In our “ICM Trends to Watch” blog series, we explore the five key trends we’re keeping an eye on in 2024, and dissect the ways in which innovative technologies, evolving GTM (go-to-market) cultures, and more are impacting incentive compensation strategies and revenue performance management.
The uncertainty of the macroeconomic climate over the past couple of years has reallocated, minimized, or even eliminated resources for many GTM (Go-To-Market) teams. These shifts and reorganizations have emphasized process efficiencies, and made it clear that motivation-focused strategies are now especially essential for cultivating — and sustaining — high-performance revenue organizations.
A “growth-at-all-costs” mindset may have been feasible in rosier times, but today — as layoffs and budget cuts have become the reality — effective business leaders are looking more closely under the hood, determining and implementing more sustainable performance strategies by asking themselves: How can we drive revenue more efficiently, without burning out the resources that remain?
Essentially, knowing how to pull the right incentive compensation levers at the right times — helping your reps stay motivated and deliver the best outcomes for your business’ evolving needs — is the key to succeeding no matter the external market factors.
In the Alexander Group’s 2022-2023 U.S. Sales Pulse Survey, 68% of executives said they aspire to have a “performance-based” sales culture, and incentive compensation — when approached thoughtfully — is one of the most powerful tools in your revenue operations toolkit for fostering a culture that breeds high performers, whatever “high performer” means for your organization. Aligning your own business goals with the financial and professional goals of your reps ensures everyone across the revenue organization is tracking in the same direction.
But it’s not just your plan design and implementation that counts — it’s also about how you communicate the impact of the plan on both sides, as well as how much transparency you provide into what goes on behind the scenes of your reps’ payouts.
Our own State of Sales Compensation Report shows that 90% of sales reps and 92% of sales managers agree: clear visibility into compensation is key for motivation. However, according to our report only 26% of reps have a clear understanding of their payouts, and the consequences for this can go further than deflated performance — 42% of reps say a lack of visibility into how their compensation is calculated would make them consider leaving a role, while 36% say inaccurate compensation would cause them to consider jumping ship.
Aggressive hiring and attrition may have been the right strategy a couple of years ago, but it’s a better practice in leaner times to hire more efficiently by investing in longevity, delivering the resources, training, processes, and policies that will help your best players shine without turning them off or burning them out. While turnover is often a normal part of doing business, you don’t want to risk losing your top performers because of an easily avoidable hiccup in transparency and clear communication.
To cultivate and sustain a high-performing GTM team, it’s important to identify these and other gaps that might unnecessarily put not only the team’s culture but job satisfaction (and thereby performance and revenue results) in jeopardy. You don’t want to risk losing your top reps by failing to understand the impact of stale policies and strategies on performance and motivation in a particular selling season or environment.
For example, 53% of reps start to re-evaluate employment after 4-6 months of underperformance against quota. In light of ever-evolving market conditions, however, it simply doesn’t make sense to “set and forget” sales targets. Regularly determining whether you have the right quotas in place during a given quarter or other time period can help set the appropriate expectations for your team, as well as GTM leadership, and put everyone on the same track towards hitting the right realistic goals without losing trust or morale.
According to Gallup’s State of the Global Workplace 2023 Report, 77% of the world’s employees are not engaged or are actively disengaged at work, while over half expressed some level of intent to leave their current jobs. But all hope is not lost! 28% of those surveyed said they would change pay and benefits to make their workplace better, and 41% said they would change company engagement and culture, presenting opportunities to differentiate by investing in a) a compensation strategy that balances benefits for your reps and the business, and b) a performance-based culture that effectively inspires and motivates reps to bring their A game every day.
One effective way to boost team satisfaction and transparency is by regularly acknowledging and celebrating successes, both for individual reps and your sales team as a whole, as well as fostering a healthy sense of competition. Giving reps a clear view of their quota attainment to goal, providing leaderboards to help reps and leaders understand how individuals and teams are performing in relation to others, and celebrating wins big and small as they happen in real-time can boost morale and motivation to keep driving the organization forward.
Offering reps visibility into their potential future earnings in addition to past and upcoming payouts also helps them stay motivated to meet and exceed quota, directly aligning behaviors to your desired business outcomes.
You can learn more about the top five trends redefining incentive compensation management in 2024 by downloading the full report.