She Works Hard for the Money*

And so do you. How hard and how much? Good questions and you, or the appropriate person in your company, have a chance to answer them right now.  Take CSO Insights' 2010 Sales Compensation & Performance Management, which we just opened this week (official launch will be next week). This is our 3rd annual comp survey and promises to be our biggest yet--we had over 1,000 firms respond to last year's survey.

What did we learn last year? 6 of 10 firms used accelerators in their compensation design but less than 1 rep in 4 reps reached accelerators in 70% of firms reporting. And the top metrics being compensated were new accounts and quota achievement. This probably isn't surprising but it's limiting. There are other important metrics to consider such as contribution to margin or its inverse, limited discounting.

Consistent use of the CRM system and/or adopted sales process are other behaviors that can be considered along with revenue. But if there's no reward or consideration for these, there's only hope that they'll be realized. As was pointed out in our first comp report, "It's very difficult to get reps to do something their wallet is telling them not to do." And the corollary, "It's equally difficult to get reps to stop doing something their wallet is telling them to do."

Of course these are obvious, but the fact remains that 52% of companies were using spreadsheets to manage their comp plans and nearly half (48%) employ only 1-3 metrics. This isn't necessarily a bad thing but there are other possibilities when you consider other desirable selling behaviors (see chart).

You can see how quickly the comp plans' impact fell off after selling new accounts. If a plan only has 1-2 metrics, it's a safe bet quota achievement is one, selling new accounts is two, and all the others shown above are simply not part of the equation or motivation. Nice to have but not likely to show up regularly.

There's plenty more to learn and it'll be particularly interesting to analyze this year's data following 2009--the toughest year in the past 16--to see how/whether it affected sales rep and manager pay, what's now being measured, and the impact these are having.

As with all our surveys, those who complete the survey will receive the report at no charge when it's released mid-September. We've also added a couple interesting questions this year but the entire survey is still designed to take less than 15 minutes to complete.

I hope you'll refer this to the sales ops or other qualified person in your company to participate. What they share--and subsequently learn in designing your 2011 plan--could mean you work a little less hard for your money.

Sell well,

Barry Trailer

*Donna Summer 1983