2018 Sales Survey - Korn Ferry

Sales Force Effectiveness Survey

Results Read-OutAre you leaving money on the table?

Every Company needs: A Few Good Salesmen…You don’t want to know the truth because

deep down in places you don’t talk about

in board meetings…you want me on that

call. You NEED me on that call!!! We use

words like stop loss, cost management,

network discounts and transparency. We

use these words as the backbone of a life

spent negotiating opportunities. You use

them as a punch line!!!

I have neither the time nor inclination to

explain myself to people who rise and

sleep under the very blanket of revenue I

provide and then question the very manner

in which I provide it. I would rather you

just said “THANK YOU” and went on your

way. Otherwise I suggest you pick up a

phone and make some calls. Either way, I

don’t give a damn what you think you’re

entitled to!”

You want answers?

I want the truth…

CAN YOU HANDLE THE TRUTH…

And that revenue must be brought in

by people with elite skills. Who’s

going to find it? You? Mrs.

Operations? You Mr. HR? We have

a greater responsibility than you

could possibly fathom.

You scoff at the sales division and

curse our lucrative incentives. You

have that luxury. You also have the

luxury of not knowing what we

know: that while cost of business

results are excessive, it drives in

revenue. And my very existence,

while grotesque and

incomprehensible to you, drives

REVENUE!!!

We live in a world that

requires revenue.

© 2018 Korn Ferry. All rights reserved 2

Presenter

SENIOR CLIENT PARTNER, SALES EFFECTIVENESS PRACTICE LEADER

Joseph DiMisa runs the sales effectiveness practice for Korn

Ferry, where his areas of expertise include working with

companies to develop and implement direct and indirect

compensation plans, sales strategies, and sales effectiveness

programs. He has more than 20 years of experience working

across all industries and is a recognized expert in go-to-market

strategies and reward structures.

▪ Author of Best Selling business Book –The Fisherman’s Guide to

Selling

▪ Author of Opening The Best Practices Closet – Sales Compensation

Made Simple

▪ Certified WorldatWork C5 – Elements of Sales Compensation and C7

Strategic Sales Market Pricing Instructor

▪ Certified Sales Compensation Professional (CSCP) Course Designer

and Instructor

Joseph DiMisa, CSCP

[email protected]

770-403-8006


Presenter

PRINCIPAL, SALES EFFECTIVENESS PRACTICE

Paul DeCoster specializes in leading sales effectiveness

initiatives, ranging from strategy development to solution

implementation. He has worked with Fortune 500 and middle-

market clients to assess, define, and optimize operating models,

channel & coverage, sales roles, and incentive plans. Paul

focuses on a variety of industries, including technology, utilities,

and healthcare / life sciences.

▪ Presenter at the WorldatWork Spotlight on Sales Compensation,

Sacrificing the Sales Comp Sacred Cows: New Paradigms for a New

World

▪ Author of the Workspan article, “How to Select and Implement a

Sales Performance Management System”

Paul DeCoster

[email protected]

512-801-1158


Survey ApproachKorn Ferry gathered the data using an online

electronic data entry and collection

instrument in addition to data from our sales

forums. The analysis and interpretation of the

data was also supported by the professional

experience of the KF survey team members

Survey MethodologyThe data was collected, analyzed, and

segmented by Industry (when appropriate)

to produce the most insightful information

Industries: Financial Services, High-Tech,

Industrial, Life Sciences, Retail

How was the Survey Conducted?


▪ Abbott Diagnostics ▪ Clarins, USA ▪ Fendi Americas ▪ J Crew ▪ Patrimonium Asset Mgmt AG ▪ Stage Stores, Inc.

▪ Academy Sports + Outdoors ▪ Clorox ▪ Ferguson Ent., Inc. ▪ Kemira ▪ Pay Governance ▪ Staples Canada ULC

▪ Aclara ▪ Coca-Cola ▪ Fluor ▪ Komatsu Mining Corp. ▪ Pfizer ▪ Straumann

▪ Acxiom Corporation ▪ Cogito ▪ Follett Corporation ▪ Lamrite West ▪ PTW Energy Services ▪ Synergy Hospitality

▪ Adobe ▪ Columbia Sportswear ▪ Forward Thinking EDU ▪ Lexicon Pharmaceuticals, Inc. ▪ Purolator ▪ Tata Communications

▪ Advent Software ▪ ComMScope ▪ FutureSense, LLC ▪ Lincoln Financial Group ▪ Qualitor, Inc ▪ Tempsplus

▪ Aggreko LLC ▪ Community Coffee Company ▪ GCP Applied Technologies ▪ Loreal ▪ Qualitrol Company LLC ▪ The E.W. Scripps Company

▪ Allergan ▪ Compass Minerals ▪ General Motors Company ▪ Lululemon ▪ Randstad North America ▪ The KPI Institute

▪ Amfam ▪ CompuCom ▪ Glanbia Performance Nutrition ▪ LVMH Inc. ▪ Red Hat ▪ The Walt Disney Company

▪ Andrews Distributing ▪ Cox Automotive, Manheim ▪ Global Knowledge ▪ Macy's Inc ▪ Regeneron ▪ Toppan Photomasks, Inc.

▪ AppDynamics ▪ Curvature ▪ Graebel Relocation ▪ MarketSource ▪ RESAAS Services ▪ Trex

▪ Apple ▪ DDD ▪ Hallmark Cards ▪ MARS North America ▪ RingCentral ▪ Tuesday Morning, Inc.

▪ ARC Financial Corp. ▪ Deltek ▪ harbourvest ▪ McAfee ▪ Riverside ▪ Unum

▪ Autodesk ▪ Dick's Sporting Goods ▪ HEI Hotels and Reports ▪ Medtronic ▪ Rockwell Automation ▪ Verizon Wireless

▪ AutoZone ▪ DocuSign ▪ HHH ▪ Merrill ▪ Rollins, Inc. ▪ Viewpoint

▪ Avaya ▪ DSW ▪ Hilton Worldwide ▪ Michaels ▪ Safelite Auto Group ▪ VMware

▪ Box ▪ EFI ▪ Holt Renfrew ▪ Micro Focus ▪ Sales Mastery ▪ Volvo Truck, N.A.

▪ BSH Home Appliances ▪ Emerson Automation Solutions ▪ HomeAway ▪ Microdynamics ▪ Sammons Financial Group ▪ West Marine

▪ Canon Poland ▪ Equinix ▪ Hormel ▪ Microsoft ▪ SDLK ▪ Western Union

▪ Carter's ▪ ERBER AG ▪ Hudson's Bay Company ▪ MuleSoft ▪ Shaw ▪ Wiley/ WLS

▪ CDW ▪ Ermenegildo Zegna ▪ IBM ▪ Northleaf Capital ▪ Singapore Telco Ltd ▪ Xerox Technology

▪ Chanel ▪ Expedia ▪ Integrated Capability Aider ▪ Office Depot ▪ Soar Performance Group ▪ Zscaler

▪ Charter Communications ▪ Express ▪ Intl Flavors & Fragrances Co ▪ Omega World Travel ▪ SoFi

▪ Cisco Systems ▪ Express Scripts ▪ ITEL ▪ OpenText ▪ Squirrel Systems

Over 125 companies participated in this inaugural survey, and we combined these findings

with our collective knowledge across industries and hundreds of clients

Who Participated?



State of the Sales Force — Do You Know Who They Are?

Sales RoleThey fall into 10 sales

roles

Average quota for each rep

$2.5M and average attainment

is 95% with only 47% of reps

above target

Quota

ProfessionalsThere are an estimated

14.5M Sales / Sales Related

Professionals in the US

CompensationCompensation cost of sales is, on

average, 7%-8% with base salary

averaging $85,000 and variable pay

at $35,000


State of the Sales Force — Do You Know What They Do?

Core behaviors of top

sellers include:

✓ Aggressive

✓ Tenacious

✓ Intuitive

Percent of time

selling…

55%for a high

performing

seller

35% for an

average

performing

seller


Getting to know the Survey Participants

Asia Pacific 23%

Europe 25%

Latin America 11%

North America 87%

Of those that don’t operate in all

regions, the percent that operate in

each region are as follows:

The percent of participants that

operate Globally:

6%

15%17%

33%

29%

Life Sciences Industrial Financial Technology Consumer

Industry Representation Geographic Representation

60% - No

40% - Yes

Industrial and Life Sciences companies are relatively more interested in expanding into international markets, especially Asia Pacific, than other industries.


Revenue vs. Sales Reps

Participants ranged in size (revenue and number of sellers, respectively):

22%

11%

26%

15%

26%

0 to 49 50 to 99 100 to 499 500 to 999 More than999

9% 8%14% 11%

33%

25%

0 to $49M $50 to$99M

$100 to$499M

$500 to$999M

$1B to $5B Greaterthan $5B

Life Sciences Technology Financial Industrial Consumer

$3.0M

per Rep

$3.8M

per Rep

$10.7M

per Rep

$14.4M

per Rep

$26.5M

per Rep

AVERAGE RATIO OF COMPANY REVENUE TO SELLER BY INDUSTRY:

Does more revenue mean more sellers?

How effectively do you staff compared to the industry?


What is going on in Sales Today: Big Sales Challenges

Why the job is so tough?

▪ No guaranty: “You are only as

good as last quarters Results”

▪ Life span of head of sales:

Typical Head of sales has a

3-5 year tenure…

▪ Overall productivity: Only 55%

of companies are making growth

goals

▪ Quotas change this many

times in a year: Average 3 times

▪ Revenue growth top priority:

No clear alignment on how

▪ Retaining top sales talent a big

issue: Days of paying more

money to retain are over

▪ Lots of trouble moving the

middle performers: Defining

“the middle” may prove to be

even more difficult

▪ Digitalization of the sales

force: Lots of change already,

and more to come

Give your sales

leader a hug,

they need it!


There is a profound transformation in customer

behavior…and companies are struggling with it. Today’s

buyers are enabled by the Internet, empowered by the

enormous choice in every market, and possess the ability to

compare real-time competitive prices. They have, in essence,

taken control of the purchase process.

12

“Interruption based" selling is

becoming less effective

Buyer’s remorse 75%of all purchases

A Positive customer

experience on

Only 45% of all purchases

Today and in the future, reps need to use Web tools, technology and social media to sell more effectively – to connect, engage, interact, share and collaborate.

And more and more Change…

✓ 80% of consumer customers feel they have more

leverage in the buying process today

✓ 64% of business to business customers feel the

same

But…

And…

we are still Human…


What are buyers doing if they’re not talking to your

salespeople?

So….You better get your Sellers Active

▪ Surfing websites to identify and qualify vendors, instead of your

sales group qualifying them

▪ Connecting with peers and colleagues to learn more about their

needs, potential solutions and providers

▪ Reading, listening to and watching free digital content from your

website and others

▪ Comparing competitive prices

• Is your

organization

geared

towards

answering

these points?

• Are your reps

spending their

time focused

on these

points?

Is your sales organization in all of these places?


27% Customer Contact

Entertainment 4%

Face-to-face meetings 10%

Telephone/Web/Digital 10%

Other 3%

8%Other Selling

Activities

Account Planning/Awareness Creation 2%

Issue Resolution 5%

Other business development (Social

Media)1%

40% Administrative

Checking Commission Reports 10%

Expense Reporting 5%

Internal processing 25%

10% Internal MeetingsSales Meetings 8%

Company-wide meetings 2%

3% Training 3%

10% Travel time - Non Selling 10%

2% Other Non-Selling 2%

38% Customer Contact

Entertainment 8%

Face-to-face meetings 11%

Telephone/Web/Digital 17%

Other 2%

17%Other Selling

Activities

Account Planning/Awareness Creation 8%

Issue Resolution 6%

Other business development (Social

Media)3%

20% Administrative

Checking Commission Reports 5%

Expense Reporting 5%

Internal processing 10%

10% Internal MeetingsSales Meetings 8%

Company-wide meetings 2%

3% Training 3%

10% Travel time - Non Selling 10%

2% Other Non-Selling 2%

How do Sellers Spend their Time?

Average Performers’ High Performers’

Time Clock—35% Selling; 65% Non-Selling Time Clock—55% Selling; 45% Non-Selling


So, now knowing the Challenges …

What is a Sales Organization’s priority?

73%

13%

9%

3%

3%

Revenue growth

Unit growth (volume/market share)

Margin improvement

Expense reduction

Other

No priority but a revenue

priority

But are they really

sure they can do it?

An overwhelming majority of companies (85%) view

revenue growth as the top financial priority for 2018.


Expanding

Our Product

Offerings

Re-Design Our

Sales Organization

or Sales Roles

Increase

Productivity

Re-Define or Re-Target

Our Markets

Let’s See….How Companies are growing Revenue:

Top Strategies for Growth in 2018/19

Sounds

complicated

… what does

this mean?

And how are

companies

doing these

things?


How are you creating

more productivity for

the future for your

sales organization?

New technologies to create more opportunities and more

coverage/exposure: Digital, Digital, Digital

Software tools for web

conferencing and team-

based collaboration

Increase

Productivity

79%Video sharing/

Conferencing

Blogs and global

bloggers

Screen sharing

tools

Deeper online content

such as case studies,

blogs and white papers

Mobile devices for instant

online capabilities

Social Media

channels

User-created knowledge

bases such as Wikipedia


▪ Products in New Areas

▪ Products for New Demographics

▪ Products at New Price Points

▪ Products for New Needs

Expanding Our

Product Offerings

63%

New technologies to create more opportunities and more

coverage/exposure: Digital, Digital, Digital

And creating the awareness for these new products through digital channels…


What is going on in the Markets?

Re-Define or

Re-Target Our

Markets

43%

▪ Market Opportunity Analysis – Our

focus is on the best opportunity for

growth?

▪ Segment Sizing and Targeting –

“We need to maximize our

Customer Engagement”

▪ Acquisition Strategies - “We need

more complimentary solutions and

more scalability”

▪ Retention and Penetration

Strategies – Drive usage and

consumption

▪ Sales Channel Productivity

Analysis - “How do we get our

channels to cover our markets

more effectively and lower cost?”

WHAT DOES YOUR SEGMENTATION MODEL LOOK LIKE TODAY?

Over 50% of companies use more than one

criteria for segmentation (matrixed coverage).

Only 25% of companies have a “solution”

orientation, even though purchasing is more

solution focused than ever.

Percent of companies using the following criteria for customer segmentation…

Product / Solution Vertical / Industry Customer Size Geography

27% 44% 48% 55%


▪ Identify Key Accounts and cover with a

richer, more customized coverage

model

▪ Reposition Sales Architects and Sales

Engineer roles to drive solution creation

and implementation

▪ Transition self-serviceable activities to

the Ecommerce channels, but with

enhanced value proposition

▪ Expanding Indirect Channel Partners to

cover new segments and make costs

more variable

▪ Freeing up Sales Resource Time by off

loading low value activities

▪ Better Development of Sales

Resources defined by geography,

channel and territory

▪ Deploy Digital/Ecommerce Sales

Channels to cover low end of field

territories

▪ Deploy Customer Advocate/Success

roles to handle post-sale account

maintenance into accounts

▪ Deploy Product Specialists for growth

products/solutions

Re-Design Our

Sales Organization

or Sales Roles

58%

How are companies redesigning their Orgs and Roles?


Change Impacts the Job Roles…

The Account Manager is the most prominent /

common sales role (57% of companies)

This role is increasingly focused on building long-term,

value-added relationships with customers / clients

Account Managers typically do not sell alone. They

partner with sales support and overlays such as:

Sales Specialists (55% of companies)

Product Specialists (50% of companies)

Sales Engineers (36% of companies)

Approximately 70% of companies also have key /

strategic sellers

50% of

RepsDo NOT

UNDERSTAND

Their Plans

And worse, more than 36%

of sales leaders say they

don’t understand the plans

or they don’t recognize it

when it rolls out

50% of

RepsSay Plans

are TOO

COMPLEX

60% of sales leaders redesign

the plans each year, but it is still

too complex and still doesn’t

line up with business strategy

And it has nothing to do with the

measures in the plan…it’s how

they are measured or

credited for revenue.

81% of companies have

three or fewer measures

The most common measure

is recognized revenue, 58%

of companies use it!

And also the Sales Compensation Plans


How is turnover in today’s sales organization?

Too many people staying… and too many people going

Does this mean that top reps leave and poor performing reps stay? (Maybe…)

Companies are starting to assess more…What defines a top rep? What

defines a poor rep? What defines a rep that is ramping-up?

45%

30%

15%

10%Less than 10%

10% to 19.9%

20% to 29.9%

30% or more

For your sales force, what is the average annual

turnover rate (voluntary and involuntary)?

Good sales force turnover is 20-25% on an

annual basis…as long as it is not your top

performers.

What’s happening in today’s sales force?

• 45% of companies say they have less than 10%

turnover

• 10% of companies say they have 30% or more

turnover


And why do the good ones Leave? Pay Opportunity?!

What do you believe to

be the major causes of

turnover?

55%

45%

37%

29%

13% 11% 11%9%

6%

Higher base pay Greater careerdevelopment

Increasedincentive pay

More attainablequotas

Strongercompanyaffiliation

More stockoptions / grants

Improvedbenefits

Better workcontent

More flexibleschedule


Base pay not important for 45% of sales reps because with good quotas they can make it up in incentive.

A Little Closer Look

Almost 30% say they

leave because of

quotas…

Can it really be this bad?

Only 47% of sales reps

hit their quotain 2017, yet…


…. Quotas are Increasing by an average of 11%

How much are quotas going to increase in 2018/2019?

Expectation of increased productivity is reflected through the anticipated rise in quota targets

Adjustment to

Annual Quota

Increase > 15%

Increase 1% - 15%

No Change

Decrease

Percentage

of Orgs

25%

54%

18%

3%Average 11%

Increase in Quota


The Pressure Keeps Increasing…

Every Company needs: A Few Good Salesmen…You don’t want to know the truth because

deep down in places you don’t talk about

in board meetings…you want me on that

call. You NEED me on that call!!! We use

words like stop loss, cost management,

network discounts and transparency. We

use these words as the backbone of a life

spent negotiating opportunities. You use

them as a punch line!!!

I have neither the time nor inclination to

explain myself to people who rise and

sleep under the very blanket of revenue I

provide and then question the very manner

in which I provide it. I would rather you

just said “THANK YOU” and went on your

way. Otherwise I suggest you pick up a

phone and make some calls. Either way, I

don’t give a damn what you think you’re

entitled to!”

We live in a world that requires

revenue.


Give your sales

leader a hug,

they need it!

Thank you For Attending!

Questions


Which Industry has the Largest and Smallest sales forces?

Sector Industries Avg. Number of Reps

Co

ns

um

er

475

Fin

an

cia

l

225

Ind

us

tria

l

400

Lif

e S

cie

nc

es

650

Te

ch

no

log

y

575

• Advertising & Marketing • Media & Entertainment • Travel/ Hospitality/

Leisure• Consumer Products • Retail & Apparel

• Digital • Sports

• Asset & Wealth Mgmt • Insurance • Real Estate

• Banking • Investment Banking

• FinTech • Private Capital

• Aerospace & Defense • Manufacturing • Transportation

• Agribusiness • Energy • Mining

• Automotive • Construction

• Biotech • Contract Services • Pharma

• Healthcare Svcs • Medical Devices

• Communications • IT – Prof Svcs

• Systems & Devices • Software

Overall, participants represent multiple industries and companies of all sizes,

providing us with a highly representative sample of the overall workforce.

What Are Companies Doing?

- Continually assess

your sales force to

ensure they understand

customer

- Understand market

trends for distribution

leverage

- Reward your top

performers

Pressured Environment

▪ Increasingly competitive environments

▪ Technology and process advances

▪ Shifts in composition of workforce

▪ Mixed demands for labor skills

▪ Pressure to keep labor cost low

▪ Variety of employment relationships

Current Trends

▪ New types of sales jobs and structures

▪ Different talent/skills profiles

▪ New employment relationships

▪ Multiple segmentation strategies

▪ New pay for performance models

▪ Services and recurring revenue

Our Advice:


Documents

2018 Sales Survey - Korn Ferry