Sales Performance Management Best Practices Blog

Highlights from recent 2018 Sales Compensation Trends survey

Posted by Jerry Hegarty on Fri, Aug 3, 2018 @ 11:08 AM

The Alexander group recently conducted a survey of sales compensation trends with 135 sales organizations. The survey was conducted at the end of 2017 with expectations for 2018 an integral part of the exercise. Now at the mid-way point in 2018, an interesting question is not only how your sales organization matched up with the survey groups results & expectations, but now with six months in the books, what, if anything, has changed and why ? We take a look at several takeaways highlighted by the survey as ask a few questions to consider as you take stock of 2018 at the half way mark.Image result for survey

  • Within the survey population, sales volume & revenue were expected growth at 5 & 6% respectively with Sales Compensation spend expected to rise 2%.
    • Are your results so far in line with these projections?
    • How is your Sales Compensation Budget tracking at the half way mark?
  • From a sales compensation plan design perspective; Median payout was targeted to match 100% of Target Achievement if the company achieved 100% of target.
  • Turnover within the sales organization tracked at 9.5% in 2017 with 8 % expected in 2018 and in line with historical norms.
    • How has turnover been so far this year? Of those moving on, how many would profile as ‘A team’ high achievers?
  • Over 55% of the respondents reported Quota setting as the major hurdle for them going into 2018.
    • How are your quota’s tracking with sales results and are you contemplating any quota adjustments?
    • How comfortable are you with the quota setting methodology (top-down / bottom-up / etc.) used to set 2018 targets?
    • Does your plan structure protect the company in the case of one time ‘Black Swan’ type sales events?
  • In 2018, 40.6% plan to make changes to performance measures in 2018 while 82% reported sales revenue as the key performance measure for the primary sales job. 37.4% selected new accounts as the next most important measure in 2018.
    • If you are starting to think about plan changes, are you contemplating changing the key plan measures? If so, will they align better with strategic objectives? Have corporate objectives shifted recently?
  • Over 80% of respondents say they do not cap earnings of their sales team while the other 20% do.
    • If you cap earnings, why? If you do not, why not? Rigorous plan design and documentation can provide your company with protection from unforeseen events while maintaining the enthusiasm at the field rep level of an uncapped plan.
  • When it comes to the mechanics of sales compensation plans; Just over half (50.4%) have a threshold on the primary plan component.
    • It’s a coin flip between companies that like to pay from dollar one to those that employ performance thresholds in their plans.
      • Is your decision regarding the incorporation of thresholds tied at all to the base/variable pay mix?
      • What are the main factors for you influencing this decision?
    • Over 33% report performance periods that are annual with monthly payout periods.
      • Best practice guidelines often look to the sales cycle as an influencer of pay period selection. How do yours align?
    • Almost 55% use a clawback to recover commission money already paid to sales personnel.
      • Clawbacks become very helpful in situations where you employ true-up calculations common to plan structures where the performance period (i.e. annual plan) is not the same as the payout period (monthly payments).
      • How do your performance, quota & payout periods align? Is there potential room for improvement in this regard with your plans?

Do you feel there is room for improvement with your current Sales Performance Management process? Check out these 10 warning signs that it may need some TLC ...

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Topics: SaaS Sales Compensation, Sales Comp Plan Fundamentals, plan design, Sales Compensation Professional, Human Resources, Sales Quota