A
ccording to extensive research by Chad Albrecht – an expert in the field of sales compensation, a principal at ZS Associates, and coauthor of The Future of Sales Compensation – sales- people continue to need a combina- tion of intrinsic and external financial rewards. “You need a balance of inter- nal and financial rewards; you can’t just throw money at them,” he says.
His fellow author, ZS principal Steve Marley, sees
interest in moving away from a single comp plan for each sales role – for example, inside sales or key- account management. “You have to select rewards that matter most to them. Millennial reps may differ from Gen Y or Gen X or baby boomers.” So some firms with large sales forces that are highly diverse in region, age, or other ways may want to personalize comp plans for individuals. That could mean letting reps pick their own quotas and potential rewards. It might mean letting each rep choose a personal mix of monetary and non- monetary incentives. Current comp software makes personalization tough to administer. But, if enough firms request personalization, software developers could en- able it. In the meantime, letting reps pick their own prizes in sales contests is a small step toward personalizing incentive comp. Marley says firms increasingly want sales-comp software to integrate seamlessly with other sales applications such as CRM, account-management, and territory-assignment systems. All this seems a very tall order. Achieving both personalization and integration may require entirely new comp systems – well beyond what is available today, maybe from new providers. In any case, Marley expects consolidation among today’s four to five dozen sales-comp application providers. Albrecht sees firms making much more use of
predictive analytics. They can use comp software and all its rich data to predict key metrics – for example, turnover rates and which specific reps might be lost. That, in turn, enables managers to intervene and avoid costly replacement and new hires. With a new hire costing up to half a million dollars, cutting turnover by just 5 percent would save dramatically.
And the ZS consultant believes firms must get
much better at explaining any changes in comp plans to their reps. Salespeople need much more than an email notice to understand and be properly motivated by the new plan. Research confirms that having more than three metrics in sales comp is counter-productive. But Albrecht notes there can be other complications in comp plans that require better communication to be effective. Another comp expert sees other trends – some
different and some similar. Scott Sands, partner and sales force effectiveness leader at Aon Hewitt, says firms are increasingly paying frontline reps for profit – up from 25 percent a few years ago to 35 to 40 per- cent now. Distributors lead this wave, as their profits are easy to calculate, but others are following. The pressure to cap upside performance comp for top performers as CFOs struggled during hard times is easing now as firms want faster growth – and CSOs are winning more comp arguments, Sands says. And the mix of base and variable is shifting. Sands expects a balance of two-thirds base and one-third variable as firms seek to encourage the patience to wait for a big solution sale rather than jump on a transaction opportunity. On total sales comp, firms have tended to bunch at the median level for their peers – or at the 75th percentile. The former strategy results in more training of young people, while the latter effectively buys talent. Now the median level is getting closer to the 75th percentile, and Sands thinks sales- people may tend to become either very valuable solution sellers who can talk to CEOs or become much more numerous and lower-paid transaction reps, with a big gap in between. Like his counterparts at ZS, the Aon Hewitt expert also sees sales comp and performance software integrating with other sales systems, especially CRM. One such partnership is between Xactly and Salesforce; another is between Callidus and Siebel. But the great majority, perhaps 80 percent, of firms still administer comp in Excel or other mostly manual systems. And, just because the leading comp applications can handle more complex- ity, Sands says firms should still ask themselves, “Should we add complexity?” Companies and software vendors should shoulder the burdens of complexity to improve sales. Individual reps should not have to.
JIANG HONGYAN /
SHUTTERSTOCK.COM
SELLING POWER MAY 2016 | 25 © 2016 SELLING POWER. CALL 1-800-752-7355 FOR REPRINT PERMISSION.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32