As the calendar turns to fall, sales leaders and salespeople have begun to accept the idea that virtual sales—selling remotely, via video or phone—will be more than a three-month phenomenon. Whether they embrace this change or not, nearly all companies have begun to consider implications of virtual selling on performance measurement and sales incentives, not just for 2020, but for 2021 as well.
In our work with asset managers and insurers, ZS runs a consortium tracking sales activities. Through that consortium we’ve gathered data on over a quarter million sales interactions with financial advisors during the first half of 2020. When we view those interactions through the lens of the external (field-based) salesperson, we can clearly see that the job has changed:
- External salespeople reached 34% fewer customers (wirehouse advisors) via video or in-person meetings in Q2 than Q1
- External salespeople made 110% more phone calls to customers (wirehouse advisors) in that same time period
- And, anecdotally, where in-person meetings were office-based in Q1, they were most likely to be on the golf course or outside over lunch in Q2
How have sales performance management and incentive practices been adapted? As a part of an industry webinar with the Money Management Institute, we asked this question to 75 salespeople and sales leaders. In their responses, we 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. But firms need to govern discretionary plans carefully and ensure they don’t become the plug for an otherwise leaky compensation plan.
- Sales activity expectations are changing. The subtext to this question revealed myriad 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.
What will performance management and incentives look like in 2021 and beyond? We also asked the MMI participants to look ahead to 2021 and forecast their incentive changes. What we saw was an industry divided: Roughly equal thirds of respondents felt there would be no change, significant change and complete reinvention.
Where to go from here? 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. Our 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. We’ve seen 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.