Small to Mid-Size Businesses Shift Sales Comp Strategies

By Stephen Miller Apr 14, 2009

A survey of U.S. small to mid-size businesses (SMBs) finds that 89 percent are changing their sales compensation to adapt to the economic downturn.

The SMB Sales Compensation Survey conducted on behalf of Makana Solutions Inc., a provider of sales compensation tools and support services, found that:

  • SMBs are looking for new sources of revenue, with 63 percent responding that “generating new revenue streams” is their greatest business challenge in this economy.
  • SMBs are identifying growth strategies, reducing costs and optimizing sales productivity to cope with the recession.

“SMBs are looking to improve their sales compensation to cope with these challenging times. The survey results show that 75 percent of respondents spend 5 percent or more of revenue on sales compensation, but only 13 percent are ‘very satisfied’ with their sales compensation’s effectiveness in driving strategy,” says Makana Solutions CEO Liz Cobb.

The survey was conducted over three weeks in February and March 2009, with a sample of 100 respondents with fewer than 1,000 employees. In the survey report, the firm’s analysts recommend taking these steps:

Align Behaviors with Strategy

Review customer-facing roles. Specify those that have clear and measurable influence over customer behavior and for which you are willing to offer at least 15 percent of the target total compensation as an incentive.

Build plans with no more than three measures to keep salespeople focused on the right strategic goals. The measures should be unambiguous and under the control of the person rewarded to maximize their motivation.

Develop and Manage Plans with Proven Tools

Automate sales compensation management,starting with a system that allows users to build plan documents easily to show graphically the earnings potential, and include clear terms and conditions.

Design a plan that is clear and simple, allowing the sales teams to understand their goals and be motivated to sell. Sales teams stay most focused on selling when they can see the commission details and receive accurate payments on time.

Stephen Miller is an online editor/manager for SHRM.​

Related Articles:​

For Sales Personnel, Incentive Targets Lead to Bigger Bonuses, SHRM Online Compensation Discipline, October 2008

Complex Compensation, Global Operations Challenge Sales Force Performance, SHRM Online Compensation Discipline, July 2008

Companies Fail To Communicate Comp Plans to Sales Managers, SHRM Online Compensation Discipline, June 2008

Sales Compensation Planning For HR Professionals, SHRM Research, June 2007

Related Multimedia:

SHRM Video, Compensation for Sales Managers, June 2008

Quick Links:

SHRM Online Compensation Discipline

SHRM Salary Survey Directory

SHRM Compensation Data Center​


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