Eighty percent of organizations lack defined methods and measures to determine the relationship between the cost and productivity of their sales teams, according to “Return on Sales Expense,” a new survey conducted by WorldatWork in partnership with OpenSymmetry. The struggle to capture sales team ROI is fueled by the absence of standards and the variability of components measured across companies and industries. The survey examines which sales costs organizations track; best measures of sales productivity; which department leads sales compensation plan design; sales compensation plan types; variable pay frequency; sales compensation analysis tools commonly used; and more. The six industries represented in the survey are financial services, consulting, IT, health care/pharma, manufacturing, and retail.
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Sample Findings:
- 22% of organizations have a defined method for calculating the cost of their sales teams; 19% of organizations have measures to determine the productivity of sales teams; 20% of organizations 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.
- 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.
“They say it takes money to make money, but how much money? And what is the ROI on your sales team’s efforts?” asks Scott Cawood, WorldatWork CEO. “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.”
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“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,” says Robert Blohm, OpenSymmetry Senior Partner. “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.”
Methodology
WorldatWork invited its member and customer base to participate in an electronic survey to examine the ratio of cost of sales effort to sales productivity and discover potential standards. A total of 364 responses were received from full-time sales compensation professionals via the online panels Dynata, InnovateMR and MarketCube. Data was collected in May 2021 over a 16-day period.
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