The pending recession dampens wage inflation pressure on sellers’ pay in 2023, according to the results from Alexander Group’s 2023 Sales Compensation Trends Survey. For most of 2022, wage inflation made the headlines. However, emerging recessionary forces at the end of 2022 are now keeping sellers’ pay subdued for 2023. The survey results indicate sales departments are allocating a traditional and modest 3% increase for on-target-earning budgets in 2023.
More than 85 companies reported revenue performance, turnover rates and change in compensation costs, including incentive and total compensation increases. Participants reported on 2022 performance and expected 2023 practices. While companies performed well in 2022, sellers struggled to reach quota with only 46.5% achieving their target performance.
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“Sales leaders are facing two competing pay budget challenges for 2023: seller wage inflation versus emerging recessionary pressures”
“Sales leaders are facing two competing pay budget challenges for 2023: seller wage inflation versus emerging recessionary pressures,” said David Cichelli, survey editor and revenue growth advisor of the Alexander Group. “According to the survey results, recessionary pressures are winning by keeping median pay budget increases to 3%.”
Other Noteworthy Highlights
- Sales departments did well in 2022. They achieved 8% median increase in sales.
- Sales departments expect a similar sales performance for 2023: an 8% median growth projection. Some are expecting a more robust year skewing the projected average revenue growth performance to 13%.
- The 2022 incentive cost increase remained muted at 2%. Companies plan a 3% increase in base pay and an overall increase of 3% in target total compensation costs in 2023.
- While companies made progress in reducing open positions, turnover was 11.5%–a rate higher than the historic 10% turnover rate. Companies expect a 10% turnover rate in 2023.
- Overall, sellers did not fare as well. Only 46.5% of all sellers reached quota in 2022. The median average quota performance was 93%.
- Several states now require pay disclosure (pay ranges) to be posted with job openings and provided to requesting applicants. The survey participants reported on their practices with 39% complying on a state-by-state basis.
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