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15 Sales Compensation Benchmarks to Use
July 2, 2024
It's no surprise that according to Gartner 50% of sales leaders feel the pandemic exposed weaknesses in their sales compensation plans.
It shows that just having a sales comp plan in place isn't enough. As a leader, you have to ensure your plan is up to par with industry standards, fair to everyone and drives the desired results.
If the plan isn't cutting out and doesn't follow sales compensation benchmarks, it won't take long for your team to notice, and that's a quick path to decreased morale and performance.
Alright folks, let's talk about sales compensation benchmarks!
In this article, let’s break down what they are, 15 key benchmarks to consider for your comp plan, and why using them is a total win.
Let's do this!
What are sales compensation benchmarks?
Simply put, they're basically like your industry's playbook for pay. These metrics give organizations a clear picture of the typical compensation structures used across the board.
Let's see some of the top sales compensation benchmarks
15 Sales Compensation Benchmarks to Use?
According to the Incentive research foundation, a well-designed incentive programs can boost employee performance by a whopping 44%. That’s something!
Let’s get into how setting the right sales compensation benchmarks can work hand in hand with these programs to supercharge your team’s success.
👉🏻Base Salary:
This is the guaranteed pay your reps get every paycheck, win or lose. Benchmarks help you set a salary that's both competitive and fair.
👉🏻Commission Rates:
Commission rates are like mini-bonuses reps earn for closing deals. Benchmarks help you pick commission rates that motivate your reps to hustle and align with what others in your industry are offering.
👉🏻Bonus Programs:
On top of their base salary and commission, some companies offer bonuses for going above and beyond. Benchmarks can inspire you to design bonus programs that are motivating.
👉🏻Performance Metrics:
These are the fancy ways you measure your reps' success, like the number of deals they close or how much revenue they bring in. Benchmarks help you set clear expectations that keep your reps focused and laser-targeted on winning.
👉🏻Territory Size:
The bigger the territory, the more running around your reps have to do. Benchmarks can help you adjust compensation based on territory size so it's fair for everyone.
👉🏻Sales Cycle Length:
Selling complex stuff can take forever. Benchmarks can help you adjust compensation to account for sales cycle length. Maybe a higher base salary for those extra-long sales cycles to keep your reps happy?
👉🏻Tenure:
The more experience your reps have, the more they bring to the table (and hopefully the more sales they close). Benchmarks can help you figure out how much more senior reps deserve to earn.
👉🏻Industry:
Every industry has its pay standards. Benchmarks help you ensure your reps are getting paid competitively within your field. You wouldn't want your star rep to jump ship to a competitor just because they offer a better paycheck, right?
👉🏻Location:
The cost of living can vary wildly depending on where your reps live. Benchmarks can help you adjust compensation to account for these geographic differences. It wouldn't be fair to pay your rep in Mumbai the same as your rep in a tiny village, would it?
👉🏻Company Culture:
Some companies are all about stability and offering a steady paycheck, while others are more like "go big or go home" with high commissions and the potential to earn a ton. Benchmarks can help you align your compensation plan with your overall company culture.
👉🏻Sales Training and Development:
Investing in training your reps can make them superstars. But if you're spending a ton on training, you might be able to offer a lower base salary. Benchmarks can help you find a sweet spot between training investment and base salary.
👉🏻Expertise Required:
Selling rocket science requires more knowledge than selling socks. Benchmarks can help you adjust compensation to reflect the level of expertise your reps need to have.
👉🏻Company Size and Growth Stage:
Startups might offer higher commissions or even a piece of the company (equity) to attract top talent, while huge companies might have more traditional compensation plans. Benchmarks can help you tailor your plan to where your company is at.
👉🏻Customer Acquisition Cost:
It costs money to find new customers. Benchmarks can help you ensure your commissions are high enough to justify the effort it takes to close those deals.
👉🏻Market Demand:
In a super competitive market for sales reps, you might need to offer more money to attract and keep the best of the best. Benchmarks can help you stay in the game when it comes to recruiting top performers.
Learn more about SDR compensation structure, check Unlocking Success: A Comprehensive Guide to SDR Compensation Strategies.
What Are Current Sales Compensation Standards?
A sneak peek into industry compensation standards…
Target Earnings: The average sales rep aims for a total compensation (OTE) of $115,000. This often breaks down to a 60/40 split between base salary and commission, but structures vary widely by industry and company.
Different field significantly affects earnings. For instance, tech sales reps typically earn more than those in door-to-door sales.
Here's a breakdown by industry median:
- Wholesale & Manufacturing: $61,660
- Insurance: $50,600
- Advertising: $51,740
- Real Estate: $50,300
- Financial Services: $64,120
- Door-to-Door & Street Sales: $26,430
- Other Industries: $33,200
SaaS Salespeople focused on Software as a Service (SaaS) have an average base salary of around $51,000, with inside sales reps earning closer to $60,000.
Here's a more detailed look:
- SaaS Account Executive (Indeed): $64,379 base
- SaaS Account Representative (Indeed): $49,216 base
- SaaS Specialist (Glassdoor): $34,613 - $53,000 base
- SaaS Inside Sales Rep (Bridge Group): $60,000 base, $118,000 OTE
To read more about the sales manager compensation plan, check The Top Elements of a High-Impact Sales Manager Compensation Plan.
Why Sales Compensation Benchmarks Matter for Your Business?
Using certain benchmarks to set up a sales incentive plan goes a long way and has a long list of perks that come with it.
Let's explore a few of them here…
💡 Attracts the Sales Superstars:
Imagine offering a compensation plan so good, it attracts the best salespeople in the industry. That's the power of a well-designed plan! Competitive pay with high earning potential makes your company a magnet for top talent.
💡Lights a Fire Under Sales Performance:
Want to see your sales skyrocket? Align your compensation plan with your company's goals and industry standards. When salespeople see a clear path to earning more by contributing to the company's success, everyone wins!
💡Fine-Tunes Your Sales Team:
Think of sales compensation plans as a way to identify areas for improvement. If your plan isn't attracting the right talent or driving sales the way you want, benchmarks can help you identify tweaks that make a big difference.
💡Learn from the Best in the Sales Game:
Spying (in a good way!) on how top sales organizations structure their compensation plans is a fantastic strategy. You can glean valuable insights and best practices to design a plan that supercharges your team's performance.
💡Boost Sales Efficiency:
A well-crafted compensation plan can nudge salespeople towards focusing on the products and services that bring in the most profit. This improves your overall sales efficiency and keeps your bottom line happy.
How to Improve Sales Compensation Benchmarks?
If you keep running on the same treadmill at the same speed, you'll eventually plateau, right? The same goes for benchmarks. We gotta keep them relevant and challenging to keep pushing ourselves.
Here are 6 easy steps to make those even better:
In a Nutshell
In the cutthroat world of sales, every edge counts!
Forget about flying blind, you need to have a guide to be able to create a solid compensation structure. Best Sales compensation benchmarks are what you need handy!
They help you pay competitively, spot where you can improve, and keep your salespeople happy. They even let you see what your competitors are up to, what motivates the top performers, and where you can optimize your comp strategy.
I'm sure these are all the things every employer or leader wants in the end!
A strong compensation strategy can help you build a team that's not just motivated, but ferociously hungry to exceed expectations.
Use sales compensation benchmarks wisely & watch your team evolve from good to great, from great to legendary.
Let's Talk About the Real Struggle!
It’s natural for every business to feel swamped with manual compensation management. But don’t worry, you can turn this around.– welcome in advance!
Are you tired of juggling mountains of data and walking a tightrope with compensation calculations? Kennect is here to help!
Effortlessly automate your incentive programs, engage your employees, and analyze performance – all in one go.
Why struggle in-house when you can simplify with Kennect? Curious? Get ready to see it in action! Book a free demo today!
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