Most B2B companies pay their sales teams on revenue. Not because they think revenue is the best measure of performance, but because revenue is the number they have. It's clean. The ERP produces it automatically. Every invoice, every order, attributed to an account.
Profit per customer is harder. It requires knowing what each customer costs to serve — freight, order frequency, returns, service calls, small-order handling, payment terms. That data exists somewhere in most companies, but it's spread across systems and departments. Assembling it at the customer level takes work that most companies haven't done yet.
So the comp plan stays on revenue. And the sales team does exactly what they're paid to do.
Gross margin is correct. It's just not profit.
Whether revenue-based incentives produce good profit or not is something most CEOs can't actually answer. Two customers with the same revenue can have completely different profitability. One places large consolidated orders and pays on time. The other orders frequently in small batches, demands special handling, returns product, and calls support. The gross margin on paper looks the same. The actual profit is not.
Gross margin isn't wrong. It's just not answering the question the CEO needs answered.
A German technical wholesaler ran their ERP data through a customer-level profitability model in 2025. 30% of revenue came from accounts with negative contribution margins. The sales team had no idea. Why would they — the accounts generated revenue, and revenue was what they were measured on.
Growth covered it
Wurth reported a 40% decline in net income in 2025. EUR 1.14 billion down to EUR 673 million. The company had been growing at nearly 20% annually for decades, and that growth covered the cost structure underneath. When growth slowed, the structure showed.
An analysis of the eight biggest Danish wholesalers found the same: an average 37% drop in profit margins. Accumulated losses of 25-35 million DKK per year at some of them.
These aren't companies with bad strategies. Revenue was growing. The sales teams were performing, by the metric they were given. The problem was that the metric didn't measure what the company actually needed.
The 85-13 gap
Bain surveyed 1,700 B2B executives. 85% said their pricing needs improvement. Only 13% had incentives aligned to pricing integrity.
The incentive mismatch
In 87% of these companies, the sales team is rewarded for something other than margin. Revenue. Volume. Retention. The incentive says: bring in the customer, keep the customer. What that customer costs to serve is someone else's problem — or more often, it's no one's problem, because the number doesn't exist yet.
A rep who loses a customer gets questioned. A rep who keeps a customer at a loss generates a line item in overhead that nobody traces back. Obvious math. Predictable behavior.
Last price paid
A broadline foodservice distributor had two people on its pricing team. Two, for tens of thousands of customers, hundreds of reps, millions of transactions. The reps focused on their top 10% of accounts. Everything else got priced on "last price paid." Whatever the customer paid last time, they paid again.
That's what happens when the incentive is retention. No customer ever gets repriced. Cost increases get absorbed. The most expensive accounts pay the same as the most efficient ones, year after year, because nobody has a reason to look.
Many CSCOs already suspect that some of their products and customers are unprofitable, but they lack a structured approach to define and resolve the issue.— Marco Sandrone, VP Analyst, Gartner Supply Chain (April 2025)
They suspect. They haven't measured. And the comp plan doesn't reward finding out.
What happens when someone measures it
The companies that have measured it and then changed incentives tend to see results quickly.
A wholesale distributor documented by BDO changed compensation to 60% bonus on profit objectives, 40% on growth targets. They also created profit rate improvement kickers for the sales team. The result: 6% operating income improvement and 30% growth in their target accounts. The sales team didn't shrink the business. They focused it.
The German wholesaler that discovered 30% of revenue was margin-negative improved profitability by 1.8 percentage points within six months. They also found 12% cross-selling potential in the mid-tier — accounts the sales team had been overlooking because the big accounts got all the attention.
A distributor studied by SPARXiQ had 50% of revenue priced through overrides — reps bypassing the system price. After restructuring, overrides dropped to 10%. Gross margin went from 18.25% to 21.2%. For a company running 4% EBITDA, that's 74% more profitable. The customers didn't change. The products didn't change. The rules changed.
The sequence
In every one of these cases, the measurement came first. The comp plan change came second. You can't pay a sales team on customer profitability if you can't show them customer profitability. And you can't show them until someone has assembled the cost-to-serve data that's sitting in the ERP, unallocated.
That's the sequence. Not "fix the incentives" — that's the easy part once you can see the numbers. The hard part is doing the work to make the numbers visible.
Most B2B companies haven't done it yet. Not because the data doesn't exist. Not because the technology is missing. But because it takes someone inside the company deciding this is worth the effort, and then actually following through.
The companies that have done it tend to be surprised by what they find. And then surprised by how fast things improve once the sales team can see what they're actually being asked to optimize.
Sources
- SPARXiQ / NAW, pricing override analysis (2025)
- Qymatix, German technical wholesaler case study and Wurth analysis (2025)
- Impact Commerce, analysis of 8 Danish wholesalers
- Bain & Company, 1,700+ executive survey
- Zilliant, broadline foodservice distributor case study
- Marco Sandrone, Gartner Supply Chain (April 2025)
- BDO, wholesale distributor 80/20 case study
- Distribution Strategy Group & Cavallo, "Closing the Execution Gap" (March 2026)
Founder, Precis Flux
20 years across the industrial value chain, from R&D to P&L management. Background in engineering and applied mathematics. Founded Precis Flux after seeing the same pattern in every company he worked in: the data to improve profitability existed, but nobody had the time or tools to use it.