WorldatWork Session: 2022 Survey First Look - New Sales Roles

Thanks, everybody for coming. Hey, Michelle. Yeah.

Hey, Mark. I'm good. How are you?

I'm Mark Dinolo with Sales Globe.

I'm Michelle Seeger and we are happy.

You guys are spending your, I guess, a little after lunch.

Yeah, we're privileged. We're privileged to have you guys share your time with us. Thank you so much. We really, really enjoy it and appreciate it that you're sharing your time.

So we're going to show you a preview of the survey results from the World at Work and Sales Globe survey on sales roles and compensation practices. So we've been doing this, what, three years in a row?

Yes.

So we've got a lot of great training information. The news is that there's like a 200 page report. Right. The good news is we're not going to show you that. We're going to show you a few highlights and we're going to show you some storylines and a few animations around what's going on. So you get the big picture on it.

Yes. And we will have this presentation, but as well as the full survey readout available to you so you can get it through World at Work. Stop by our booth as well because we've got what's in this presentation format. It's much more expanded. So these are really the clear highlights, the headlines, because this is really literally hot off the presses.

All right, little bit about us. Sales Globe. We are a problem solving firm for sales and we solve problems in the areas, of course, sales, compensation, quotas, sales organization, design, go to market, sales strategy. Our whole thing is, you know, the benchmarks and the best practices. That's kind of the starting point. So then the question starts, how are you going to solve the problem and give you a competitive advantage? So that's what we do. We combine kind of right brain and left brain thinking, creative and analytical thinking together to come up with those kind of solutions. We have a few books, as we mentioned. We're going to raffle off a couple what your CEO needs to know about sales compensation and quotas. And if you haven't seen Claudius of the Box of Tears, he can take your card if you'd like to win one of those. And we are excited to be here. So let's jump in. Michelle.

All right, so a little bit about the survey. As Andrea said, we love that you all participate in the survey. Please continue to take those surveys. We had almost 700 people take this. So 700 unique companies, which is really great. You see the industries that are represented there. Those are the top industries. But Basically the big news is it was a pretty broad distribution. So we feel that we've got a good mix of large companies to small of different cross industries that were represented and we've got really good data. And a new highlight for you, we started looking at M and A last year because as you will know, or maybe you don't know, but M and a activity in 2021 was unprecedented. Over 5 trillion in volume. And so we added a piece in there and about over half, just over half of the companies were part of a merger and acquisition. So we've got some insights for you there as well. For context, what do we look at when we put this survey together? This is our approach to incentive compensation and it's called the sales compensation diamond. And what we do is we look at not the mechanics and not the measures as the starting point, but a lot of what you're going to hear about today, the roles. So we're going to talk about sales roles and how they've changed and how that impacts the sales strategy. And then we look at things like framing the plan and that's when we look at things like your pay mix thresholds, upside that you may have in that plan and then measures and priorities. We talk about that as linking your pay and performance. So what are the most important things and the levels and timing. And then of course it wouldn't be complete without aligning the team and financials, looking at the quotas and the expectations and outcomes and finally governance and operating for results. So how you're gonna measure exceptions and other things like that. So that's the context that we use as we put together the survey.

So this is what we call one of our laminators, Michelle.

Oh yes.

It's so good that we made a laminated card out of it. These are built with the booth. We also have revenue roadmap cards and actually we've got a ton of them up here if you guys would like them.

Yes.

As we travel around the world, Michelle, we walk through different offices and we actually see these on people's office walls and cubicles and stu they come in so handy. So anyway, if you're ever lost about where you are in sales comp or the entire context, they're really good to refer to.

Yes, they are. So Mark, I think we're gonna show a video, right?

Yeah, I always like videos.

Right. So guys, we have a really amazing communication team out of Singapore and I wish that our lead could be here with us. He was at another session and he got higher ratings than I did, but, you know, he, he's really, really good, but he put together a little story on sales roles that we'd love to show you guys. So, Mark.

What'S the story? Sales roles. The future of B2B sales now lies with the Hybrid Sales Professional. With 54% of companies reporting they are increasing headcount over the next 12 months at sales globe, we define the hybrid sales role as one that spends roughly half their time face to face with clients and the other half of their time connecting with them virtually. Thus, the days of the five day a week traveling salesperson are over. However, this is good news for both salespeople and the companies that hire them. From the employee perspective, less travel equates to a healthier lifestyle. And we know that employees who are healthier are more engaged with their work equating to better relationships and bottom line results. While hybrid sales leads the way, the inside sales role, which was the fastest growing role pre pandemic, is here to stay. 47% of companies report increasing headcount in what remains a pivotal role. What remains in flux is the inside sales center of excellence. Those call centers which have been widely acknowledged to be the secret sauce to inside sales and the key to developing new hires. That includes younger people who are just entering the professional workforce. As companies hire across different sales roles types, they are focused on hiring people that can develop and bring in new business for the company. Account acquisition through outbound calling and prospecting is a priority over account management and inbound response to marketing campaigns. This is going to require new skills development and sales enablement as the playing field continues to level out across companies worldwide.

All right, so there's a lot to unpack there. We, by the way, have I think six of these storyline videos, different storylines that came out of the survey. So if you're interested in them, they're really good for communicating. Just let us know, we'll give you the link. You can go to the page and just get them and use them for yourself. But let's look into this because there's a lot there, Michelle, and we don't show a bunch of PowerPoints with numbers. Usually we like storylines, we like kind of narratives. So we put together a little narrative on sales roles and what's happening here. So let's take a look. So as we know, during the pandemic we had a lot of people working at home. At the point of the original survey, it was about 60% of people working at home. And then we started to have this role called hybrid. Well, hybrid came out. Was it like 2021 in 2020. 2020 when we started to see hybrid. Right. It just kind of appeared in the survey and that was the new role. And as we said, their hybrid is a little different. Michelle.

Right. So there's, there's. I'm working from home and I go to an office a couple times a week. That, that would be hybrid work. When we talk about the hybrid sales role, just to be really clear, we're talking about that field sales role, which is a very valuable role within companies and the primary client facing role, spending roughly half of their time face to face still and roughly half of their time virtually connecting, which is very different than just working from home.

Yeah. So it's not just work from home. I think a lot of it has to do with where the customer is. Right. Because customers are still working remotely as well. And customers are not in sales positions. They're usually in buying positions. So they're remote. So you can't always be there in person with them. So 61% of companies increased headcount in the hybrid roles over the past year. So that's pretty significant. Inside sales. Michelle. That was the fastest growing role before hybrid came along.

Yeah, I was writing a book about it being the fastest growing role. We saw where that went.

So we got about 43% of companies that are increasing inside sales. So that's a lot of healthy hiring as well. So hybrid and inside are actually leading the way, which I think is pretty incredible. So we'll talk about implications, but it really means you start to have to think about compensation differently as well.

That's right. And another very interesting point, brick and mortar is not going away. So I don't know about you guys, but I actually do like going into a store. So whether you're buying in that store or whether you're touching. So this survey was B2C and B2B fired. Just to be clear on that companies. But on that customer facing piece, we're finding that people are going out into the retail store. But as far as the roles that they're fulfilling, it's direct facing, it's call center, it's all different types of roles. Which means that the Omni Channel is alive and well. And one thing we'll talk about a little bit later is. And so how do I pay for that? Right. It still continues to be a big challenge. So brick and mortar, alive and well with all this hiring going on, however, though organizations are still not keeping pace with the hiring expectations that they had. So they're not able to fill all the positions. Are any of you experiencing that within your company right now where you're having this hiring issue? Yeah, it's a real pain point.

Yep. Yep. So what's happening? Well, it's all about the money. So we'll go into this in a little bit more depth. But when you're looking at what companies are doing to retain people and what companies are doing to hire new people, to acquire new people in sales organizations, it's about the base pay. A little over half of companies are increasing base pay for new hires and to hold on to people. And then about 41% of organizations increasing incentive pay. So what's wrong with this picture? Anybody take econ painful class in business school? Well, there's the short run and there's the long run. Right. So we're making decisions for a short run. Our belief, a short run situation, that's going to probably hit equilibrium at some point. Right. Because it's not going to stay out of what they call this equilibrium where it's actually a seller's market or an employee's market. It's going to probably shift back. But these companies are committing to fixed cost. So take it out another year, another year and a half, two years. Then the question is going to be, can we handle those fixed costs or would we have preferred to have those in variable costs?

Right. And so we got ideas for that to help you manage those costs and that risk. But what's the big implication here and what people need to be thinking about?

Mark?

Yeah, so I think it's about understanding the coverage model, where that's heading. As you mentioned, Michelle, Omnichannel is becoming more important. So how do you make sure that you're encouraging the customer to do business with you through different channels the way they want to without making it difficult for them, but also making it easy for the sales organization to do the same thing, making them channel neutral. And then also in terms of value proposition, it's not all about the base pay. Right. It's not all about the base. Right. But it's not all about the base pay. It's about the entire employee value proposition. So you got to think about what the whole thing is you're offering. And we'll look at some of the other things that are being offered as well. All right, so a couple numbers here and all these juicy things are available for you in the report as well. You see the headlines on the left we talked about. So here are some of the numbers behind it, organized by the types of sales roles. So You've got field, inside, hybrid and retail shown by the brackets here. Does anybody see a pattern here? Any numbers? People see a pattern here with the biggest increases. It's highlighted up there, Michelle.

It's highlighted in beige, guys. I mean, I'm just saying new customer sellers, right.

Companies are hiring new customer sellers and they're hiring outbound in each of these job categories. Start with hybrid, 61% of companies are adding hybrid new account sellers. Look at Your inside sales, 46% of companies outbound, field sales, 42% of companies, your new account sellers. And same with retail as well. So that's leading the way. So companies are saying we need new business. We're hiring people that, that can do that and that has implications on skills and talent.

Right, right. So we believe a couple things. One, that companies are hiring into this role, companies of all size. Because I think, I don't know if you caught it in the video, but with this virtual world that we're in, it does level the playing field a bit. So large companies and small companies, they can interface and act the same from a buyer's perspective. There's not that big differentiation. The other thing is we do believe that they're hiring to a new skill set. So they're trying to source that person who can understand and connect with buyers virtually as well as they can in that face to face environment. It's a whole new sales landscape.

So some good helpful information there. And Michelle, you know, what are we doing today?

Retaining and this is like a little bit of an eye chart. But the big key, key point in here is that whether you are looking to reduce turnover, voluntary turnover, and whether you are looking at getting new sales talent, pay is what's being leveraged the most. Thirdly, you'll see this one time signing bonus as well that that is happening when they don't want to get their pay too far out of whack. Right. And that's one tool or one method that's being used to avoid that pay compression issue that, that a lot of people are facing. So we see some of the other EVPs, right. We see that other stuff like getting paid working remotely or additional pto, that's all secondary right now. It's still really all about that pay.

Yeah. So one of the questions is if it's about the pay, what can you do so you don't get yourself pinned into that fixed cost position.

Yes.

I found another one interesting on the right hand side here too, which is extending the kids candidate pool. So what that basically means is companies are starting to look outside of adjacent industries, other places they might not traditionally look at.

That's right, Yep.

All right, so measures. What's the story behind measures? Plans are specific, and we're getting to about two to three measures on plans. So what happened back in the pandemic, what you'll probably recall, maybe you've seen this in your own company, is we started to simplify and measure measures. We. We went to this mantra of stop selling and start helping the customer. So it was like, just do what we need to do to keep customer relationships going. And by the way, we're going to get less specific about all the different types of measures. We just want you to sell revenue or we just want you to sell bookings. So we went down to, like, a lot of companies that had single measures in 2020, and then that started to increase, and now we're up to about 71% of companies using two to three measures. So plans are staying fairly simple in terms of measures. Revenue is king, followed by bookings and by gross profit. So we think about all the other things in plans. Revenue is king, and that is also the most heavily weighted performance measure across all job roles. Okay, so not just most frequent, but most heavily weighted is revenue. And then if you're looking at organizations in tech, in software, we're seeing total contract value and also annual contract value. Those are kind of interpretations or derivatives of bookings or revenue, but we're seeing those.

Hey, Mark, I'd like to make a comment here. So tomorrow, this is a really important point on this whole. Bookings and acv, tcb, and there's so many other ways to pay. And companies are constantly grappling with, well, how much do we pay on bookings vs revenue? How do we not get upside down? What happens if a contract is canceled Tomorrow? I'm not pushing our session, really. Tomorrow we've got a great session, a panel that I'll be leading in the morning, and we're bringing in some really good industry experts that have had to solve for this globally. And we're going to ask them all the tough questions, and you'll have an opportunity to interact with them as well. But we're going to delve into this issue on bookings, revenue, what to pay, how to pay within, everything as a.

Service, everything as a service. That's going to be good. And one of my old clients from years ago, I don't think he's here right now. I won't name him, but he's going to be on the panel. Yes, he Was like one of the toughest sales leaders ever met. But he knows everything about software and everything as a service. That's going to be a lot of fun. Individual measures. Okay, so what happened during COVID We started shifting toward measures that were more team oriented. Right. And there were a few reasons for that. One is we didn't know how to set goals because everything was shifting around. The other is we need a little bit more shared responsibility because people just needed to shift around and move. So we started doing more team regional measures, that kind of thing. And we're shifting back to individual measures. And so you'll see some of the stats on that in a minute. But it's getting very individual now in terms of measures and that starts to put pressure on what quotas.

Right.

So when you have an individual measure, the quota setting gets tougher because you got to allocate out further versus well, we're just going to measure everybody, the team or the region level, something like that. So one thing we know about quotas is the historical method is the most popular quota setting method. But we know that history.

It's history.

It's history. Yeah. Because it doesn't matter anymore because everything's shifting around. So people are like, companies are looking at new quota setting methods that have better forecasting, better market intelligence. The good news is there's actually better market information out there. So in fact, you can see some of those in the book. Quotas. We'll get back into quotas a little bit later in the conversation as well. But that's putting pressure on quotas.

Yeah. And you know, even though. Right. Although the pandemic seems to be more under control, we still have and are going to continue to have other macroeconomic pressures. So you hear things like inflation, recession, other things that are going on. Supply chain issues are still a real thing, hiring still a real thing. Continuing to put that pressure on quota setting from traditional methods.

All right. And then you can see some of the numbers behind this in terms of the measures. Top measures, your individual and team. 76% of organizations are measuring at the individual level. Where did that come away from? It came away from the region level measures and the company level measures, and it went toward the individual measures. And you can see the shift on the right hand side here in terms of the number of performance measures. And you can see some of the breakouts here by industry. But the big point here is that what was happening during COVID in terms of pay caps and thresholds and all those types of things, well, they started to go away. Remember, one of the big moves during COVID was we're taking away thresholds so people can earn. Earlier that was basically like an advance on pay. At that time we're taking away caps so people have more earning opportunity. Then in 2021, we saw the caps start to come in a little bit more and the controls start to come in. Well, where we are right now is the pay caps are decreasing, so there is more perceived opportunity. And what's happening is we actually have other governors that are coming into place play. So regressive payouts. That's increased to 45% of companies using regressive payouts. That's like effective declining commission rates after you get over a certain level from 36% of companies last year. Megadeal policies are your bluebird policies. More companies using those now. So where you're seemingly getting more upside opportunity, we're also putting a little bit more in terms of other governors. And if you want to know more about pay caps, you got to listen to my new podcast coming up on Free Friday about what the free range chickens and pig haps have in common.

Oh boy.

So I won't answer that. So that's our Rethink Sales podcast. And you can see some of the breakouts here, of course, by industry in terms of how these are being used. Michelle.

Yeah. So M and A. Can I ask you guys, how many of you have been involved your company in merger acquisition over the past 12, 18 months? Okay, so a fair amount. It looks like it kind of matches with, with what our survey is telling us. Well, here's what we know, right? There are outcomes. There is a reason that a company acquires another company or they merge. And those outcomes and expectations, many of them are the responsibility of the sales organization to execute upon. Many of you are having to help with incentive compensation plans. We need to sell new products and services. We need to sell more of. We need to sell this, do some cross sell, right? But you've got all these outcomes and there are all of these challenges though before you even get to the outcomes. And the two are not often during the acquisition, during that due diligence, they aren't considered. So the top challenges that we have found and continue to be is around role definition and alignment of roles across companies. That's one of the most difficult. An inside sales rep here to an inside sales rep there. Two field here, two field there. I can tell you a story about a global company, technology company and it was a hardware company, very well known name brand that you all would know and they purchased a very hot, wonderful, amazing software company to complement their hardware. Very big in Europe, not so much in the States. And the very first thing that happened was that that company that they acquired, they saw a big outflow of the sales rep, their top selling rep. Well, they were all 100% inside sales reps. They were highly compensated professionals. And the very first thing that they heard was that the company that was acquiring them was going to diminish all of those roles because inside sales were was an entry level role. They didn't do a good job with the role alignment up front. They didn't do a good job with the communications up front. If you don't even know what the answer is going to be, the biggest thing we would tell you on M and A is get a message out that something is happening so you can stem that tide even if you don't know what the answer is. Just start to communicate and message. We're going to look at our roles. We're going to make sure we've got some alignment there. The next heavy one is incentive compensation alignment. And that means that they're paid very, very differently. Now we would caution you and say because often the first thing is companies will jump in and look at the pay. We would caution you and say look at your roles first. Get everyone kind of settled in around that, what the expectations are, what the outcomes are and then you can deal with comp a little bit further down the line. We would ask you to kind of handle it in that manner. And then third big challenge, total target comp. It happens all the time. The two companies pay very, very differently for. We'll go back to point one seemingly similar or the same roles and once you dig into it and do the alignment, you find out that the roles are actually very different. It happens all the time. So we ask you to look at those key points for first and then not to be lost is cultural differences, the full integration of the sales organization. There's just a lot to unpack there. So don't jump to comp. Look at the role and the role definition because you all would be asked to develop an incentive compensation plan around that. But unless that first thing is done, you're not going to get the results that you expect no matter how good that plan is. So that would be our big news on that.

You make a good point about the culture, Michelle, because that as we interview companies, that's kind of the underlying driver of so many of the comp issues is you have different cultures, right? You may have a sales Culture and an operations culture coming together. And so then that spawns different pay philosophies. And then of course you've got the question of, you know, and I love that one question, hey, you know, could your top sales rep make more than the president of the company in any given year? Right. That's a culture test question. And you get, sometimes you get completely different answers like, oh, of course. Or we wouldn't be comfortable with that. Right. So you can tell a little bit about culture, but that's kind of an underlying current on all this.

It is. So let's talk about the three types of synergies that come out of ma. This is just really important context for you guys. And we've got a whole method around M and A and integration and what happens. So what we know is that there's three big areas. One would be your cost synergies. And that would be like, oh, I've got three different, maybe two headquarter locations, maybe a manufacturing facility that's not at 100% capacity. They look for pulling that stuff together and get some cost synergies there. Not traditionally or typically put on the sales organization or any of you. That would be my capital synergies anyway, my capital synergies. My cost synergies would be overall cost. We've got two marketing groups. How do we bring that together? Optimize where we are. The big one, which are the revenue synergies. That's where the sales organization is often asked to execute upon the outcomes there. And let's take a look at what some of those are. Typically it's cross selling and that's really up to 20%, we know up to 20% of the overall revenue that's put into this deal that's expected coming out of cross sell alone. But we also know that less than 20% of companies actually realize that outcome. So that's. That's a really difficult one.

Beyond consistently, we hear that in interviews we do the cross selling is the big one, but we can never get there. And if somebody could tell us how to do it, that would be like.

You know, and it's not by developing a better comp plan. It doesn't matter what you throw at it. You can't. You've got to start with the alignment first and people understanding what it is that they need to do and how they need to sell differently. Because what Mark is saying is they're frustrated. We hear about plan design changes that have taken place. We hear about, I'm not kidding, cars that are being given away all these extra spiff things for hitting these numbers and it's not happening. But there hasn't been that upfront alignment around roles, but even around segments and the clients and the geographies and the need in the market. So you got to kind of do that up front.

So I've got a quiz question on cross selling. What do you think is the number one barrier to cross selling? One word, number one barrier. Yes. Ego, close and probably related. Risk. Yeah, risk. People don't want to bring reps, don't want to bring other people in, particularly if they're very successful. It creates risk in the situation. And then you have all these other alignment areas like segmentation and sales process and rules of engagement and you know, but you can't compensate somebody enough to put something at risk if they think they're going to lose more.

So we had a. You're just reminding me of our podcast from last week. We had a podcast last week and we brought in an M and a expert who has been responsible for over 24 mergers and acquisitions of significant size. And he validated and said the number one risk is the people, the salespeople. The risk of bringing someone into my account, the risk of them messing it up right. All of a sudden if it's not delivered well, I'm going to lose out and I could potentially lose my client. Client. So not to be underestimated again has nothing to do with your plan designs. The other thing expectations might be around geographic expansion, getting into other segments, but making sure that there's alignment there and people know what needs to be done. And then from the cost synergy perspective, they're expecting sales capacity improvements. So you gotta, you know, there's a method of looking at that too around job role deconstruction, contamination and looking at how you become more productive as well.

All right, so let's wind up here. We're going to show you one quick quotas clip here before we finish off.

What's the story? Quotas. The frontline carries a quota in most organizations and there's a shift back to individual performance measures over regional and company level measures to reps more control over their pay. Quota attainment has improved over the past year, but the outlook ahead is not as optimistic as last year as continued concerns with macroeconomic conditions that includes concerns around inflation, recession, long term effects of the pandemic and ongoing supply chain issues over the next 12 to 18 months continues to create headwinds for companies recovery their revenue goals. Most organizations use quota for the front line in 74% of organizations. Frontline reps are responsible for quota, up from 72% in 2021. These measures are increasingly shifting to individual measurement, with 76% of organizations using individual measures in their frontline plans. Organizations are improving on quota attainment. In 2019, in median organizations, 65% of reps were at or above quota. This declined to 50% in 2020 and improved to 60% in 2021. The quota attainment outlook is fading. In the first two quarters of 2022, in median organizations, 53% of reps were at or above quote quota. The median organization is projecting that 60% of reps will hit quota for 2022, but this optimism has diminished slightly from 2021 projections of 65% attaining quota.

All right, so we're going to wind it up here and quota is a big topic. Come talk to us about it. Like we said, we've got six of these videos if you'd like to check those out and some actions for you. We got a sales comp x ray takes two weeks if you'd like to check that out and see how your organization's doing. And then we have a Rethink sales podcast that's on Spotify and Apple and we've got some, some books available to you. And then just, just talk with us. We'd love to chat.