The Impact of Selling Complexities on Sales Compensation

All growth-oriented manufacturing and distribution leaders want to drive more alignment between seller pay and performance. According to executives surveyed in recent Alexander Group’s trends on industrial selling, 97% of manufacturers and 67% of distributors feel that driving a strong pay for performance sales culture is critical for growth. However, only 55% of manufacturers and a mere 22% of distributors feel that they are executing this effectively today.

This ideology represents a notable disconnect between sales compensation and revenue growth. Sales compensation represents 57% of total sales expense for manufacturers and 61% for distributors. Additionally, sales compensation costs have increased dramatically over the past three years across all sales roles–total comp for field reps is up 10% while key account managers have seen a 19% increase. The uncertainty is real–are your sales compensation measures and mechanics structured correctly to drive strategic revenue growth and employ a strong pay for performance culture?

Alexander Group recently held virtual roundtable sessions formed exclusively for leaders in manufacturing and distribution. This round’s sessions focused on sales compensation and in particular, determining the principles and guidelines necessary to attract, retain and reward best-in-class sales talent to profitably grow the business. Fifty executives attended three virtual roundtable sessions. Sales and HR comp leaders, along with members of Alexander Group’s manufacturing and distribution practice, discussed the challenges of driving a stronger pay for performance culture and the critical success factors for aligning sales compensation with company revenue growth goals

Additional Resources

  1. New Manufacturing Study Reveals Top Industry Challenges
  2. Today’s Manufacturing Sales Teams: How To Lean the Sales Compensation Program
  3. Distributor Sales Compensation Design Optimization
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