Sales Compensation

New Metrics for New Times

There is no doubt that 2020 has been a challenging year for everyone.

Social distancing and the impossibility of serving clients in person ended up accelerating changes that in many cases were already being considered, but eventually became not only necessary but urgent. Innovation and creativity became mandes, as companies needed find ways to serve their customers remotely, while also keeping their sales team motivated in an environment of adversity and insecurity.

On September 15th, 2020, Alexander Group held a virtual roundtable in Brazil, with a discussion about how the pandemic and other recent trends have impacted the commercial execution and performance metrics of the sales force. 65 commercial and HR leaders, as well as sales compensation professionals focused on two main topics and their implications for 2021 planning:

  • COVID-19 and the impacts on sales compensation
  • Recent trends challenging the design of business positions and traditional performance metrics

COVID-19 and the Impacts on Sales Compensation

Research conducted by Alexander Group since the beginning of the pandemic shows that more than 60% of companies have made some kind of change to their sales compensation programs in order to offer some protection to variable payment for sellers. The main changes reported were guaranteed payments, changes in the plan or payment curve, and reduction of business targets.

The same trend was reported by the roundtable participants. Almost 70% of them adopted some measure to mitigate the impact of the pandemic on variable sales compensation plans. The most common approach was ensuring a minimum payment, followed by the reduction of business targets for sellers.

Recent Trends Challenging the Design of Business Positions and Traditional Performance Metrics

Participants were asked about monitoring and paying for the commercial activities of sellers carried out virtually during the pandemic.

Half of the participants said they had not monitored or payed for the virtual activities of their sellers. The reason presented by one of the participants was to consider these activities the same as those that would be performed in person under normal circumstances, which are neither monitored nor remunerated. Thus, they made no changes due to the remote work. Another participant stressed the importance of ensuring the appropriate resources and tools for performing remote commercial work effectively, with specific training when necessary.

33% of the respondents are monitoring commercial activities carried out virtually, but without including them in the incentive plan.

Participants were also asked about the introduction of purely digital commercial positions, and about the change in the execution of existing commercial positions due to the adoption of digital tools.

Some consumer sector participants noted a strong migration of customers to digital channels, with some categories reporting real growth over the previous year.

One participant in the technology sector pointed out that his pre-sales team, responsible for generating and qualifying leads, came to have greater relevance during the pandemic, and faces the challenge of deciding on how to remunerate this team – whether to be eligible for variable compensation, and if so, which metrics are more appropriate to measure their performance.

One pharmaceutical industry participant reported the increased use of digital channels in marketing campaigns for awareness purposes, but does not see the same trend of digitization in the commercial area.

On the implementation of purely digital commercial positions, most participants stated that it is a movement that is beginning to happen, but still slowly in most companies. One consumer sector participant reported using a dedicated team for his e-commerce channel.

The expectation of the vast majority is that, as restrictions on social contact are reduced or eliminated, regular face-to-face business activities will return to normal.

As the session wound down, participants were asked about paying for commercial execution metrics, including milestones in the sales process or commercial activities.

Most participants reported not paying for these metrics. Some, however, reported payments to the pre-sales team for qualified leads.

Concluding Thoughts

Digital transformation has profoundly changed the purchasing process and the way buyers relate to their suppliers. Companies need to respond to this reality by evolving their business coverage models and their business positions. Virtual sales are a reality and require a careful review of performance metrics.

If you would like to discuss the topics covered at this event, or other topics relevant to your company’s sales compensation program, please contact us. It will be a pleasure to set up a time for us to talk.

Stay Tuned

Alexander Group just launched a complimentary survey on Sales Compensation Trends – Brazil Edition 2020. Participate to understand how the market has been changing this important commercial program in response to all the changes that have occurred recently.

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