COMP NEWS – A new sales compensation survey has been released, shining light on compensation models for employees in sales positions. The data shows that commission plans, the most prevalent form of sales compensation, have been shrinking over time.
It’s more expensive than ever to run a business – and that fact is pushing companies to take a bigger cut of what reps bring in. Because of that, distributors are re-examining the industry’s long-standing 50/50 commission split (where half goes to the rep, and the other half to the company).
When Sandy Gonzalez, CEO of MadeToOrder (MTO, asi/259540), started out in the industry in the 1980s, distributors didn’t provide marketing, didn’t have a website or email, and certainly didn’t purchase laptops for everyone. Now, not only are distributors expected to offer a slew of services for their reps and provide the latest in equipment and software, but they’re also held to strict cybersecurity standards by their customers, and reps require training in everything from sourcing to forever chemicals.
ASI Research has found that straight commission continues to be the most popular plan, though the cut that salespeople receive has been shrinking each year for almost a decade.
While ASI Research found that straight commission was still the most prevalent compensation plan among reps and managers, that number has fallen every year since 2013. (The survey wasn’t published in 2020 and 2021 due to the pandemic.) And while 35% of survey respondents work off of straight commission, by comparison 23% of respondents say that it’s their most desired compensation plan.
There are many reasons why the rate of straight commission has decreased, distributors say. In a time of economic uncertainty, people want more guaranteed income – particularly the younger reps without an established book of business. Indeed, of those respondents with five years or fewer of industry experience, 44% desired a salary plus commission plus bonus plan, while only 10% desired straight commission. The numbers were almost exactly the reverse for reps with more than 20 years in the industry (7% and 47% respectively).
To read the sales compensation survey, click here.
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