Sales Compensation Brief- Issue No. 200420-2

COVID-19 has brought sales declines to commercial enterprises. Likewise, the COVID-19 crisis is impacting sellers’ incentive pay. In some cases, the loss of sales has been substantial. Since sellers’ pay is linked to sales performance, sales compensation payouts are facing similar declines. What are sales leaders attempting to do? Save the sales force.

The Alexander Group’s COVID-19 Impact on Sellers’ Pay 3-Day Update Survey reveals sales leaders are looking at a variety of pay replacement methods, including guarantees, quota changes and payout formula modifications. The survey featured 219 companies that provided their perspectives on how to treat the loss of sellers’ incentive pay. (Survey responses were collected during the week of April 13 and published on April 20.)

Watch here for complete survey findings (40 min video).

The pressure is building on sales leaders. Executive management is asking their sales leaders to restart the revenue acquisition engine. Protecting the sales force from losing focus and turnover are key challenges. Seller pay protection is at the top of the list of intervention efforts to save the sales force.

However, not all companies are experiencing the same level of revenue loss. Some more than others. Not surprisingly, some suppliers critical to the COVID-19 health effort have seen sales balloon. As expected, pay replacement efforts are driven by the degree of revenue loss. As the chart demonstrates, 100% of the companies reporting sales declines of greater than 25% plan to provide pay protection to sellers. So are most of the other companies.

Here are the most popular actions sales leaders are taking by sales level decline:

Decline greater than 25%: compensation formula changes (66.7%)
Decline 15% to 24.9%: incentive pay guarantees (34%)
Decline 5% to 14.9%: quota changes (35.3%)
Decline .1 to 4.9%: no adjustments (33.3%)
No decline: no adjustments (41.2%)
Increase in revenue: varied practices (42.9%)

Our initial survey (featuring 203 participants) published on March 30 found similar practices. One noteworthy exception is a preference to provide pay guarantees and formula changes rather than making quota changes, which fell from 45.2% preference to 29.5% preference from the first survey to the second.

Good News

Many sales organizations (43.7%) believe the need for pay adjustment modifications will end by June meaning economic activity will return. That’s good news.

Get Ready

The COVID-19 crisis has been a shock to sales departments. Sales leaders have stepped forward to protect the loss of sellers’ incentive earnings. However, sales expectations will not wait. Executive management wants sales leaders to begin producing sales results, the sooner the better. Having an incumbent sales team will make this possible. Sales volume needs to return. The sales department is ready to meet the challenge. Our view? Watch for the emergence of kick-start incentive programs such as contests/spiffs, recognition and formula accelerator rates.

David

David Cichelli
Sales Compensation Educator, Author, Speaker
Connect with me on LinkedIn!

READ ALL ISSUES:

Solving Today’s Market Disruptors
Global Sales Comp Practices
Sentinel Charts to Monitor Programs
Sales Comp: Linked Formula Design
Sales Quotas: Friend or Foe?
Sales Comp: Breaking the Rules
New Fiscal Year Sales Comp Plan
Sales Force Trends
Test Your Knowledge
You Can’t Hide From It
Getting the Mix and Leverage Right
2021 Sales Comp Hot Topic Findings
Should Reps Be Paid on Profits?
Sales Comp Starts With Job Design
Quota Busters!
Sales Compensation Victims
Global Sales Compensation
Are Salespeople Coin-Operated?
2021 Sales Comp Trends Findings
Is Sales Comp Just for Sellers?
Sales Comp: Rewarding Sales Profits
Pay Equity and Sales Compensation
2021 Sales Compensation Planning
Avoiding Common Misunderstandings
2020 Sales Comp Hot Topic Findings
What COVID-19 Found in the Shallows
Best Revenue Recovery Solutions
Save the Sales Force
Sales Seek to Protect Incentive Pay
Should You Protect Sellers’ Pay?
Use the Right Measures!
Are Comp Plans Industry Specific?
Careful About That Threshold
Commit to the Money, Not Mechanics
Should You Change Your Comp Plan?
Are sales comp costs variable?