From our experience, I would say that most companies are making some kind of adjustment due to the economy. If your expected total sales are down, you have several options that we’ve seen recently:
1. Reduce quotas and…
1.a. Hold commission rates constant (sales people would then earn less when they hit quota than they did when quotas were higher)
1.b. Raise commission rates (to keep sales people whole year over year)
2. Hold quotas constant, along with commission rates and…
2.a. Add earnings opportunities in the form of MBOs or SPIFFs to keep sales people whole and reward them for building for the future (training/preparation to sell complex products or improve selling skills, introductions to prospects who can’t necessarily buy this year, but maybe next year,…)
2.b. Reduce the number of sales people so that fewer people cover larger territories and those remaining can actually have productivity and earnings levels similar to prior years (at a cost that is affordable to the company)
2.c. Make no changes and expect sales people to under-perform and under-earn, but be ready when the market comes back with sales people to serve your full market potential
Among our clients, we are mostly seeing 1.a. and 2.b. – with ample discussion of the other options.
Donya Rose, CSCP, is Managing Principal of The Cygnal Group. She is a recognized expert in sales compensation plan design, regularly speaking at conferences and writing published articles. She serves clients from F500 to growth-stage businesses, and advises WorldatWork on sales compensation hot topics and best practices.