Incentra Insights

Sales Incentives Outlook for 2021

Posted by David Chittock on Nov 24, 2020 10:31:00 AM

Sales incentives & virtual selling

Virtual Selling is with Us for Awhile

As we head into the fall, it’s becoming clearer that virtual sales, selling remotely via video or phone, won’t be going away anytime soon. It appears that sales leaders and salespeople will have to consider the implications of virtual selling on performance measurement and sales incentives, not just for 2020, but for 2021 as well. So what will this mean for our sales incentive planning for the upcoming year?

Impact on External Salespeople

ZS Associates, a global professional services firm, compiled data on over a quarter million field sales professionals’ sales interactions during the first and second quarter of 2020. Not surprisingly, they found that in the first quarter of 2020 over 80% of field sales were conducted with in person visits.

During the second quarter, the findings showed less than half were in person calls with 20% through video and 40% by phone. The net of these changes is a fundamentally different set of customer engagement expectations for field-based sellers. How have sales performance management and incentive practices been adapted to these changes? 

ZS saw an acceleration of two trends that are already underway in the industry:

  • Discretionary pay is being used more widely. This trend has been building for several years and has gained momentum during the crisis. Discretionary incentives can be very effective in sales scenarios where direct results—like gross or net revenue—don’t tell the whole story of performance. 
  • Sales activity expectations are changing. The subtext to this question revealed a myriad of perspectives, with some firms placing more emphasis on activities, which are measurable and controllable by sales, and some moving away from them entirely. Irrespective of the direction, more than a third of respondents had adjusted expectations for 2020.

Looking Forward to 2021

As the industry tries to find its way through a changing sales landscape, here are four ways to address incentive and performance management changes going into 2021:

  • Virtual engagement and access: Don’t accept “less activity” for 2021 looking at 2020 benchmarks. Research suggests salespeople are still getting through to customers, just in different ways. But do consider indexing or ranking and revisiting activity norms quarterly.

  • Geographic variability: Resist local-market customization. There appears to be little evidence to support tailored performance expectations by geography within the U.S. But, if in-person accessibility does in fact change, this will be perceived as a fairness issue and should be addressed.

  • Use discretion effectively: As firms increasingly move toward discretionary pay, they shouldn’t sacrifice objectivity; discretionary pay decisions can and should be data-informed.

  • Reinforce your strategy: This moment of change provides a great opportunity to reinforce your organization’s strategy through your incentive plan. Focus incentives on your core strategic pillars, remove misaligned or unnecessary components and pay close attention to the culture you’re building through these programs. 

Incentive plans are becoming more customized by company and industry. The traditional focus on gross sales is shifting toward a more strategic and company-specific approach. This trend is right for the moment and will likely continue.

Adaptability Rules

These times call for a sales incentive platform that is totally flexible, easily adaptable and can change on a dime. Flexibility is our middle name. Adapting your incentive plan can seem overwhelming. We can make it easy. Give us a call.

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Categories: Sales Incentives