Significant Number of Sales Teams Will Not Reach Quotas in 2020
WorldatWork and SalesGlobe Release Sales Compensation Programs & Practices Survey
August 18, 2020
August 11, 2020 — Scottsdale, Ariz. – Twice the number of companies say that less than 25% of their sales team will reach quota in 2020, compared to 2019 and clearly a consequence of the pandemic. This is a key finding in the 2020 Sales Compensation Programs & Practices Survey conducted by WorldatWork in partnership with SalesGlobe, which concluded on June 13, 2020. Performance measures, utilization of sales caps, base pay/variable pay, upside potential, and thresholds were among the topics covered. (Journalists: for a complete copy of the results, contact email@example.com)
Hitting sales quota is a challenge. Respondents were asked about sales performance in 2019, the first two quarters of 2020 and quota expectations for all of 2020. Compared to 2019, twice the number of companies, 39% vs. 19%, say that less than 25% of their sales team will reach quota.
Compensation plans are simplifying. On average, organizations use up to three sales compensation performance measures. However, the percentage of organizations that report one performance measure has increased by 71%.
Total revenue is the top performance measure. 60% to 79% of organizations report total revenue is their top performance measure followed by key sales objectives and product unit volume.
Manual monitoring of sales compensation is still being utilized. Only 32% of organizations use third party Sales Performance Management (SPM), and 47% use third party Customer Relationship Management (CRM). A surprising number of organizations manually conduct SPM (32%) and CRM (24%).
Looking to the future. When asked about events that will impact sales strategy, 61% of organizations see macroeconomic changes as a top impact item, while 43% cite technology advancements and 33% mention natural occurrences like weather events and health crises.
“We are not surprised to see that the pandemic has hurt sales quotas. Despite the many issues those responsible for sales compensation are now facing, organizations continue to reevaluate the merit of multiple performance measures,” says Alicia Scott-Wears, Director, Total Rewards Content, WorldatWork. “Over the years, we have seen organizations reduce the number of performance measures in the sales compensation plan to 1-3 criteria on average. As organizations continue to streamline for efficiency and enable more agile approaches, we anticipate the trend of moving toward a single performance measure to continue.”
“We’ve been tracking the progression of quota actions across companies since March as 2020 unfolds and as they plan for 2021,” says Mark Donnolo, Managing Partner of SalesGlobe. “The number of companies estimating that over half their sales organization hit quota has declined from 58% of companies in 2019, to only 30% of companies in 2020 but shows more optimism for 2021 at 36%. However, this is still concerning because quotas across companies are also expected to decline for 2021. Macroeconomic changes are cited as having the biggest impact, likely driven by the pandemic, causing a large portion of companies to rethink their approaches to sales compensation, quotas, and sales coverage.”