Salespersons' incentives that set minimum quotas and commissions based on sales revenue,and tie bonuses and rewards to achieving sales revenues above a stretch target contribute to unprofitable customer relationships.

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Salespersons who are incentivized solely based on sales revenue may prioritize closing deals without considering the profitability of the customer relationship. As a result, they may bring in high-revenue but low-profit customers, which can lead to unprofitable relationships and ultimately harm the company's bottom line. Setting stretch targets for bonuses and rewards can also encourage salespeople to focus on short-term gains rather than long-term profitability.

Salespersons' Incentives That Set Minimum Quotas and Commissions Based on Sales