3 Key Takeaways from the Future of Sales Compensation with Seth Marrs

Catch up on 3 key learnings from our podcast interview with Seth Marrs, Principal Analyst at Forrester, on the future of sales compensation.

Published on 18 October, 2022 | Last modified on 1 November, 2022
the future of sales compensation podcast

This autumn, we are back with more episodes in our sales and marketing podcast, Talk of the Trade. In this podcast series, our SVP of Acquisition, Mike McNary, interviews business leaders across industries to find out the secrets behind successful revenue teams. To kick things off, he sat down with Seth Marrs, a Principal Analyst at Forrester, to talk about the future of sales compensation.

In addition to lived experience as a sales practitioner, Seth Marrs now works with five-ten organizations per week to research and advise on compensation models. That gives him a unique perspective on how sales comp is structured across industries and what trends sales leaders need to consider to stay competitive. 

Here are three key takeaways from the podcast conversation:

Sales Compensation is Still Key

While it is true that younger generations like Millennials and Gen Z care about company culture and personal growth, compensation models are still key to staying competitive among today’s sellers. After all, no one wants to stay at a job that they feel is paying them unfairly.

Seth recommends not focusing too much on measuring what leads to company success, as a lot of market factors can play external roles. For example, in 2020, the pandemic had huge impacts on most companies, and in 2021 conservative quotas meant that most sales teams blew their plans out of the water. However, Seth does suggest tying a direct correlation between sales comp plans and company performance. The ideal is that if the sales reps do really well, then the company does really well, and everyone is rewarded. 

Use Sales Compensation as a Tool, Not a Defense

Seth noted that most organizations are very reluctant to experiment with their sales compensation models, for fear of losing their top sellers by introducing change. However, as business environments continue to shift, organizations must respond or else no longer be competitive with the market.

That’s why Seth recommends considering sales compensation as a tool to get to your ideal state, rather than as a defensive measure to try to keep the status quo. He recommends always trying to find a model that is fair to both the seller and the company. He also advocates for agility, such as only giving quotas every quarter, so that you can respond to market pressures, or introducing small changes one at a time to slowly steer the ship in a new direction. 

Technology is Rewriting the Playbook

One major anxiety he notes among organizations currently is a fear of overpaying on a sale, since there are often top-of-funnel reps involved in addition to the closing salesperson. Clever salespeople can drive up their predicted sales, resulting in the company overpaying for deals that may or may not actually close.

Ultimately, Seth predicts that sales listening technology – such as Gong, Chorus, and other AI tools – will make it possible to remove the salesperson from the forecasting process altogether. This allows the seller to focus on their expertise: selling. Meanwhile, it will rely on machine learning to more accurately predict which sales will close, which in turn will reward the sellers who are doing good work as opposed to sellers who have learned how to game the system.

At the end of the day, your compensation model is an essential tool in your kit to attract and retain top sellers. Tune into the full interview with Seth Marrs to get more insights, including why increasing base pay is not always the best strategy!

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