ROI of Sales: 3 Recommended Approaches

DiMisa, who is senior vice president, Sales Force Effectiveness at Sibson Consulting, outlined eight design challenges during a recent webinar sponsored by BLR® and HR Hero®.

ROI #1. Reduction in Compensation Cost of Sales through Improved Plan Design and Measurement

Reducing total incentive compensation costs through improvements in design and planning can yield a near-term payback and substantial ROI. After a compensation redesign effort, the companies we work with typically see a 5 percent decrease in costs due to realigned priorities and more efficient compensation plans.

ROI #2. Increase in Available Sales Resources and Efficiencies
Without Adding Head Count

When conducting sales compensation redesign, the offshoot is typically increased productivity. A company can capture more productivity through increased emphasis on key strategies as supported by the compensation plan. Additionally, with more emphasis on strategy, reps are more likely to have a better focus, which increases their direct selling time.

Typically, a sales organization spends approximately 40 percent to 60 percent of its time selling, or about 800 to 1,200 annual hours out of 2,000 hours worked per rep (cross-industry average). Companies that take a look at their sales functions during a sales effectiveness assessment can recapture ½ percent to 1 percent of total time for selling, or 10 to 20 hours per year per rep.

ROI #3. Reduction in Use of Rewards and SPIFFs

Through the use of a better defined compensation program, employers can expect to see less need for reward programs and SPIFFs due to the fact that the compensation plan will better support the needs of the business.

(What’s a SPIFF? Several phrases have been proposed as possible origins of the acronym SPIFF (e.g., “Sales Performance Incentive Fund,” and “Special Pay Incentives For Fast Sales”), but experts believe that they are all “backronyms,” as these phrases would have had no meaning in 1859, when the usage of “SPIFF” was first documented.)

With less of a need for award and recognition programs, typically, a 20 percent to 25 percent reduction in award programs exists when plans are better aligned to meet the needs of the business.

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Get ADA compliant job descriptions for your jobs with a Free Market Analysis Report. Also receive guidance on how to use our Compensation Analyzer tool to do market analysis, identify internal and external inequities, and track compensation.

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Sales Compensation Report Card

One valuable tool mentioned by DiMisa is the Sales Compensation Report Card. This form helps you measure the sales orientation of an individual employee or class of employees based on five factors.

Sales Characteristics			Sales Orientation Rating
Job:________	50 (Low Sales Orientation)			60	75 (Moderate Sales Orientation)	90	100 (High Sales Orientation)			Score
1. Individual versus team influence on outcome of the sale	Team (of at least 3) holds >80% of the influence over the outcome.				Team and this job’s efforts hold equal weight.		Individual holds >80% of the influence over the outcome.
2. Percentage of current annual revenue that would repeat without the existence of this job role	>80%				50%		<20%
3. Direct contact with the customer (in person or by phone)	Rarely				Occa-sionally		Often
4. Influence of the company or the job incumbent on the sale	Customer makes purchase due to company’s reputation, relationship, and actions.				Company and incumbent play a balanced role in the customer’s decision.		Customer makes purchase because of the incumbent’s reputation, relationship, and actions.
5. Role in the customer’s buying process	Respond with information, service, or technical support.				Manage customer activities and identify opportunities that arise.		Proactively identify issues, potential solutions, and drive to closure.
Average Grade (Divide Total Points by 5):

Trying to make sense of sales incentives, just one of comp and benefits’ daily challenges. “Maintain internal equity and external competitiveness and control turnover, but still meet management’s demands for lowered costs.” Heard that one before?  

Many of the professionals we serve find helpful answers to all their compensation questions at Compensation.BLR.com, BLR’s comprehensive compensation website.

And there’s great news: The site has just been revamped in two important ways. First, compliance focus information has been updated to include the latest on COBRA, Lilly Ledbetter, and the FMLA. Second, user features are enhanced to make the site even quicker to respond to your particular needs:

• Topics Navigator—Lets you drill down by topical areas to get to the right data fast.
• Customizable Home Page—Can be configured to display whatever content you want to see most often.
• Menu Navigation—Displays all the main content areas and tools that you need in a simple, easy format.
• Quick Links—Enables you to quickly navigate to all the new and updated content areas.

The services provided by this unique tool include:

• Localized Salary Finder. Based on reliable research among thousands of employers, here are pay scales (including 25th, 50th, 75th, and 90th percentiles) for hundreds of commonly held jobs, from line worker to president of the company. The data are customized for your state and metro area, your industry, and your company size, so you can base your salaries on what’s offered in your specific market, not nationally.

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Get an ADA compliant job description, grade assignment, rate range for that job, and salary data, all customized for your industry and geography. Better news? It’s FREE. Download Your Free Market Analysis Report.

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• State and Federal Wage-Hour and Other Legal Advice. Plain-English explanations of wage-hour and other compensation and benefits-related law at both federal and state levels. “State” means the laws of your state, because the site is customized to your use. (Other states can be added at a modest extra charge.)
• Job Descriptions. The website provides them by the hundreds, already written, legally reviewed, and compliant with the Americans with Disabilities Act (ADA) mandate that essential job functions be separated from those less critical. All descriptions carry employment grade levels to current norms—another huge time-saver.
• Merit Increase, Salary, and Benefits Surveys. The service includes the results of three surveys a year. Results for exempt and nonexempt employees are reported separately.
• Daily Updates. Comp and benefits news updated daily (as is the whole site).
• "Ask the Experts" Service. E-mail a question to our editors and get a personalized response within 3 business days.

If we sound as if we’re excited about the program, it’s because we are. For about $3 a working day, the help it offers to those with compensation responsibilities is enormous.

This one’s definitely worth a look, which you can get by clicking the links below.

Click here to get more information or start a no-cost trial and get a complimentary special report!