Most companies make minor annual changes to their sales compensation plans. Will companies be making major pay program changes for 2021?
At the start of each fiscal year, the revenue team confirms and realigns sellers’ efforts to focus on the new year’s revenue goals and important strategic objectives. Each year, 90% of all companies make changes to their sales compensation programs. About 12% of the companies make major changes affecting most incentive plans. Additionally, many of these companies make major job changes, too. Meanwhile, the remaining companies make tactical changes to the incentive plans for select jobs. And, many plans remain unchanged. Plans slated for change for the new fiscal year often feature changes to performance measures. The objective of these changes is to ensure the incentive program aligns with company goals.
The 2020 COVID-19 pandemic impacted companies in a variety of ways, including delayed orders, lost customers and pricing pressures. Some industries saw severe declines such as travel, hospitality, retail, restaurant and live entertainment. Other companies experienced only a minor downturn, sector challenges or specific account conditions. Not surprisingly, some companies saw an uptick: healthcare solutions, technology, work from home tools and quarantine/social distancing aids.
However, the pandemic also revealed fundamental questions about seller/buyer interactions. For years, the buyer/seller equation has been changing, but in a piecemeal fashion. Most companies can list their evolving, customer engagement practices: more internet engagement, more pre-sales lead generation and more post-sales support. However, the pandemic created a “wait, what?” event accelerating sales leaders’ commitment to reevaluate their legacy sales deployment models: Now is the time to fully recognize, embrace and accelerate the changing nature of selling.
Consider these realities:
These are only a small sampling of the unstoppable changes sales teams are adopting. These changes will have an impact on jobs and thus on sales compensation practices.
What happens to sales roles affects the design of sales compensation plans. With elements of the classic sales job’s role now being absorbed by other parties, sales management must determine why and how to use sales compensation.
Sales compensation’s underlying intent is to reward successful persuasion. New account selling, complex application configuration, reducing buyer risk and uncertainty and securing non-guaranteed orders is the role of a seller. Jobs with these accountabilities belong on robust sales compensation plans. However, as sales models change, consider some of the following job and sales compensation implications:
Sales compensation pays for successful influence. Customer contact accountabilities and expected outcomes are changing. So are sales jobs. Will 2021 be the year that you undertake a top-to-bottom review of your sales compensation practices? Many companies are being nudged that way.
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©2020 The Alexander Group – All Rights Reserved – Issue No. 200920-2
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