Sales force yield is rising – a key finding from the 2013 Sales Compensation Trends Survey

By: David Cichelli Sales Compensation, Sales Productivity, Sales Quotas, Sales Transformation

Sales Force Yield—the ability of a sales department to grow revenues faster than sales costs—is a foundation measure of sales force effectiveness. The best outcome is to have a positive sales force yield when revenues are growing. That is, as the company’s revenues grow, the sales force costs grow at a lesser rate. However, even when sales production declines, sales leadership can demonstrate a positive Sales Force Yield by reducing costs at a greater rate than sales revenue shrinkage.

The Alexander Group’s “2013 Sales Compensation Trends Survey” reports an average 3.28% positive yield of revenue growth to sales costs for 2012.

More than 125 companies participated in the 11th annual survey, which collected data in December  2012 and published results in January 2013. The survey gathered information on sales department performance in 2012 as compared to 2011 and projection about 2013 performance. The survey featured more than 36 questions regarding sales performance and sales compensation program costs and effectiveness.

Chart I displays the relationship between the percent change in sales revenue and the percent change in sales costs.

As Chart I demonstrates, greater sales growth usually requires greater sales cost.

Chart II shows the distribution of Sales Force Yield.

Most companies show a positive Sales Force Yield with revenue growth growing faster (positive numbers) than sales costs. The average Sales Force Yield is 3.28%.

Sales Force Yield provides a year-over-year measure of sales productivity improvement. While companies with higher growth rates tend to see costs increasing at a higher rate than lower growth companies, the more insightful measure is to compare the percent change in costs to the percent change in sales revenue. A positive Sales Force Yield will show that the percent of sales revenue change is higher than sales costs change. This demonstrates sales productivity increasing. Anytime the number is negative, the sales costs will be growing at a faster rate than sales revenue.

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David Cichelli

David Cichelli contributes his revenue growth knowledge and experience to a wide array of sales organizations. His clients include leading companies in technology, telecommunications, wholesale/distribution, financial services and healthcare. David helps clients redefine and deploy go-to-customer solutions to ensure optimal revenue performance. By applying the Alexander Group’s Revenue Growth Model™, he helps companies achieve their revenue objectives through the coordination of marketing, sales and service resources. These efforts include revenue planning, customer engagement design, sales force configuration, and program design and management. He is the Alexander Group’s sales compensation practice leader.

Widely recognized by national professional associations and trade publications for his work in linking sales compensation to management’s objectives, David is a frequent speaker on sales compensation topics. He is author of Compensating the Sales Force (3rd edition) and The Sales Growth Imperative, published by McGraw Hill. He serves a leadership role in the design of the firm’s revenue growth conceptual models. David is an officer of the company. He is also the author of the 2018 Sales Compensation Almanac, published by AGI Press.

Prior to joining the Alexander Group in 1985, David served for five years as a national practice manager in sales compensation for a leading compensation consulting firm. Previously, he had spent seven years providing support to the field sales organization of a multinational Fortune 200 chemical company. David has a B.A. from Pennsylvania State University and an M.S. from Michigan State University.