Inaugural “State of Sales Compensation” report uncovers significant disconnect between typical sales compensation approaches and changing needs of today’s sales reps
CaptivateIQ, the agile commission software that keeps sales teams motivated and focused on driving revenue, published its inaugural State of Sales Compensation report. Based on a survey of U.S. sales representatives and leaders, the report offers a comprehensive view of the trends, strategies and market dynamics affecting sales compensation today. The State of Sales Compensation 2022 report found almost all (92%) respondents see clear visibility into compensation as a strong motivator, yet just 26% of companies are offering their reps real-time insights. The survey also measured the impact of today’s economic climate on sales representatives, how compensation affects performance, and the drivers for job security and satisfaction.
As businesses navigate through the current economic uncertainty, many are struggling with rising operational costs and are becoming increasingly dependent on their existing sales teams to maintain and deliver business growth. However, amidst this changing landscape, the demands of the modern sales team are shifting, and a sizable disconnect remains between management and sales representatives.
“In today’s competitive environment for talent and growth, the wants and needs of sales representatives are changing dramatically. In response, companies must allow their commission plans to evolve together with market forces,” said Conway Teng, co-founder and co-CEO of CaptivateIQ. “The State of Sales Compensation 2022 report shows a clear need among sales organizations for greater transparency and flexibility in sales compensation approaches. Companies able to make this transition will be in a stronger position to retain top sales performers bringing in the largest percentage of revenue.”
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A Growing Chasm Between Senior Management and Sales
To maintain morale and productivity, sales revenue leaders must stay closely aligned with the needs and wants of their sales staff. However, the State of Sales Compensation report found significant disconnects between sales teams and leadership in seven key areas, including pay mix, visibility, forecasting, productivity, efficiency, flexibility and technical solutions. For example, when it comes to forecasting, nearly three-quarters (71%) of sales representatives say the ability to forecast earnings would improve their motivation, yet only 28% can do so today. Additionally, while sales management urges their teams to stay focused on selling, 42% of sales representatives spend valuable time recalculating their commission payouts each pay period to ensure their accuracy.
Maintaining Success Amid Economic Uncertainty
Businesses must support and retain the top performers on their sales teams in order to maintain growth for profitability in the face of inflation. To that end, sales leaders have a responsibility to ensure their teams have access to the right tools and technology in order to be successful. In fact, according to the survey, most reps (95%) say a best-in-class sales tech stack is essential to their success. Despite this finding, outdated legacy solutions are still being used today — making it difficult for sales teams to reach their true potential. In addition, flexibility is a concern among sales managers (95%) who indicated they want to be able to flexibly change plans to reflect new business dynamics, but existing systems are not nimble enough.
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What Sales Representatives Want — And How Management is Delivering
Sales representatives stated that economic uncertainty necessitated four changes: plan adjustments; increase variable pay as a percent of total compensation; lower targets/quotas; and reduced hiring of new representatives. According to the report, 60% of sales managers have already made adjustments to compensation plans due to economic changes, while 41% have reduced hiring. All these changes can instill confidence in sales representatives, decrease time spent on recalculating payouts, and increase motivation for current sales representatives.
“Like any challenge, periods of economic uncertainty represent an opportunity to innovate, discover new ways to execute tasks, and rally teams behind a common goal,” added Teng. “Addressing sales representatives’ concerns and developing an action plan is the first step in navigating these challenges despite dynamic market factors.”
Methodology
The State of Sales Compensation 2022 report collected a representative sample of sales professionals and managers, as well as sales leadership, including directors, vice presidents and chief revenue officers. A total of 401 respondents completed the survey.