SalesGlobe Sage explains how companies design sales performance measures. Most use two to three metrics, with bookings and revenue as top priorities. Gross profit matters too, especially for recurring revenue businesses where timing mismatches between contract execution and revenue recognition can create problems.
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71% of organizations.
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What's the story? Performance Measures as we surveyed organizations, we went back to a few key principles around pay at sales Globe. Our model is the Performance Measures Cubed, which looks at the measures used in the plan, the level of payout and the frequency of payout. What we found is that companies are using financial measures in the plan. We also found that in general, companies are paying at the individual level, which is aligned with paying for individual performance. Results Plans are specific and focus using primarily two to three measures. 71% of organizations use two to three performance measures in their plans, holding steady from 2021. Whenever there are more than three measures used in a plan, it tends to dilute focus on what's most important to accomplish. The most important measures across all sales roles are revenue and bookings followed by gross profit. This demonstrates that companies are finding ways to balance paying as close to the sale as possible with a booking measure while helping them manage their overall cost of sales with revenue. Recognition Bookings are recognized upon execution of a contract which may not align closely with recognition of revenue. This is most prominent in companies that offer recurring revenue products and services, which continues to grow as a strategy across all sectors and company sizes. Gross profit is a useful measure where there's flexibility in sales price and a wide margin distribution across products and services. This helps ensure companies stay profitable while growing their footprint in the market.
