VANRATH Sales Remuneration Panel Review
The CEOs Connect network held an event on the topic of Sales remuneration on Thursday 1st December 2022 at the Titanic Hotel Belfast.
Thank you to Catalyst partner VANRATH, who presented on current market trends and Kent Summers, US-based sales mentor, also contributed to the discussion.
The VANRATH Salary Survey can be found here and a copy of their presentation here. Below is a summary of tech sector sales salary ranges:
Please also see below links to the Hays salary guides for Technology and Marketing:
Key takeaways from the session can be found below:
Current Recruitment Market Trends:
The balance of power currently sits with the candidate and a good candidate has a choice of roles. Salaries are increasing as a result of inflation and movers expect a 10-15% increase. The war on retention is surpassing the war on recruitment. There has been a huge increase in the number of counter offers yet recent experience shows staff leave within 6 months of accepting a counter offer anyway, and that making that counter offer can upset balance across the team in place, so advise caution when considering this as an option.
Salaries are driven in NI by a growth in product-based companies and the increase in shared services companies but on the upside there has also been a very recent increase in people on the market coming from a product-based environment. In addition, as more employers seek a hybrid model and return to the office, people who moved home from London during the pandemic may now be seeking local opportunities rather than commuting to London.
Balancing Base and OTE
For sales people, basic is important but candidates expect double OTE and the best believe they will exceed this.
VANRATH suggest a 60/40 split. Double OTE is becoming a buzz word. A high base is also attractive, but depends on sector and needs to be tailored.
A good candidate will look at the value they can bring e.g. asking questions about revenue and negotiating on that basis. This should be viewed as a partnership to achieve the company’s goals; if they join only for money, then they are more likely to leave for money. Candidates will look at the structure and consider how achievable it is and how often it is paid.
Some techniques being used include an accelerator or kicker e.g. if I get 10% commission up to OTE what do I get beyond this (uncapped commission not uncommon) or offer a guarantee for first 6/12 months and include a clawback if they leave within 2 years to offset risk. VANRATH also stressed looking at how you are paying commission: some pay 2 months in arrears, some pay 6 , but it’s important to find a balance that works for your company.
Kent Summers suggested resisting the temptation to over-engineer the commission and avoid attribution. He suggested a base salary based on what they need to survive so they are motivated, but this can only be discovered through a discussion.
Beyond the Pay-packet
38% of candidates want flexibility over and above salary. Diversity and Inclusion is also becoming increasingly more important and strong values in this domain can ensure team members are bought into the business. CSR initiatives are also becoming increasingly important, particularly to younger generations and can enhance the team culture and retention.
A comprehensive benefits package is also very attractive to sales staff who feel that taking a risk with a lower base can be offset with the security provided by benefits such as a Health and Dental care plan (these are not that expensive and the perceived duty of care is impactful).
Equity is not seen as a key differentiator yet in NI, it is not understood in the local market which makes it difficult to sell. For those who do get it, it can enhance buy-in and therefore increase retention but the more risk averse would prefer cash.
Build or Buy
To build generates loyalty, to buy is expensive. VANRATH have found some of the best results for companies are those who build sales talent. It is possible to find a best fit from those in other careers who believe in the product. This talent doesn’t need to be technical but does need to have technical gravitas. You can educate them on the value of your software and competitors, this process can take 9-12 months but if they feel integrated and valued they are more likely to stick around.
Ensuring you are hiring the right talent
Getting the selection process right is crucial. VANRATH suggest examining due diligence and the selection process. Some tips include:
Asking questions on revenue
Assessing loyalty, for example are they their exiting current role at the right time.
Look at P60 to assess salary and bonuses
A suggestion for assessing sales competency at interview from VANRATH is to ask candidate to break down programmes, give them a task and ask them to compare two products
One member shared that rather than interview they get the whole company to meet and assess candidates and have found an innate curiosity is a strong indicator.
Competing for talent
With candidates, be 100% candid, if you want to retain them you must show trust up front. Tell them about product gaps and do not over represent yourself. Tell the story of your vision for growth.
With agencies, educate the recruiters on who you are, sell the mission, and the recruiters will be more willing to help – they don’t get this deep connection with larger clients.