While many organizations understand the importance of a high-performing sales team, few have the tools or resources in place to truly measure the success of their own.
WorldatWork’s “Return on Sales Expense” survey in partnership with OpenSymmetry found that 80% of the 364 organizations surveyed lack defined methods and measures to determine the relationship between the cost and productivity of their sales teams. The struggle to capture sales team ROI is fueled by the absence of standards and the variability of components measured across companies and industries.
“They say it takes money to make money, but how much money and what is the ROI on efforts of your sales team?” asked Scott Cawood, CEO of WorldatWork. “Savvy sales leaders understand the difference a highly motivated and engaged sales team can make; this research provides insights into how to more fully tap their potential and shows how you stack up against some of the best in the business.”
The six industries represented in the survey are financial services, consulting, IT, health care/pharma, manufacturing and retail.
The survey found that 22% of organizations have a defined method for calculating the cost of their sales teams and 19% of organizations have measures to determine the productivity of the sales team, while 20% have both. When examining the return on sales expense, base salary (84%) and variable pay (71%) are the primary sales compensation costs. Other costs commonly include travel, sales awards, channel costs and equity.
When it comes to sales compensation plans, 73% of organizations use goal-based incentives, 49% of organizations use commission plans with fixed commission rates and 36% use flexible objectives-based plans that reward for accomplishments other than financial results.
“In order to compare the level of spend on the sales effort across companies, it is essential to understand current practice about how different industries calculate both the cost of the sales effort and the productivity of the sales force,” said Robert Blohm, senior partner at OpenSymmetry. “Given the wide range of practices in use (to calculate sales ROI), as well as the tools available, being able to identify prevalent practice and propose standardization within industries should be very beneficial to CFOs and all those working to ensure a solid return on selling expense.”
Other Key Findings:
- Those with sales operation responsibility are most often responsible for measuring sales compensation plan effectiveness, 31% as compared to finance (25%), HR/compensation (25%) and sales (13%).
- Desktop office applications are still the primary tool to administer and assess sales compensation plans, 50% and 64%, respectively. Other tools include third-party SPM solutions, solutions built in-house and reporting/analysis solutions.