-stage effort | Measuring final success and impact |
| Risk | May not always result in final outcomes | May cause delayed feedback and motivation |
| Compensation Fit | Ideal for frequent, activity-based bonuses or SPIFFs | Ideal for quarterly/annual performance bonuses and commissions |
Looking for inspiration?
Download our free “Guide to Business Performance Metrics” with formulas and examples to get started quickly. Get the Ultimate Guide to Business Performance Metrics for Free →
Performance metrics are the backbone of any effective incentive compensation strategy. Whether you’re optimizing sales incentive plans or creating a new bonus structure, the right KPIs make all the difference.
Remember:
Metrics drive behavior
Simplicity beats complexity
Align rewards with outcomes
Need help designing an incentive structure that actually drives performance?
👋 Chat with the experts at Bentega - Book your free session →
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Bentega helps companies design data-driven compensation and incentives using performance metrics that drive results. Explore solutions at Bentega.io.