[Data Snapshot] 2019 Sales Compensation Best Practices Study

Nov 07, 2019
2 min read
Xactly surveyed more than 90 companies. Get tips, trends, and best practices for sales compensation planning and administration and improving performance.

This year, Xactly conducted the annual Sales Compensation Best Practices Study to define the key trends and metrics around sales compensation administration. This type of management tool is critical in enabling companies to drive the right sales behaviors, attain goals, and drive growth.

As reflected through research, many respondents ranked their biggest compensation administration challenge as being unable to implement best practices as well as lack of data centralization and standardization of processes. This means that organizations are not using sales compensation as strategically as they could be. As leaders in the compensation industry, it’s important to understand where we are in order to get to where we’re going.

Insightful participant responses are included below, as well as several key takeaways from the overall survey results. It’s all there—the good, the bad, and the ugly.

Take a look and see for yourself. 

First, there’s Incentive Plan Execution.

56% of smaller businesses with 1-50 employees employ a team of 1-2 full-time employees to administer compensation

57% of larger organizations with more than 1,000 employees employ a team of 3-5 people to administer compensation. 

Ultimately, a higher level of service requires more dedicated resources. However, with optimized incentive processes, the number of resources can be decreased, while maintaining a higher level of service.

What about Compensation Payout Accuracy?

83% of companies admit they have inaccuracies within their payment schedules. This is concerning when you consider that on average, organizations spend 10% of annual revenue on sales compensation payments.

70% of responding organizations have already automated their incentive compensation management (ICM) and the positive impacts from it speak for themselves.

75% of businesses that automate incentive compensation processes have fewer errors than companies using manual processes, resulting in 95% or greater payment accuracy

Ultimately, automated solutions do three main things:

  1. Improve Data Integrity
  2. Reduce Errors 
  3. Increase Efficiency 

Long story short: if you don’t track accuracy, you can’t improve it! Failing to track commission accuracy equates to making a best guess when paying out employees. Companies can use automated ICM technology to decrease errors and improve administrative processes; this can lead to cost savings and lowered payment processing times.

Let’s talk Optimization

It’s no secret that compensation optimization should be an ongoing process. With the right tools in place to continuously analyze and improve processes and execution, businesses can

then begin to implement best practices more effectively. Here are 5 common best practices for compensation administration (you can get even more sales comp best practices here):

  1. Establish Compensation Ownership
  2. Continue Investing in Compensation Optimization
  3. Spend the Necessary Time to Ensure Data Integrity
  4. Simplify Incentive Design and Reduce Plan Complexity
  5. Take Advantage of Reporting and Analytic Insights

Finding the Truth Within Your Organization

There it is, in black and white. Are many of these statistical truths and industry best practices reflected in your own organization? Does your team often struggle with flawed data and shallow analytics? It’s evident—you’re not alone. Let’s work on this together.

This 2019 study reveals the trends that you can stake your company’s comp strategy on. To learn more about how accurate, on-time payments can impact your sales representatives’ future successes and increase quota attainment, check out the full 2019 Sales Compensation Best Practices Study.

  • Incentive Compensation
Emily Jahn
Content Marketing Manager

Emily Jahn is a Content Marketing Manager at Xactly. She earned a degree in advertising from The University of Colorado - Boulder and has experience in copywriting, social media, and digital marketing.