“Changes Ahead” for Sales Compensation
Alexander Group held annual Media Ad Sales Compensation Symposium.
During the “Challenge Accepted! Sales Comp Design for Uncertain Times” session, discussion centered on how the current market disruption is impacting the sales compensation plan structure for the remainder of 2020 and into 2021.
80% of attendees have made changes to their second-half 2020 sales compensation plans. This is no surprise as 81% of the attendees noted that the current environment is impacting their sellers pay by 5% or more. So, what are they changing? ~50% are adjusting rates, thresholds and/or maximums. Between 25%-40% are changing quotas, providing SPIFFs and/or granting guarantees/draws.
Why are there so many different approaches? The answer depends on each company’s situation (revenue impact/duration, staffing/account changes, current plans/quotas, and pay impact/variability of impact) and reward priorities. Below is a list of typical reward priorities and associated solutions Alexander Group has helped design for many of our clients.
50% of attendees plan and 20% are considering making changes to their FY21 sales compensation plan. Why? Many reasons…
- Align their incentive program to evolving strategy, coverage and job changes. One sales leaders talked about re-aligning focus on new accounts.
- Accommodate market volatility and unknowns in this new post-COVID-19 world. One sales compensation leader stated it appropriately, “Our 2021 plan must accommodate the market uncertainty.”
- Keep pace with the market practices. A few companies are taking advantage of this downturn to move from 100% commission to a quota-based target cash mechanic, which is a daunting task.
When polled, we found the largest change will be to the pay curves (83%). However, 40-60% will be making changes to pay mixes, measures, as well as their terms, conditions or policies (e.g., new hire draws, LOA and windfall policies).
For more details
For more information about this event, please read our Symposium Insights article. If you need help with your FY21 planning, please schedule a call with one of our practice leads, we are eager to help!