4 Shifts In Sales Compensation

Ralph Grimse, a partner with The Brevet Group, a sales consulting and training firm, shared in a blog post on the company’s website some trends in sales compensation that will lead to a “seismic shift.”

Closing the Gap Between Hunters and Farmers

New business continues to be broadly valued more than the retention or upselling of current customers. Many companies pay larger commissions for bringing in new revenue. Increasingly, companies are paying more for the land-and-expand selling model. Grimse predicts more convergence between the two roles.

Rewarding the Team-Based Sale

Just as buying teams have become more prominent in B2B sales, today’s selling process requires more resources. Shifts are occurring in how individuals and teams are rewarded
for closing a sale, including commissions for marketing team members, as well as pre- sales engineers and subject matter experts.

Differentiating Incentives by the Lead

Many sales teams are shifting their emphasis to own more and more of their pipeline. Rep-generated leads that produce a sale are being paid at a higher rate than leads generated by marketing. This encourages reps to develop their own pipeline. “Properly executing the mechanics of this trend is not for the novice sales organization. A thoughtful balance is needed between incentives and data management to minimize potential adverse effects,” Grimse writes.

Using Data to Think Beyond Revenue

Data is everywhere in business strategy, and compensation is no different. With more visibility into how a sale is made, incentives can be structured to align with multiple factors, including the type of revenue being generated, deal profit levels and product or service bundling scenarios.

“The sales function is undergoing significant transition in response to today’s complex selling environment. New thinking and more sophisticated enablement efforts are needed. This is especially true when it comes to sales compensation plan design,” Grimse states. “Don’t fall into the trap of blindly applying ‘what worked last year will work next year’ thinking.” Staying on top of shifts in compensation strategies will give your organization an edge.

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