Smart Management: Selling Into 2010: A Cause for Optimism?

Most everyone was happy to bid the sales year of 2009 a speedy farewell. Sales leaders (like others) have entered 2010 with more optimism than pessimism, but are understandably still cautious. For many sales executives, 2009 was a sobering experience they don't wish to repeat any time soon. <br clear="none" /> <br clear="none" /> In The Alexander Group's recently released 2010 Sales Compensation Trends Survey, a survey of more than 130 major sales organizations representing over 110,000 salespeople, sales leaders shared their views about what happened in 2009&#x2026;and what they expect to see in 2010. <br clear="none" /> <br clear="none" /> The sales executives from the surveyed companies saw revenues shrink by four percent in 2009. While most salaries were frozen, incentive pay for salespeople actually registered a whopping five percent drop in earnings for 2009 compared to 2008. <br clear="none" /> <br clear="none" /> Yes, sales management expects growth for 2010&#x2014;about six percent, to be precise. But senior management is asking sales leadership to accomplish this feat without any increase in costs for 2010.<br clear="none" /> <br clear="none" /> Here's a quick look at some of the other survey highlights:<br clear="none" /> <br clear="none" /> <b>In 2009</b><br clear="none" /> <br clear="none" /> &#x2022; The average incentive payout change from 2008 to 2009: 6.9 percent (five percent for the 50th percentile).<br clear="none" /> <br clear="none" /> &#x2022; The median revenue growth for 2009: four percent.<br clear="none" /> <br clear="none" /> &#x2022; The median change in sales department costs in 2009 compared to 2008: zero.<br clear="none" /> <br clear="none" /> &#x2022; The median of the average quota performance reported in 2009: 85 percent.<br clear="none" /> <br clear="none" /> <b>For 2010</b><br clear="none" /> <br clear="none" /> &#x2022; The expected median revenue growth for 2010: 6.5 percent.<br clear="none" /> <br clear="none" /> &#x2022; Percentage of companies planning to increase staff in 2010: 34.93 percent.<br clear="none" /> <br clear="none" /> &#x2022; The percentage expecting no change: 48.4 percent.<br clear="none" /> <br clear="none" /> &#x2022; The percentage expecting a decline: 16.6 percent.<br clear="none" /> <br clear="none" /> &#x2022; The average projected target compensation increase for 2010: four percent (two percent for the 50th percentile).<br clear="none" /> <br clear="none" /> &#x2022; The percentage of reporting companies making changes to their 2010 sales compensation plans. 93.3 percent.<br clear="none" /> <br clear="none" /> <b>Five-Year Trends</b><br clear="none" /> <br clear="none" /> <b>2005 to 2010 sales revenue trends.</b> The overall pattern from 2006 to 2009 was to overestimate the expected sales volume for the following year. The degree of this estimation error by sales management increases from 2005 to 2009. <br clear="none" /> <br clear="none" /> This divergence between projected and actual revenue was the greatest for 2009. Sales management estimated 2009 year growth of five percent, but the economic recession of 2009 produced a four percent median growth decline for the reporting companies.<br clear="none" /> <br clear="none" /> <b>2005 to 2010 staffing projections.</b> The year-to-year comparison highlights the impact of the 2009 recession. The estimated reduction in hiring for 2009 reflected sales management's awareness of the looming recession at the end of 2008. 2010 shows a promising slight upturn in staffing levels and a downturn in headcount reductions.<br clear="none" /> <br clear="none" /> <b>2005 to 2009 sales compensation budget payouts.</b> Almost 60 percent of the companies did not pay out their target 2009 sales compensation budget in 2009. Yet even with the recession of 2009, approximately 20 percent of the companies did exceed their target sales compensation budget. <br clear="none" /> <br clear="none" /> Note: The Alexander Group conducts the annual Sales Compensation Trends Survey each December. Full results are available to survey participants. An Executive Summary of the results can be downloaded from <a href="http://" target="blank"></a>.<br clear="none" /> <br clear="none" /> <i>David J. Cichelli is senior vice president of The Alexander Group in Scottsdale, Ariz. He can be reached at <a href=""></a>.</i>