“Pay-for-play” is an unacceptable practice in many areas of modern enterprise business activities, but the need to motivate the desired behavior of B2B sales professionals means fully embracing the concept. If you’re reading this, you are likely paying out some form of base-plus-commission to your quota-carrying reps or channel partners. But are you deriving the maximum business value from a holistic Sales Performance Management approach toward your incentive-oriented people, processes, and technologies?
In many companies today, the management of their salespeople remains an independent process held away from the purview of the core Human Resources function. Traditionally seen as “those cowboys over in Sales,” sellers are naturally different from most other corporate job roles and employee personas. Fairly or not, they’ve often earned a reputation as mavericks allowed to operate outside of behavioral norms; they hold more of the fate of the company’s s fortune in their hands than any other line of business; and their compensation leans far more heavily toward base-plus totals in their W-2.
Still, Aberdeen’s current Sales Performance Management research consistently validates the necessity to adopt a more sustainable and mature approach to running a successful sales organization. Many of the foundational elements of Aberdeen’s Human Capital Management research practice – deploying best practices in onboarding and talent management and adopting a more analytics-driven approach to the entire employee lifecycle – bear analysis within this Research Report. Here we will learn not only how the most successful sales enterprises deploy and support the automation of traditional incentive compensation management (ICM), territory, and quota solutions, but also what leading-edge trends and new technologies they are adopting to ensure they stay ahead of the competitive curve.
Sorry Mick Jagger, You’re Wrong
The classic sales persona described above is not without some merit: don’t we all secretly appreciate it when a hard-driving, if somewhat annoying, sales rep closes a huge deal for our company? They may be obnoxious, but at least someone is getting that job done, and we benefit directly from whatever behavior accompanied their successful revenue acquisition. Part and parcel with the idea of this aggressive sales persona is a safe assumption that the more they sell, the more money they make, and as a result most quota-carriers will act like the Energizer Bunny: they’ll just keep going and going, dialing and dialing, closing and closing, to eke out every possible commission check and override bonus by year-end. So, one would assume that there is never enough compensation to make them truly happy, specifically because of their unique, often uncapped income potential. It is somewhat surprising, then, to see the results of Aberdeen’s SPM research in Figure 1, regarding the general satisfaction levels reported by professional sellers and their managers:
Figure I: Sellers are Surprisingly Happy…When They Work for the Best-in-Class
Here we see that the majority of salespeople report either high or very high levels of satisfaction with their overall job environment, as well as with their compensation: the first and third triads in Figure 1 are far more substantial than the second and fourth. The more relevant story, however, details the stark differences between Aberdeen’s Best-in-Class companies and under-performing sales enterprises. While every single Best-in-Class company reports strong sales job satisfaction (selecting a ranking of four or five on a 1-5 scale), only 57% of All Others do so, and not a single top performer reports very or extremely unhappy sales workforces. With similar results around compensation satisfaction, what exactly is going on here? Is it actually possible to satiate a front-line seller? Do these supposed cowboys or lone wolves actually believe they are paid well enough? The answer lies in understanding what these Best-in-Class leaders and sales operations practitioners are doing that is different from Industry Average and Laggard companies.
Getting it Right: Why it’s Worth Making the Extra Effort and Deploying the Tools for Sales to Succeed
Let’s begin by understanding what kind of belief systems our surveyed companies hold dear to their hearts: have contemporary sales leaders evolved from the dog-eat-dog, Glengarry Glen Ross days of sales management?
In Figure 2, we analyze the extent to which organizations self-report their focus on three deliberately generalized strategic initiatives: continuous improvement, territorial equality, and team-building within the sales team. “Deliberately” is the term used here, because it’s hard to imagine any business leader not subscribing to such tenets, and yet Industry Average and Laggard companies consistently trail the Best-in-Class in affirming the need for action to support such strategies:
- Every top-performing firm strongly supports continuous sales talent improvement, and perhaps we should be glad that at least most under-performing firms agree. Talent management professionals know that dissecting the skills of various job roles, and matching them to the varied traits of both applicants and current employees, is a strong methodology to support this belief. Indeed, top-performing sales teams in Aberdeen’s It’s a Marathon, Not a Sprint: Best-in-Class B2B Sales Training for an Ever-Changing Market are 82% more likely than All Others (42% vs. 23%) to “use assessment / measurement tools to match sales personnel to the most appropriate selling role (hunter, farmer, inside, etc.).”
- Sales territory parity is another vital mainstay for successful SPM environments. The current research indicates that a typical B2B sales rep costs over $29,000 to replace, and 7.3 months to hire and onboard. Considering that a single rep’s turnover translates into measurable expenses and over a half-year of sub-optimal territory coverage, aren’t we obligated to minimize sales talent churn and do our best to make our sellers successful? This is why Best-in-Class firms are 32% more likely than All Others (37% vs. 28%) to have “optimized territories based on performance metrics to set attainable quotas and increase rep productivity.”
- Aberdeen research published in Incenting Success: Best-In-Class Sales Management drives home the value of compensating sellers for both individual and team results. While it is true that salespeople are – and we expect them to be – more selfish than the average employee, the research shows that only compensating them for individual accomplishments leaves opportunity on the table. The Best-in-Class better recognize that at least some small percentage of the payroll-based or non-cash rewards provided to sellers, should be linked to team-wide accomplishments. Todays’ “millennial” employees, having grown up natively in socially-connected, constantly sharing environments, are a natural fit for initiatives based on this reasoning.
Read the full report here.
This article was syndicated from Business 2 Community: Beyond the Commission: Will You Stay Ahead of the SPM Maturity Curve?
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