The COVID-19 outbreak dramatically changed business conditions, including a shift in priorities for sales teams. Salespeople may have trouble getting appointments with prospects, demand may decrease substantially, and supply chain issues may result in stock-outs. At the same time, demand has increased dramatically for some products and services.

With little understanding of the extent and duration of the unfolding situation, how should sales compensation plans be adjusted, and when? We will discuss best practice processes for determining plan adjustments, as well as specific options for a few of the most commonly-faced business challenges today: significant reduction in realistic sales expectations, excess sales capacity and how to use it well, income preservation for salespeople most seriously affected, and managing runaway compensation costs in cases of extraordinarily high demand.

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In the face of the COVID-19 epidemic, things are changing, differently for each business. Many will see reduced sales volume from existing customers due to changes in their customers’ needs, others will be unable to supply even the demand that remains due to disrupted supply chains. In addition, new customer and new contract selling are likely to be delayed as customers attend to their own issues created by the epidemic. All of this will result in changing priorities for the sales team. For many the focus will shift to supporting existing customers or their industry in general. And all of this is happening under the constraints of social distancing and dramatically curtailed travel.

At the same time, there are businesses that are seeing a surge in demand for their products or services. Examples include certain categories of groceries, web-based communication services like Zoom, and healthcare providers and their suppliers. These are truly unprecedented times requiring thoughtful responses from all quarters.

The presentation video goes through a number of specific suggestions for responding to the current challenge in ways that support salespeople as well as the needs of the business and its stakeholders for the long run. A few key highlights from the presentation are shown below.

Business leaders need to coordinate a response to concerns about sales compensation, focusing first on setting goals and assigning a team.

Business leadership starts the process

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Setting goals

Business leaders need to be clear about the business goals for the sales compensation response. Here’s a sample list to choose from:

  • Incentivize continued aggressive focus on selling
  • Manage the cost of the sales team down
  • Focus sales efforts on the most important sales
  • Retain key talent
  • Cement the employee value proposition
  • Elevate the focus on existing customers and their challenges
  • Use sales resources well while they spend less time selling
  • Maintain a reasonable income level for salespeople
  • Manage run-away compensation costs due to high over-performance
Assigning a team

Include leadership from Sales, HR Compensaiton, Finance and Sales Operations. You may be able to leverage an existing sales compensation governance body, or establish a new one.

The team should be empowered to:

  • Manage requests for exceptions, establishing and overseeing an orderly and fair process including…
    • Criteria for considering exceptions (e.g., at least 20% of annual revenue for the territory lost due to external influences)
    • Process to submit requests for exceptions
    • Frequency for decisions (e.g., meet monthly during the 3rd week of the month)
  • Recommend needed changes, procactively making recommendations regarding…
    • Sales compensation plan adjustments
    • Sales goal adjustments
    • Sales responsibilities in the near-term
    • Guarantees or other income protection measurses
    • SPIFFs and other incentives.

Exceptions are likely to lead to policies. The initial focus may be to review requests for exceptions as they arise. Once exceptions reveal patterns, policies may be developed to address those that are most common. Policies should also be formulated to anticipate expected shifts and key priorities.

Four common challenges and recommended approaches

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Quotas are now too high

If sales goals now seem unattainable by most it may be tempting to add quota attainment bonuses or SPIFFs, or to add acceleration over quota. However these measures are not likely to solve the problem that the current market simply won’t support the volume in the sales goal.

Better ideas
  • Soften the qualification criteria for President’s Club, possibly making it a stack-rank-based selection (e.g., top 10%)
  • Lower or eliminate thresholds*
  • Reduce quotas
  • Add acceleration at a more in-reach attainment level
  • Offer added quota credit and compensation for sales in a preferred category
  • Shorten the measurement period (e.g., annual to quarterly)
  • Offer guaranteed comp for a short period, possibly contingent on activity-based results.

For additional detail and specific examples of these better ideas, see the presentation video or downloaded pdf (pp. 10-12).

*A threshold is a level of quota attainment below which no compensation is paid, typical in businesses with strong run-rate (repeat) business in the quota.

Sales income is in jeopardy

If salespeople are likely to lose significant income due to external events,  it may seem like a good idea to pay at target for a quarter or two, or to add acceleration or other incentives over quota. However these measures will not focus the sales people on the things they can control.

Better ideas
  • Remove gates and linkages
  • Lower thresholds*
  • Create SPIFFs and contents to focus on the most important sale (or the first fully virtual sale!)
  • Shift some incentive pay to non-financial measures
    • Value-creating activities (see the following section on excess sales capacity)
    • Customer satisfaction / retention

*A threshold is a level of quota attainment below which no compensation is paid, typical in businesses with strong run-rate (repeat) business in the quota.

Excess sales capacity

If salespeople have time on their hands for the coming weeks or months, finding a good way to use their valuable skills and insights will bring value to the business and a sense of purpose to their days. If you have excess sales capacity for a quarter or two, think creatively about how your sales team could best contribute. A few good ideas are listed below.

Good ideas
  • Build pipeline so that well qualified prospects are ready to pursue when the time is right
  • Leverage virtual tools to strengthen customer relationships
  • Train salespeople in company offerings, sales skills, presentation skills
  • Encourage mentoring between more and less experienced sellers
  • Deploy salespeople to help with product development as the voice of the customer
  • Create virtual working teams to improve sales processes and tools
  • Clean up customer lists, sales activity records, etc.
Quotas are now too low

If market conditions are resulting in unexpected high attainment and run-away compensation costs, some may advocate for raising quotas in alignment with the market surge, or capping the plans. Consider the alternatives shown below.

Better ideas
  • Live with it (see criteria below for when this might be a good idea)
  • Bring windfall and management discretion clauses in the plan into effect
  • Limit quota credit in any one month or quarter, and pay the balance based on a regressive rate table
  • Limit total variable pay in any one year, paying the balance in future years
  • Reduce or eliminate accelerators over “excellence” performance levels
  • Move to a simple flat commission plan for a quarter or two.

For additional detail and specific examples of these better ideas, see the presentation video or downloaded pdf (pp. 18-20).

When is it time for a change?

Our recommendation is that you consider a change based on the following criteria:

Live with it

…when the effects are unpleasant but not “dire,” usually a comp effect vs. budget of 10% or less.

Consider SPIFFs and incentives outside the plan

…when corrective action is necessary, usually a comp effect of 10-20%, or a business goal miss that is big enough to be a board-level discussion.

Consider adjusting plan structure (weights, measures…)

…only if business priorities have changed significantly due to the changes in market conditions or product availability.

Change quotas, implement guarantees, consider furloughs

…only when the stability of the sales force is threatened and/or the viability of the business is at stake.

Communicate clearly and frequently

ASAP, from senior leadership

Key messages:

  • We are aware of the current challenge and monitoring…
  • If we believe the effect will be __ or greater, we expect to implement __
  • We have tasked __ to review exception requests and recommend any needed changes.
Soon, then frequently, from the sales comp governance team

Key messages:

  • Sales focus, as always, is on supporting our customers’ success; in today’s world that means…
  • The exception process is… (process for raising requests, timing for decisions)
  • We will consider changes to ___ (sales measures, linkages, quotas, rates) only if ___
  • We will update you ___ (frequency)
  • Please raise your questions or concerns with your manager, or email to
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