Scottsdale, Ariz., August 22, 2014 – The Alexander Group has announced the results from its recent “2014 Sales Compensation Plan Design Survey.” More than 185 sales departments participated in this survey, which reveals how firms pay the “Big Four” sales jobs: strategic account manager, key account manager, territory representative and channel/partner manager.
Surprisingly, there were not many noticeable plan design differences among the four jobs. Almost all design choices feature the same preferred practice and, interestingly, almost the same prevalence of practice score. There was a split decision on the use of thresholds. Most companies have a threshold for strategic and key account managers but do not use thresholds for territory representatives and channel/partner managers.
“Collecting plan design information is challenging; but, we think these leading companies have given us an eye-opening view about how they structure their sales compensation plans,” said David Cichelli, senior vice president and survey editor, the Alexander Group.
Participants answered questions on how companies configure their sales compensation plans, i.e., number of measures, capped plans and thresholds. Other questions focused on base pay administration, quota management and sales crediting practices.
- 69.2% of the companies are on-plan (+/- 5%) or exceeding plan year-to-date.
- 65.7% will grant a base pay increase to sales personnel in 2014.
- The majority of companies do not apply an incentive earnings cap to the primary performance measure. This “no cap” practice among the participants is greater than 70% for all four jobs.
- 80% or more of the participants use three or fewer measures for all four jobs.
- Most companies have an annual performance objective: strategic account manager (74.6%), key account manager (68.6%), territory representative (73.1%) and channel/partner manager (73.4%).
Base Pay Management
- 62.6% will provide up to an average 4% base pay increase in 2014.
- 87.9% of the reporting companies vary the base pay for incumbents in the same job.
- 50.8% of the companies’ summation of sellers’ goals matches the corporate sales objective.
- 41.2% use a quota allocation method combining top-down and bottom-up estimates.
- 40.6% of the companies communicate quota assignments within the first month of the fiscal year.
- 45.2% provide at least 50% sales credit at either invoice or shipment.
- 33.2% provide at least 50% credit at time of booking.
- 27.7% have explicit sales credit split rules.
About The Alexander Group, Inc. ̶ Growth Through Sales
Alexander Group provides sales management consulting services to the world’s leading sales organizations, serving Global 2000 companies from across all industries. To learn more about Alexander Group’s services, visit www.alexandergroup.com.
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