After a disastrous 2009, sales compensation made a comeback in 2010, and this year’s expectations are better still. Hold on, though. There are caveats: Sales position, industry, and performance matter when you’re talking about compensation increases. Smart reps will have to be like running backs: pick an opening and blow through to score a financial gain.
Outside of professional sports and entertainment, salespeople, more than any other professionals, write their own paychecks with performance. A 2010 WorldatWork survey of more than 500 companies found that salespeople and first-line sales managers continue to receive from 29 to 42 percent of their compensation in variable pay. This performance-based compensation is most important for new-account salespeople. The most common performance metrics are now revenue, gross profit, and reaching specific sales objectives. All About You
What does that mean for you? Table 1, derived from Department of Labor data, shows that top salespeople in the right positions are still doing very well. The top 10 percent of first-line sales managers, sales engineers, and business-to-business salespeople still clear more than $100,000 per year, and in some cases more than $150,000.
But situation is important, and so is meeting metrics. The median managers and sales reps earn only half as much as the top performers, and the bottom 10 percent get about one-fourth as much. That’s a steep slope from comfortable success to just getting by.
It helps to work in the right industry (see Table 3). For example, even average advertising sales reps earn more than $100,000 in public relations and print, radio, and TV markets. The top-paying industries for technical sales are in data processing and insurance, where even average reps make more than $100,000. Median nontechnical salespeople can make almost as much by selling in the insurance, aerospace, and securities markets.
Location matters, too, but not as much (see Table 2). Advertising pays $75,000 on average in Connecticut – better than in other states, but not as much as advertising reps earn in the best advertising segments. Technical sales reps are paid the most in Massachusetts and New Hampshire, but not quite as much as their counterparts in the hottest industries.
Being in technical sales is no guarantee of a high income. The bottom 10 percent of technical salespeople make little more than $36,000 a year. Nontechnical sales comp is even lower: about $27,000 per year.
Sales managers do best in apparel and securities markets and in northeastern states such as New York and Pennsylvania. Sales engineers reap the most handsome rewards in contracting and nonresidential construction and in places as far apart as Rhode Island, Utah, Nebraska, and Massachusetts.
Telemarketers are the least paid of business-to-business salespeople, but 10 percent make more than $40,000 a year – not bad for people in or out of sales. And telemarketers can do very well if they are in the right spots. Telemarketers in metals, minerals, and electronics do considerably better than average; they make about as much as the average sales rep. Overall, telemarketers appear to do best along the eastern seaboard, from Washington, DC, up to the Boston area. But telemarketers in less-favored fields and locations do considerably worse: The bottom 10 percent make barely $16,000 a year. Be a Leader
So prospective earnings vary widely, by position, industry, market, and above all, by how well the job is done. But there is more to compensation than just base pay and commissions. Table 4 shows total compensation, including benefits, for higher-level sales positions. The best account executives make more than $125,000 a year, including health benefits, 401(k), and pension. The top senior account executives reap more than $165,000 in total compensation. Business-development managers earn about the same once all benefits are considered.
Again, the penalty for not being at the top of your game is heavy. The bottom 10 percent of account executives earns less than half as much as the industry leaders, even when the value of benefits is included. Senior account executives pay an even stiffer penalty for poor or mediocre performance, while business-development managers suffer a bit less but still see a big drop in total comp.
Experienced call-center staff and inside salespeople make half to one-third as much as senior executives but still do pretty well if they are at the top of their profession. Senior call-center reps can earn about $75,000 a year if they are really good at what they do, which is not much different from the take-home pay of a below-average field salesperson. And the top 25 percent of inside reps earn more (continued on page 2)