The struggles businesses have endured are well known and widespread to this point of the COVID-19 pandemic. Sales teams are no exception when it comes to suffering adverse effects.
WorldatWork’s “2020 Sales Compensation Programs & Practices Survey” in partnership with SalesGlobe underscored this, as it revealed that twice the number of companies said that less than 25% of their sales team will reach quota in 2020, compared to 2019.
“We are not surprised to see that the pandemic has hurt sales quotas,” said Alicia Scott-Wears, director of total rewards content at WorldatWork. “Despite the many issues those responsible for sales compensation are now facing, organizations continue to reevaluate the merit of multiple performance measures.”
The survey also revealed that organizations are simplifying their compensation plans. On average, organizations use up to three sales compensation performance measures. However, the percentage of organizations that report one performance measure has increased by 71%.
“Over the years, we have seen organizations reduce the number of performance measures in the sales compensation plan to 1-3 criteria on average,” Scott-Wears said. “As organizations continue to streamline for efficiency and enable more agile approaches, we anticipate the trend of moving toward a single performance measure to continue.”
When determining performance, 60% to 79% of organizations report total revenue is their top measure, followed by key sales objectives and product unit volume.
Other key findings:
- Manual monitoring of sales compensation is still being utilized. Only 32% of organizations use third party Sales Performance Management (SPM), and 47% use third party Customer Relationship Management (CRM). A surprising number of organizations manually conduct SPM (32%) and CRM (24%).
- When asked about events that will impact sales strategy, 61% of organizations see macroeconomic changes as a top impact item, while 43% cite technology advancements and 33% mention natural occurrences like weather events and health crises.
“The number of companies estimating that over half their sales organization hit quota has declined from 58% of companies in 2019, to only 30% of companies in 2020 but shows more optimism for 2021 at 36%,” said Mark Donnolo, managing partner of SalesGlobe. “However, this is still concerning because quotas across companies are also expected to decline for 2021. Macroeconomic changes are cited as having the biggest impact, likely driven by the pandemic, causing a large portion of companies to rethink their approaches to sales compensation, quotas, and sales coverage.”
About the Author
Brett Christie is the managing editor of Workspan Daily.