The New Model for Sales Compensation in 2022
Updated: Jan 19
My Sales Management article published in the February 2022 issue of Radio Ink magazine.
First, let’s move ahead a few years mentally, it's 2024, and we no longer discuss sales compensation in our management meetings.
The sales department has been replaced by a marketing department with three subsets of responsibility and dedicated teams to match. The 2020 Covid pandemic, the rate of change driven by technology, the increased proliferation of user-generated audio content, and what attracts talent to companies have pushed established ideas out the door.
What Happened to the Building Blocks of Compensation?
The fundamentals of compensation tied to market size, cost of living, competitive pay, and experience levels still prevail. Comprehensive health insurance, HSA's, and short-term savings programs take priority over retirement plans as company recruitment efforts require benefits that are available earlier in employment. Vacations, holidays, and paid time off support the increased emphasis on work-life balance that has become more important due to the Covid pandemic, which began in 2020.
New on the list of benefits are premium LinkedIn accounts paid for by the company to support networking, personal brand development, and nurturing careers. A learning fund has been established to reimburse approved online courses that enhance skill sets or build strategic knowledge. There is a dedicated effort to support the "relearn" movement for established staff and continued learning curves for new hires building their knowledge base.
Some benefits focused more on the company than an employee and have been rendered irrelevant. For example, media non-compete sales agreements designed to control the "across the street migration" they once restricted are gone. In a 360-degree media landscape of choices for customers and a revenue mix that relies less on traditional assets of the past, the non-compete agreement ran its course. The non-compete had also become a roadblock to recruiting sales talent and did not fit the organizational changes in stations.
The Marketing Department 3.0
The days of a "salesperson" wearing multiple hats are gone. As mentioned earlier, everyone in the three sections of this department is on salary with a bonus structure. The compensation plan for each person is customized to their daily role, contribution to the revenues generated, and experience level. Let's look at the blend of sales efforts, customer service segmentation, and asset management, causing the new compensation model.
A trend that started in the previous decade of less human interaction in the commoditized sales arena, more robust technology platforms to support the transaction process, and shifting evaluation metrics have now matured. Radio market managers recognized the importance of scale through aggregation to better compete nationally and locally in concert with their companies.
The need to be closer to the speed of business led to the consolidation of local and national sales activity with a dedicated team to monitor sales transactions, coordinate support for campaign activations, and keep service requirements running smoothly.
Content Creation/Creative Promotion:
By adopting a longer-term view of sales and getting out of the "make the quarter" mindset, there is a new emphasis on warming up the sale. After awareness, interest, and desire, you reach the action step of purchase in a marketing model. We now listen to our advice and support a creative team to develop compelling content for prospect engagement. A group to curate all our previous "sales" collateral and give it new meaning as it builds value for our products. This creative group also supports promotional opportunities with our stations that benefit the customer and drive listener attention.
Direct Revenue Development:
Teams of two coordinate the elements of a 360-degree marketing solution set. As assets expanded, learning curves became steeper, and "salespeople" were stretched to the limit, we had to find a better way. A team approach builds more collaboration in the department, gives depth to the customer relationship with this added focus of resources, and expands incremental revenue. An added benefit for team members, customers, and the company, is improved coverage of responsibilities during vacations or illness. If due to circumstances, turnover occurs, there is a bridge during a replacement hiring process.
You are right; it's not 2024 as stated earlier; it's 2022; we can't wait two years in radio to adopt a new compensation plan based on how we sell or function.
Your sales departments suffered more than most during 2020 when commission-only sellers were stopped in their income tracks by a pandemic. The future is never clear, and surprises will come.
You can be proactive today and start building a new plan for your marketing (sales) team's role and the compensation that fits the new model.
Thank you for reading this article, and please pass it along to your colleagues.
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About The Author:
Alec Drake openly shares revenue management strategies and sales improvement ideas in the "Sales Success Library" at Alecdrake.com. He is a regular contributor to Radio Ink Magazine, where he leverages four decades of experience to write about sales and management. Alec is the founder of The Radio Invigoration Project (T.R.I.P.), a support initiative for local radio sales and promotion staff.
Drake Media Group, LLC retains exclusive rights to any original content in articles written by Alec Drake or published on any third-party platforms and featured in any podcast.